Carbon Trading: The rise of a new asset class

Posted on February 19, 2009

An Australian website has a nice little primer on my favorite asset class - carbon:

The growth of emissions trading schemes will increase the need for investors to assess how material carbon is and how it might impact the bottom line of companies.

Companies are increasingly evaluating the impact of carbon pricing in their operations, risk management plans and broader corporate strategies.

By the same token, institutional investors also need to review the potential carbon exposure in their investment portfolios.

Carbon may also present opportunities for investors, such as alpha generation – for example, exploiting pricing inefficiencies in the trading of carbon emission permits – and investment in carbon-related projects and new ‘clean’ technologies. 

Capturing investment returns from these opportunities should become easier as research providing insight into the environmental, social and governance (ESG) practices of investment managers is more readily available.

So, while the carbon issue continues to heat up, investors would do well to know what their investments are really exposed to.

Read the full article here

Filed Under Carbon Asset Class, Carbon Investing, Carbon Investments, Investing in Carbon

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