Bloomberg and Goldman Sachs roll out index focusing on clean energy

It tracks performance of global equities with significant exposure to the clean energy sector

Renewable energy projects in Aberdeen, Scotland. Investments in the clean energy sector are expected to increase as the world seeks to reduce emissions to protect the environment. Photo: Ian Hastie/Aberdeen Renewable Energy GroupShow less

Bloomberg and Goldman Sachs Asset Management are rolling out a new index that tracks the performance of more than 175 global equities with significant business exposure to the clean energy sector as the world focuses on energy transition.

“Bloomberg and Goldman Sachs Asset Management are offering the market a new standard for clean energy indices,” said Dave Gedeon, global head of equity and strategy indices at Bloomberg.

“With increased recognition of the significant global investments necessary for decarbonisation coupled with declining renewable energy costs and ever increasing technologies for renewable energy, our launch of a Clean Energy Index is particularly timely, and we look forward to offering this solution to the climate-focused investing community.”

Investments in the clean energy sector are expected to increase as the world seeks to reduce emissions to protect the environment.

Saudi Arabia, the Arab world's largest economy, has pledged to become carbon neutral by 2060, while the UAE aims to reach the target by 2050 with new investments worth Dh600 billion ($163.5bn) planned in the clean and renewable energy sources in the next three decades.

Multilateral banks such as the International Monetary Fund have urged stakeholders to increase investments to finance the transition to a greener economy.

About $20 trillion in investment is needed over the next two decades for companies and countries to become carbon neutral by the middle of the century, the Washington-based lender said in a report this month.

US climate change envoy John Kerry also urged private capital to help accelerate the transition away from fossil fuels.

“Mainstream investors have an important role to play in financing the clean energy transition, especially as the battle against climate change intensifies,” Kyri Loupis, head of energy infrastructure and renewables at Goldman Sachs Asset Management, said.

SwissWinds, Europe's highest wind farm, at 2,500 metres in Gries, Switzerland. Reuters

However, with new technologies and government policies emerging, “the energy transition is rapidly evolving and requires a dynamic investment approach”, he said.

“As such, we are excited about leveraging BloombergNEF’s real-time energy insights and proprietary data sets to help investors reallocate capital to align with their long-term climate goals.”

BlackRock, the world’s largest asset manager, expects the next 1,000 unicorns or start-ups with valuations of $1bn to come from the green industry as investments grow in the clean energy sector.

“It is my belief that the next 1,000 unicorns … won't be a search engine, won't be a media company. They will be businesses developing green hydrogen in green agriculture, green steel and green cement,” Larry Fink, the chief executive of the company, told the Middle East Green Initiative forum, which took place in Riyadh on Monday.