On Wednesday, Krane Funds Advisors, LLC (“KraneShares”), the investment manager for KFA Funds and KraneShares ETFs, announced the launch of the KFA Global Carbon ETF (KRBN) on the NYSE.
KRBN is benchmarked to IHS Markit’s Global Carbon Index, which offers broad coverage of cap-and-trade carbon allowances by tracking the most traded carbon credit futures contracts. The index introduces a new measure for hedging risk and going long the price of carbon while supporting responsible investing. Currently, the index covers the major European and North American cap-and-trade programs: European Union Allowances (EUA), California Carbon Allowances (CCA), and the Regional Greenhouse Gas Initiative (RGGI).
“The climate crisis threatens life itself. Just as COVID-19 demanded an early response, so do the threats of climate disaster. One of the most powerful ways the world can collaborate to reduce emissions is to move toward carbon pricing that puts basic, free-market economics to work,” said Former Secretary of State, John Kerry. John Kerry is the Chairman of the Climate Finance Partners Advisory Board (CLIFI), which is the sub-advisor to KRBN.
“A comprehensive global price for carbon emissions at a substantial level could encourage rapid shifts of resources to lower-carbon technologies and incentivize research and development of carbon capture and clean energy,” said Nobel Prize-winning Economist, Robert Engle, also a member of CLIFI’s Advisory Board. “KRBN provides investors access to the carbon allowances futures market, which is vital to having the free market determine the price of CO2 pollution.”
Hitting The Goal
According to IHS Markit, as of July 29, 2020, the global price of carbon was $19.77 per ton of CO2. It is estimated that carbon allowance prices need to reach a range of $50 – $100 per ton of CO2 to achieve the emissions reductions goals of The Paris Agreement. As the Financial Times reported, over the past two years European carbon allowances within the European Union Emissions Trading System were the world’s top-performing commodity. Past performance is not a guarantee of future results.
“This is a historic fund for global ESG investors. As of today, KRBN is the first US-listed ETF to combine the largest carbon allowance markets into a single investable fund,” said Jonathan Krane, CEO of Krane Funds Advisors, LLC. “KRBN can support positive climate action by allowing investors to go long the price of carbon emissions.”
Eron Bloomgarden, Founder of CLIFI, explained, “Following COVID-19, the climate crisis is perhaps the single largest long-term challenge facing the global community. Addressing climate change through carbon emissions pricing presents an enormous opportunity to rebuild a greener, safer, and more resilient economy.”
“Across the world, there is a growing demand for investment solutions that facilitate the principles of environmental sustainability, while supporting economic development,” said Sophia Dancygier, SVP and Global Head of Indices at IHS Markit. “We are proud to collaborate with Krane Funds Advisors and CLIFI on the launch of this innovative ETF tracking our Global Carbon Index.”
For additional information on the KFA Global Carbon ETF (KRBN), contact your financial advisor or visit KFAFunds.com/KRBN.
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