Stock Takes: NZX climbs on environmental bandwagon with carbon indices, TIL placement

NZX has introduced two new indices to recognise companies' environmental performance. Photo / Whanganui Chronicle

The NZX has launched New Zealand's first carbon-efficient indices to tap into growing investor demand for environment-friendly stocks.

The exchange said it had launched the indices in partnership with S&P Dow Jones Indices to recognise investor interest in reducing carbon emissions in addressing climate change.

Two new indices, S&P/NZX 50 Carbon Efficient Index and S&P/NZX 50 Portfolio Carbon Efficient Index, use a Trucost environmental dataset to weigh companies listed on the NZX according to their carbon intensity and sector impact.

London-based Trucost, part of S&P Global, makes estimates about the hidden costs of unsustainable use of natural resources by companies.

NZX said the objective behind the new indices was to incentivise New Zealand companies to compare their carbon intensity to their industry group peers around the world.

Based on the carbon intensity of each constituent company, a company's weight may be adjusted positively or negatively, however, it will not screen out a company from the index solely due to its carbon intensity, the exchange said.

NZX chief executive Mark Peterson said many New Zealand companies are already strongly focused on emissions, and well-advanced in disclosing and discussing their approach to sustainability and how they are managing ESG risks and opportunities.

"We see these S&P/NZX Carbon Efficient indices as an incentive for New Zealand issuers that will help accelerate greater transparency," Peterson said.

He said the new indices are inclusive – meaning that currently all S&P/NZX 50 companies are covered – and recognised disclosures of emissions, and comparatively better performance than global peers, will be reflected in weightings.

"There is global consensus around climate change – and, with carbon intensity a key concern, we expect investment products to be quickly created off the back of these indices," Peterson said.

S&P DJI managing director and global head of ESG Indices, Reid Steadman, said that there had been rising demand for benchmarks that take into account companies' carbon impacts.

"With growing awareness from both institutional and retail investors, companies are increasingly measuring and managing their environmental impacts," Steadman said.

TIL Logistics places notes

New Zealand freight and logistics company TIL Logistics said it had placed $8.2 million of mandatory convertible notes to some of TIL's largest shareholders and other wholesale investors to repay bank debt.

Together with cash of $1.8m, TIL will repay $10m of senior secured debt under its existing facilities.

Chairman Trevor Janes said the placement was of "considerable value" to TIL Logistics Group in assisting to reduce core debt.

"The placement also provides the opportunity to welcome new wholesale investors to the company," he said.