Climateworks Centre has worked with project partners to develop and launch the first ever forward looking climate transition index using dynamic climate scenarios in Australia. 

The Australian Climate Transition Index was jointly established by Climateworks Centre, BNP Paribas, Institutional Shareholder Services Inc (ISS ESG) and the Centre for Quantitative Finance and Investment Strategies at Monash University.

A score is calculated for each company under a given climate scenario by considering both the:

• Products and services vs separations i.e. the types of products manufactured or services the company provides to the market, and how it operates to manufacture those products or provide those services
• Current exposure vs mitigation approach i.e. the company’s current activities and emissions, and what it intends to be or do in the future.

A weighted average of the company’s score for three climate scenarios is then calculated. This approach seeks to provide the highest score to companies that are likely to:

• support the transition (‘enablers’)
• adapt and thrive (‘adaptors’) 
• to be unaffected by the anticipated changes (‘least affected’). 

The lowest scores identify companies that are deemed to face significant risk (‘at risk’).

The Index aims to provide broad exposure to enablers, adaptors and least affected companies, whilst avoiding investment in companies considered most at risk.

What we’re doing

The Australian Climate Transition Index is a sustainable investment solution which allows investors to align their financial objectives with net zero emission targets, while supporting the financing of low emissions energy transition.

Climateworks Centre provides dynamic climate scenario analysis using its AusTIMES modelling.

The index is rebalanced every six months to reflect any changes with the 300 largest, liquid public companies in Australia.

Jointly established by Climateworks Centre, ISS ESG and the Centre for Quantitative Finance and Investment Strategies at Monash University. The initiative was led by index sponsor BNP Paribas, one of the largest banks in the world.