Carbon efficient investing in emerging markets as a tool to combat global warming

With the 2012 expiration of the Kyoto protocol on global warming looming large, emerging markets, which have begun to surpass the United States (U.S.) as some of the largest emitters of carbon, are taking a central role in the debate over how to reduce emissions. As global attention turns to these countries, standard and poor’s has designed an index which allows for reduced carbon emission exposure in their portfolios while replicating the broad emerging market returns. One popular approach has been to create equity indices and investment tools that focus on companies whose primary interest has been on producing clean technology and clean energy. This approach has its uses; it highlights the specific companies that are leading the charge in the green space and allows for focused investments that are betting on the market's ability to reward these companies. Broad market strategy that can meet the dual objectives of replicating a broad market and, at the same time, rewarding carbon efficiency is required.