As the global move towards carbon neutrality continues, the financial services industry is doing its part. For example, Citibank is looking to reduce its emissions with the purchase of carbon credits, according to a Carbon Credits report.
“Citibank unveiled targets for reducing emissions linked to loans to coal mining, steel, auto, and real estate clients by 2030, while revealing its plan to buy carbon credits for its own operations,” the report said.
The report also mentioned that more banks around the world are looking to reduce carbon emissions, especially for specific sectors that produce the highest carbon output. Citibank, in particular, is looking to achieve net zero emissions by the year 2050, while also utilizing the purchase of carbon credits to help reach this long-term goal.
“Citibank said its clients need to use carbon credits while it will buy the credits to offset its own emissions,” the report added.
The financial industry is one steeped in tradition, so a move towards carbon neutrality could cause a domino effect. As such, more and more banks could follow this trend, opening opportunities in the carbon credit market in the form of exchange-traded funds (ETFs).
Get Global Exposure to Carbon Credit Market
A diversifying aspect of carbon exposure in a portfolio is its global reach. As such, this opens up investors to opportunities overseas, adding an extra drop of portfolio diversification.
For global exposure in the carbon sector, investors can consider the KraneShares Global Carbon Offset Strategy ETF (KSET). KSET is the first U.S.-listed ETF giving investors carbon offset exposure to the growing carbon markets.
The fund tracks the S&P GSCI Voluntary Carbon Liquidity Weighted Index. It offers a unique benchmark for the global voluntary carbon futures market performance that trades through the CME group.
As presently structured, KSET offers global coverage of voluntary carbon markets by tracking carbon offset futures contracts comprised of nature-based global emissions offsets (N-GEOs) as well as global emissions offsets (GEOs). As the world continues to move towards decarbonization, KSET offers tremendous growth potential that can reap gains in the short- and long-term investment horizons.
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