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Broad-Basing “Green” Stock Market Indices

  • Srinivasan Sunderasan
Chapter

Abstract

Sustainability (“green”) stock market indices are intended to focus attention on environmental credentials, to reward superior performance, and to help channel investments. Such indices often incorporate clean energy; waste, water, and wastewater treatment; recycling; and other “pure-play enviro” companies. This chapter contends that in keeping with the philosophy of Green Economics, which advocates an expansive view of man’s interaction with the environment, true environmental performance (“greenness”) is indexed by the eco-sensitivity of mainstream businesses, by the level of stakeholder involvement, and by the extent of information readily made available to society. Effective enforcement of environmental regulation requires contributions from all stakeholders concerned. With voluntary participation from businesses not readily forthcoming, and given the price-sensitivity of consumers, investors through the incentive structures they face could contribute to better enforcement of regulatory standards. Broad-basing the green index could be interpreted as recognizing and rewarding superior environmental performance of mainstream businesses and/or ensuring adequate representation in emerging markets, where a large number of “pure-play enviro”-related instruments are unlikely to be listed.

Keywords

Carbon Capture Life Cycle Impact Assessment Green Economic Stock Market Index Green Index 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer India 2013

Authors and Affiliations

  1. 1.Verdurous Solutions Private LimitedMysoreIndia

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