HELIO Index For Investors

Helene Connor, HELIO International

In the next few years trillions of dollars of investments will be spent in the energy sector. What criteria will guide investors and governments' policy-makers?

There is a growing need in the sustainable investment community for tools that provide timely information on the quality of countries' policies. This need stems from the fact that today more and more investors look for improved efficiency and want to direct their investments towards socially responsible alternatives leading to ‘eco-development’. For this allocation to be effective there is a call for tools to identify these investments, and to help to measure their ex-post performance. The HELIO Index for Investors (HIFI) aims to fill those needs by helping financiers around the world to identify countries that best suit their objectives because their policies, and in particular their energy policies, are truly conducive to the eco-development of the country.

Managing energy wisely is essential to the economic and social development of a country, as well as to environmental protection and climate change mitigation and adaptation. In order for a country to achieve a balanced growth while reducing its ecological footprint, it is crucial to have reliable tools that can measure and monitor how well a country’s energy policy supports eco-development goals.

Eco-development builds on the concept of traditional sustainable development – associated with the Brundtland principles – by bringing in two additional elements, which are necessary for long-term success in the energy field: ‘usufructal’ technologies (Usufructal technologies only use renewable, harmless forms of energy and do not rely on fossil stocks) and participative governance. Eco-development can only be achieved when all forms of capital (financial, produced, natural, human and social capital) are truly operating in harmony, reinforcing one another.

Over the last two decades, HELIO devised methodologies to help decision-makers and other stakeholders assess the degree to which a given country's policies provide its population with clean and efficient energy services that are reliable, affordable and resilient to the impacts of environmental degradation and climate change. The resulting methodology, TIPEE, was successfully tested in a number of Africa’s most vulnerable countries.

This accumulated knowledge has now been encapsulated into a single index, the HELIO Index for Investors (HIFI), a composite index, based on the 24 TIPEE indicators grouped among the five forms of capital.

Some of the main advantages of HIFI are that:

  • It is founded on the Working Group on Statistics for Sustainable Development (WGSSD) framework. Accordingly, HIFI is a tool that provides a multi-faceted view on sustainable energy investments;
  • It can cover most of the world’s countries, enabling rigorous comparisons on a global scale; and
  • It  focuses on policies that are within the control of policy makers in the energy sector.

The HIFI allows all stakeholders, investors, policy makers and members of civil society, to monitor how effective national policies are, thus helping to identify areas for successful investment in climate-proof, sustainable energy projects. This tool will act as a signal for investors to invest in a country where their projects are likely to be more successful and profitable. It will allow them to compare countries' performance and identify those that offer better conditions for investment in energy projects, thus stimulating countries to improve their own energy policies.

HIFI, aims at promotingsound energy investments in economic, environmental, technological, civic and societal terms through assessments of conditions and policies at country level, and will generate a unique set of primary data that will be available to parties wishing to conduct research. Unlike some initiatives that are carried out on a one-time basis or updated infrequently, those who will find it useful for their own purpose will keep HIFI updated.