Shanghai Stock Exchange considering launch of carbon index

BEIJING, March 27 Thu Mar 27, 2014 2:28am EDT

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BEIJING, March 27 (Reuters) - The Shanghai Stock Exchange has asked China's securities regulator to make it mandatory for listed companies to report their greenhouse gas emissions to pave the way for new carbon-related financial products.

The exchange, which has listed nearly 1,000 Chinese companies, wants to set up a new benchmark index for companies, based on how much carbon each company emits per yuan it makes.

The index would allow traders to invest in products associated with companies that are least exposed to fossil fuel risks if China and the world step up efforts to cut emissions and mitigate the impact of climate change.

"Companies are not willing to release carbon emissions data," the exchange's Financial Innovation Laboratory said in a new report, calling on the China Securities Regulatory Commission to make emission reports mandatory.

Shanghai last year launched a carbon emissions trading scheme which forces local firms to report their emissions, but so far the data has not been made publicly available.

The International Energy Agency said last year that if the world is to reach its target of limiting global temperature growth to 2 degrees C by mid-century, two thirds of proven fossil fuel resources must stay in the ground.

Banking group HSBC has said that this might devalue some oil firms by up to 40 to 60 percent.

But big energy users remain reluctant to disclose their carbon risk.

Last month, a U.S. group of investors with combined assets of over $200 billion filed shareholder resolutions with ten energy companies, including Exxon Mobil and Southern Co , demanding they disclose their strategies for competing in a lower-carbon future. (Reporting by Kathy Chen and Stian Reklev; Editing by Muralikumar Anantharaman)

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