Barclays Plc has decided to re-enter the carbon trading space after retreating from it just over a decade ago, Bloomberg reported earlier today.
The move has been regarded as a ‘sea change’, given how the London-based bank had thus far always been unwilling to have anything to do with physical commodities.
Experts note the rising interest in carbon trading among commodities desks is a clear sign of the changing times for financial markets.
One of the main drivers of these changes is the increasingly strict climate laws and regulations that require companies to disclose their emissions and actively try to reduce them.
Offsetting has also become a large part of companies’ sustainability strategies and pathways to net zero, which is causing many large corporations to turn to carbon credits as a means of mitigating whatever emissions they cannot yet effectively reduce within their own operations or supply chains.
“Carbon markets and high-quality credits are increasingly being seen as one of the most effective ways to accelerate the net zero transition,” said Camille Petre, chief financial officer at BeZero Carbon and co-founder of the Women in Carbon network. “But carbon credits are instruments of risk, and carbon credit quality is a spectrum.”
The risks are becoming increasingly difficult for businesses to assess, which is where the finance industry can come in.
Particularly stepping in between corporates and the unregulated voluntary market is what provides a particularly lucrative opportunity for financial institutions.