Cleantech Index - Does It Signify Hope for the Environment & Businesses to Co-Exist?
Cleantech - the new buzz word which is cut across industries and geographies has always had a mystical presence in the minds of a neophyte.
So what is all the euphoria about cleantech?
As the Cleantech Indices simplify cleantech as “Clean is more than green”.
Clean technology, or “cleantech”, should not be confused with the terms environmental technology or green technology popularized in the 1970’s and 80’s.
Cleantech is new technology and related business models offering competitive returns for investors and customers while providing solutions to global challenges.
In the past greentech and envirotech were the dreaded words which would sound like death knells to environmentally insensitive industries because of its highly regulatory and compliance oriented nature emphasizing on green and environment which would quite often be marring the businesses as a whole.
But cleantech is driven by market economics that provide greater financial upside and sustainability to the businesses.
So how can cleantech be beneficial for the business and what is the much talked about Cleantech Index?
The Cleantech Indexâ„¢ United States (CTIUS) is the foremost stock exchange which announced on the American Stock Exchange in early 2006. The purpose of such first of its kind index was to provide an opportunity to investors to park their money in cleantech assets covered across 11 sectors â€“ from clean energy generation, energy storage, transportation, water and wastewater treatments, agriculture/nutrition, and so forth.
This process of inclusion of a company in the CTIUS is fairly simple:
- The company has to garner at least 50% of it revenues / turnover from cleantech activities
- The floated company should has a minimum market capitalization of US$150 million in freely traded shares traded on the NYSE, NASDAQ or the American Stock Exchange
- A three-month average closing price above US$3.00 per share.
- An average monthly trading volume of the companyâ€™s stock should be greater than 400,000 shares during the prior six month period.
- The companies also have to pass some stringent process on various parameters like business strategy, technology property, management, financial stability & sustainability, etc.
The CTIUS is a modified equally weighted index which is rebalanced each quarter â€“ namely, March, June, September and December. Upon any such rebalancing no stock on the index would have a concentration of more than 5% of the index.
The stocks are grouped together in several bands based on the m-cap of their freely traded shares. The stocks within the each band are equally weighted at rebalancing.
The Index Provider of CTIUS like any other Index Manager will have the authority to change or modify one or more components in the calculation of the index from time to time and at any time to truly reflect the value of the index. The American Stock Exchange acts as a calculation for the index.
At present there are 47 companies on the CTIUS with a combined m-cap of US$263 billion as of August 15, 2007. As per the website (http://cleantechindex.com), the CTIUS has significantly outperformed the S&P 500, Dow Jones 30 Industrials, and NASDAQ indices over the past 3 and 5-year periods.
The cleantech index boasts names like Siemens AG, Tetra Tech, First Solar, Suntech Power, Sunpower Corp, etc.
The CTIUS is novel concept which would lead in paradigm shift in the global economy. The first step has been rightly taken to create a harmonized living co-existing between the businesses & environment. Although, only time will tell if such a model could ever exist; or is just wishful thinking coming out of present optimism.