MSCI published two climate change indexes on Tuesday that allow investors in China stocks to re-weigh securities based upon the opportunities and risks associated with the transition to a lower carbon economy.
The move represents MSCI's efforts to promote environmental, social and governance standards in China.
The newly created climate change indexes were based on the MSCI China Index and the MSCI China A Index. Compared with their parent indexes, the new indexes allocate more weighting to less polluting companies.
For example, internet giant Tencent enjoys an additional weight of 1.61 percent in the MSCI China Climate Change Index, while LONGi Green Energy Technology is awarded an extra weight of 1.4 percent in the China A Climate Change Index.
MSCI China Climate Change Index outperformed its parent gauge by an annualized 0.4 percent in the past 6.5 years, MSCI said.
Shuo Xu, vice president of MSCI Research, said the index publisher is already in talks with quite a few institutions about creating investment products based on the new indexes.