Developing Low Carbon Finance Index: Evidence From Developed and Developing Economies

•Low carbon finance Index has been developed.•Low carbon finance Index contains multidimensional indicators.•DEA-Like mathematical composite indicators has been used to develop low carbon finance index.•Nepal and Iceland have a low carbon finance index score highest value while Uruguay and Finland had comparatively lower scores. Climate change mitigating requires substantial efforts towards the transition of energy systems in order to decrease CO2 emissions. Therefore, this paper develops a low carbon finance index that may help out to entice foreign direct and private investment in low-carbon energy sector. A DEA-Like composite indicator has been used to develop a low carbon finance index, where considerable differences among the variables have been observed. Results show that Nepal and Iceland have achieved a low carbon finance index score value of 1, Uruguay and Finland had comparatively lower scores (0.94 and 0.43 respectively), Iran had significantly lower score of 0.06, while Singapore and Israel have lowest scores (0.01 and 0.04 respectively). It has been concluded that the developing countries may comply with the partial efforts to develop policies and renewable sector investment.