Contents

Sr No Description Page No
1 About the Index 3

2 Carbon Intensity Estimation Methodology 4

3 Index Methodology 6

4 Index Performance 8

5 Frequently Asked Questions 10

6 Contact 12

2
About the Index
The BSE-GREENEX is the 25th dynamic index hosted on the Bombay Stock Exchange. It is a first of its
kind benchmark index, which assess the ‘carbon performance’ of stocks based on purely quantitative
performance based criteria. Unlike existing global indices that measure environmental performance
through various scaled quantitative criteria, the BSE-GREENEX applies sector specific proprietary
algorithms, developed in cutting edge research facilities, to assess energy efficiency performance of
various companies based on publicly disclosed energy and financial data.

The BSE-GREENEX is a veritable first step in creating an inclusive market based mechanism for the
promotion of energy efficient practices amongst the larger business entities in India. BSE Ltd. in close
association with gTrade Carbon Ex Ratings Services Private Limited (gTrade) has co-developed the
BSE-GREENEX.

The mission of gTrade is to create viable market based solutions for industries, investors and
governments, to promote energy efficient practices and encourage impact investing in economically
and environmentally sustainable businesses. It seeks to achieve its mission by developing and
promoting a “green ethos” in high growth developing nations through market based push and pull
factors by providing financial tools to investors. The BSE-GREENEX is the outcome of the joint
collaboration which consists of 20 largest and most efficient companies on the carbon emissions
front from the BSE-100 Index.

One of the parameters for measurement of environmental performance used in BSE-GREENEX

calculation, and received from gTrade, is emissions intensity viz. total emissions upon total revenue
(which is assumed to be a close proxy for energy efficiency). Mandatory disclosures on energy usage
by assessed companies make it possible to estimate these numbers for listed companies.

Additionally, BSE-GREENEX is the first environmental friendly equity index to be publicly

disseminated on a real-time basis, providing a new tool for use by “green” retail and institutional
investors to track the performance of India’s largest and most liquid, energy efficient stocks. The
index can be licensed for the development of green financial products including mutual funds, ETFs
and structured products.

BSE-GREENEX is also India’s first objective green equity index to employ index constituent weight
capping. Index constituent weights are capped at 6 percent during dynamic rebalancing, in an effort
to increase the diversification within the index and ensure greater compliance with international
regulatory and statutory investment guidelines.

3
Carbon Intensity Estimation Methodology
Carbon intensity of a company is estimated as total greenhouse gas emissions from a company
divided by its total revenue. This is estimated on an annual basis following internationally accepted
methodologies and best practices. Data for BSE-100
BSE 00 companies was extracted from companies’
annual reports on multiple parameters.
parameters Fuel consumption, electricity consumption (including
purchased electricity), energy generation (when generated internally using fuels), and production /
raw material data (for the Cement Sector) from Form ‘A’s (of Directors’
irectors’ report) enclosed within the
annual reports of listed companies were extracted for use in the GHG inventorying model developed
specifically for this effort.

The 2006 IPCC Guidelines for National Greenhouse Gas Inventories were followed for energy and
process related emissions for listed companies. In case this data was not disclosed by a company, its
financial data such as power and fuel fuel expenditure was used through appropriate econometric
modeling to estimate its GHG emissions.

The data for standalone part (Form A) was extrapolated appropriately for estimating GHG emissions
on a consolidated basis.

The analysis adopts multiple methods

methods for calculating GHG emissions for companies depending on
the industry segment and business operations of company, and also availability of appropriate
information for those sectors. The flow chart captures the stepwise estimation of GHG emissions for
companies.

The emission intensity distributions of BSE-100

BSE 100 companies are shown below for FY 2008,
2008 2009, 2010
& 2011 in Normal Distribution.. These are moving towards left indicating that the total carbon
emission by total revenue of the companies is generally
generally reducing over the years,
years which is a positive
for the Indian economy. The reasons may be many, such as energy and economy decoupling, carbon
and energy decoupling, newer technology penetration, economies of scale and sector consolidation.

0.0004

All of the companies having emission

0.0003 intensity above 500 mostly belong to the
Electric Utilities, Non-Energy
Energy Mineral
(Metal) and Cement sector.

0.0003 2008

2009
Normal Distribution

0.0002

2010
0.0002

2011
0.0001

0.0001

0.0000
0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 5500 6000 6500 7000
Emission Intensity (Tonnes/INR Crore)

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Flow Chart for Estimation of Emissions

Yes Has the company also disclosed its Yes Verify Report the
Are GHG Emissions reported in the
energy and fuel consumption these GHG
Annual Report?
data? emissions emissions

No No

Use the
Has the company disclosed its Yes data to
energy and fuel consumption estimate
data? emissions

No

Estimate the
Is the company in the business of Yes Is the data on the amount of these Yes fugitive
extracting fossil energy like coal, materials being produced emissions
oil or gas? available?

Add emissions from

No No
other business
activities

Is the data on the amount of Estimate

Is the company in the business of Yes Yes
electricity produced, distributed or Scope 2
production, distribution or sale of
sold available? emissions
energy?

No
No

Estimate GHG
Is the company in the sector where Is the regression analysis for emissions for
Yes Yes
emissions have been estimated through company specific sector yielding other companies
the above processes and regression significant results? in the sector.
analysis can be used?

No
No

Collect appropriate Estimate GHG

data/ information emissions for
Is the company in the business Yes
on company both the energy
with considerable non energy
specific emission and non-energy
emissions?
sources. sources.
No

Estimate GHG
Is the expenditure incurred by a Yes emissions using
company on power, fuel or appropriate
electricity usage available in the conversion
P&L account? factors.

No

Get this information on power, Conduct appropriate QA/QC

fuel or electricity used. checks and report GHG
emissions

Report emissions
appropriately

5
Index Methodology
BSE-GREENEX includes the top 20 companies from the BSE-100 Index, which are good in terms of
Carbon Emissions, Free-Float Market Capitalization and Market Turnover. The Index is a Cap
Weighted Free-Float Market Capitalization weighted Index.

BSE Ltd. should have the recent Carbon Intensity Number calculated by gTrade prior to the
rebalancing date i.e. every year in September. In case BSE Ltd. doesn’t have the recent Carbon
Intensity Number for a company, the company will be deemed in-eligible for the Index.

Once the Carbon Intensity Numbers are available from gTrade, the process utilized by BSE Ltd. to
arrive at the final selection of stocks in to the BSE-GREENEX is as follows:

1. Scale the Carbon Intensity (C), Average Free-Float Market Capitalization (M) & Average
Turnover (T), from 0 to 100 within the sector.
2. Assign points to the above mentioned numbers from 1 -50 within the sector.
• For C: For 0-2, assign 1; for 2-4, assign 2; and so on.
• For M & T: For 0-2, assign 50; for 2-4, assign 49; and so on.
3. Calculate the composite point for a company by taking the summation of the points
multiplied by their respective weights, where C is weighted 50%, M is weighted 40% and T is
weighted 10%.
4. Rank the companies on the basis of the composite point.
5. For base composition take top 20 companies.
6. Review frequency: Bi-Annual (September & March)
• For September review, recent Carbon Intensity numbers received from gTrade,
Average Market Capitalization and Average Turnover for quarter ended September
will be taken into account.
• For March review, the Carbon Intensity numbers with BSE Ltd. received in
September of the previous year from gTrade, Average Market Capitalization and
Average Turnover for quarter ended March will be taken into account.
7. On-going review:
• Mandatory Exclusions: If the existing constituent ranks beyond 28 (i.e. 29, 30….) by
final rank the company will be excluded.
• Mandatory Inclusions: If a non constituent ranks within 12 (i.e. 1 to 11) than the
company will be included.
8. Capping individual stock at 6%. Capping is done at each rebalancing or inclusion/exclusion
from the index between two rebalancing.
9. In case a company is excluded from BSE-100, the same will also be excluded from this index.

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10. If an index constituent is traded under the ‘Ex-Entitlement’ basis it will be excluded from the
Index. This is done because during this period BSE is unable to ascertain the valuation of the
constituent and valuation of a constituent is required for Index calculation.
11. Upon re-listing from suspension or from ex-entitlement, the company becomes part of the
regular stock universe that can be considered for inclusion in the index upon subsequent
review.
12. Rebalancing dates post Index review are:
• 2nd Monday of October for the September review.
• 2nd Monday of April for the March review.

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Index Performance
2,000

1,800

1,600

1,400

1,200

1,000

800

600
SENSEX BSE-100 BSE-GREENEX
400
Feb-09
Apr-09

Aug-09

Feb-10
Apr-10

Aug-10

Feb-11
Apr-11

Aug-11
Oct-08

Dec-08

Jun-09

Oct-09

Dec-09

Jun-10

Oct-10

Dec-10

Jun-11

Oct-11

Dec-11
Chart from October 1, 2008 till January 31, 2012

Oil & Gas

5%
FMCG
Housing
5%
Related
6%
Transport Healthcare
Equipments 22%
6%
Metal
12% Finance
19%
Capital Goods
12% Power
13%

Sectoral Representation as on January 31, 2012

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 Index Returns
Returns BSE-GREENEX SENSEX BSE-100
1 Year -6.26% -9.17% -6.19%
2 Year 3.01% 0.62% 5.11%
3 Year 87.25% 94.23% 82.44%
Since Inception 32.36% 41.59% 31.69%
~ Returns up to 31-Jan-2012; Inception Date - 01-Oct-2008

Index Volatility
Volatility (Annualised ) BSE-GREENEX SENSEX BSE-100
1 Year 20.6% 20.9% 20.1%
2 Year 18.1% 18.7% 18.1%
3 Year 23.9% 24.1% 23.5%
Since Inception 29.8% 29.4% 28.6%
~ Annualised Volatility up to 31-Jan-2012; Inception Date - 01-Oct-2008

Constituents as on January 31, 2012

SR No Name Market Capitalization* Weight

1 Tata Steel Ltd. 24,211.12 6.70%
2 State Bank Of India 24,040.43 6.65%
3 Larsen & Toubro Ltd. 23,603.11 6.53%
4 ICICI Bank Ltd. 23,566.41 6.52%
5 Tata Motors Ltd. 23,308.38 6.45%
6 Sun Pharmaceutical Inds. Ltd. 21,315.29 5.90%
7 NTPC Ltd. 21,298.11 5.90%
8 Dr Reddys Laboratories Ltd. 20,484.17 5.67%
9 Housing Development Finance Corporation Ltd. 20,312.97 5.62%
10 Bharat Heavy Electricals Ltd. 19,468.49 5.39%
11 GAIL (India) Ltd. 18,918.07 5.24%
12 Hindustan Unilever Ltd. 18,657.39 5.16%
13 Cipla Ltd. 18,222.10 5.04%
14 Sterlite Industries (India) Ltd. 17,489.93 4.84%
15 Tata Power Company Ltd. 17,251.05 4.78%
16 Ambuja Cements Ltd. 12,321.64 3.41%
17 Lupin Ltd. 11,633.80 3.22%
18 DLF Ltd. 9,166.12 2.54%
19 Glaxosmithkline Pharmaceuticals Ltd. 8,188.03 2.27%
20 Reliance Infrastructure Ltd 7,804.71 2.16%
*Capped Free Float Market Capitalization in the index in INR CRS.

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Frequently Asked Questions
1. What is climate change?

Climate change refers to a statistically significant variation in either the mean state of the
climate or in its variability, persisting for an extended period (typically decades or longer).
Climate change may be caused due to natural internal processes or external force, or due to
persistent anthropogenic changes in the composition of the atmosphere or in land use.

2. What are greenhouse gases?

Greenhouse gases are those gaseous constituents of the atmosphere, both natural and
anthropogenic, that absorb and emit radiation at specific wavelengths within the spectrum
of infrared radiation emitted by the Earth’s surface, the atmosphere and clouds. This
property causes the greenhouse effect. Water vapour (H2O), carbon dioxide (CO2), nitrous
oxide (N2O), methane (CH4) and ozone (O3) are the primary greenhouse gases in the Earth’s
atmosphere.

3. What is greenhouse gas (GHG) emission?

The emission of green house gasses, both natural and anthropogenic, into the atmosphere is
known as greenhouse gas emission.

4. What are the types of GHG emissions?

GHG emissions are of two types, direct and indirect emissions. Direct emissions are physical
emissions from sources that are owned or controlled by a company/individual e.g. from
captive power plants. Indirect emissions are a consequence of the activities of a
company/individual and occur at sources owned or controlled by another entity, e.g.
electricity purchased from the grid.

To facilitate accounting of GHG emissions there are operational boundaries defined by

“scope”:

• Scope1: Reporting organization’s direct GHG emissions for e.g. fossil fuel combustion,
company owned vehicles.
• Scope 2: Indirect emissions from electricity/ heat/ steam used for own consumption.

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 • Scope 3: This is an optional reporting category. Includes all other indirect emissions not
covered under Scope 2.

5. What is emissions intensity?

Emissions intensity for a company is defined as the total GHG emissions (excluding scope-3
emissions) divided by the total revenue of the company.

6. What are the guidelines for the emission intensity estimation?

The 2006 IPCC Guidelines for National Greenhouse Gas Inventories are followed by gTrade
to estimate GHG Emissions. Disclosures by listed companies of their fuel consumption,
energy consumption (when purchased from outside sources), energy generation (when
generated internally using fuels), and in the case of specific industrial sectors - emissions
from Industrial Processes and Product Use (IPPU) are used in estimating emissions. In cases,
where energy data is not available or sufficient, data on usage of other energy related
materials like power and fuel is used appropriately. Emissions are estimated using
internationally established methodologies and statistical tools like econometric regressions
etc. In cases where companies clearly report renewable credentials in quantifiable numbers,
the numbers are appropriately considered. Subsequently, emission intensity is calculated for
each assessed company.

7. Why are stock weights capped?

BSE-GREENEX is the third Real Time Index to utilize stock-level capping, which increases
diversification and makes related products more attractive to investors subject to regulatory
and statutory diversification requirements.

8. What is the benefit of green compliant Index?

Over the years sizable funds and finances will increasingly find their way into green
businesses. The creation of this Index will enable such investment flows.

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