10 May, 2023 / Analysis
State Street adds carbon asset servicing solution
By ESG Clarity
The carbon assets market is expected to grow 15-fold by 2030
State Street has introduced a solution that allows investors to integrate carbon-related assets – “an emerging asset class” – into ESG portfolios.
The State Street Carbon Asset Servicing Solution brings carbon asset fund administration and depositary services to asset managers, asset owners and other financial institutions helping clients tosimplify the management of carbon assets. Additionally, an announcement from the group said, clients will be able to incorporate carbon assets into both existing ESG and non-ESG portfolios, leveraging State Street’s back and middle-office capabilities.
“As businesses continue to move toward models that reduce greenhouse gases and emission standards increase in scale and magnitude, the price of carbon offsets are likely to increase,” commented Phil Kim, global head of ESG product at State Street. “Investing in carbon assets can help fund the energy transition and diversify portfolios, all while offering the opportunity for investment returns.”
The solution will coordinate multiple parties’ data, including top carbon registries, exchanges and cash agents, allowing clients to gain exposure to this growing asset class via spot and derivatives markets.
“The carbon assets market is growing dramatically—as the total traded value for compliance and voluntary credits reached a record €865bn in 2022 and is expected to grow 15-fold by 2030 as new regulations in major regions push corporations globally to report on and offset their greenhouse gas emissions,” said Kim. “Our carbon asset servicing solution will help clients gain access to this emerging asset class so they can directly hold carbon allowances and credits and trade them as they would other products, and ultimately look to maximize the potential of their investment portfolios.”
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