KRBN Capitalizes on Success of Voluntary Carbon Markets | ETF Trends

Carbon emissions continue to be a driving focus of companies and investors as the world works to halve emissions by 2030. One of the main successes to come out of the climate summit at the end of last year was to add increased validity to existing voluntary carbon markets and to work to set global standards going forward that will encourage both trust and transparency.

With climate commitments becoming increasingly important for shareholders, businesses and nonprofits are utilizing the voluntary markets at greater rates, creating massive demand for carbon offsets, reports Forbes.

Carbon offsets do not prevent the biggest polluters from continuing to pollute, but they do create a system that requires payment while the transition is being made to an ultimately net-zero carbon emission future. This in turn encourages the private sector to fund the climate change transition at an even greater pace.

The carbon markets and the related allowances are a system that can reach and benefit all members, from the biggest emitters to the most at-risk, marginalized economies. Through a rigid process that entails on-site monitoring, ensuring that funds are used correctly and appropriately, offset creation, and providing proof that projects are meeting their goals, carbon market participation can provide structure as well as opportunities.

“Rwanda is relying on the sale of such offsets to finance its green transition and protect people from the impacts of climate change,” said Jeanne d’Arc Mujawamariya, Rwanda’s Minister of Environment.

KRBN Invests in Emissions Reductions

The KraneShares Global Carbon ETF (NYSE: KRBN) offers a first-of-its-kind take on carbon credits trading and is in a position to capture the rise in carbon allowance prices as emissions limits become more stringent.

KRBN tracks the IHS Markit Global Carbon Index, which follows the most liquid carbon credit futures contracts in the world.

This includes contracts from the European Union Allowances (EUA), California Carbon Allowances (CCA), and Regional Greenhouse Gas Initiative (RGGI) markets. North American pricing data is supplied by IHS Markit’s OPIS service, while European prices are supplied by ICE Futures Pricing.

KRBN invests in its futures contracts via a Cayman Islands subsidiary, meaning that it can avoid distributing the dreaded K-1 tax form to its shareholders.

KRBN carries an expense ratio of 0.78% and has nearly $1.7 billion in net assets.

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