Two huge investment banks, UBS and Credit Suisse have separately launched Global Warming Indexes enabling environmentally conscious investors to gain exposure to weather related asset classes (UBS Index) and renewable energy and carbon controlling stocks (Credit Suisse Index). Below is an overview of each index as provided by each corporation’s press release announcing the investment vehicles. For the green business investor, both indexes are worth a look for environmentally friendly investments.

UBS Global Warming Index Press Release:

“The UBS-GWI is a tradable benchmark for global investments in the weather derivatives market and, as such, is the first weather index designed to reflect the current needs of the investment community. It provides a rational and simple way to obtain exposure to the weather asset class.
The UBS-GWI is constructed using liquid, actively traded Heating Degree Day (HDD) and Cooling Degree Day (CDD) weather futures contracts. Initially, the index will be composed of weather futures contracts of 15 U.S. cities traded on the Chicago Mercantile Exchange (CME). There is no limit to the number of cities which can be included in the Index.

To be eligible for inclusion, the volume of futures traded for any given city must represent 1% or more of the total weather derivatives contracts traded on the CME. It is anticipated that cities from Europe and Asia will join the index in the medium term. The UBS-GWI Governance committee will meet annually to determine the composition and the weighting of the UGWI index and its sub-indices family, which is currently composed of four US regions or sub-indices: Northeast, Midwest, West and South.“

Credit Suisse Global Warming Index Press Release:
“Credit Suisse's Global Equity Strategy and Equity Research teams have identified key investment opportunities created by environmental sustainability issues, particularly in companies involved in demand management (e.g., more efficient energy consumption), emissions limitation, renewable electricity and renewable fuels.
The Bank's Global Energy Research team first generated a global universe of global warming-related stocks, and then chose the top 120 stocks by market capitalisation from that group. HOLT factors were used to assess these companies' operational quality, cash flow valuation and market sentiment, selecting the top 40 companies to constitute the index. Calculated by Standard & Poor's, the index is rebalanced every February and August and is calculated as a synthetic price return and total return index in dollars, Euros and Swiss francs. The Global Research team's continued input will help to adjust the universe to take advantage of technological and regulatory changes in this fast moving space.

Earlier this year, Credit Suisse's Private Banking division launched the Credit Suisse Global Alternative Energy Index (CSGAEI). This index allows the close observation of developments in the Alternative Energy universe in an innovative way, by tracking all Alternative Energy sources and providing worldwide exposure and regular rebalancing. These products underscore Credit Suisse's aim to be one of the world's top resource providers in this area.”