To meet the proposals for CTBs or PABs,—as published by the EU Technical Expert Group (TEG) in its Final Report, —active share and therefore tracking error are uncertain over time, due to the TEG’s absolute decarbonization proposal. This blog assesses the S&P Eurozone Paris-Aligned Climate Index Concept’s (PAC Concept) potential active share sensitivity to future decarbonization, to align with a 1.5 °C scenario.
Exhibit 1 shows future PAB and CTB trajectories and possible parent index trajectories from 7% decarbonization and 3% carbonization. If in twenty years the parent index carbonizes at 3% year-on-year, a 90% relative carbon reduction will be required for the PAB (hopefully far higher than will be observed).
Read the complete whitepaper now at the link below