State Street Corporation announced on May 8 it has launched the State Street Carbon Asset Servicing Solution. The new service will allow asset managers, asset owners, and other institutions for financial services across the globe to integrate CO2-related assets into their portfolios.
State Street Corporation’s goal with the new solution is to help clients navigate the complex carbon assets market and simplify the management of CO2 assets. The Carbon Asset Servicing will also allow asset managers and owners to incorporate CO2 assets into their existing ESG and non-ESG portfolios.
The Carbon Asset Servicing Solution offers different fund administration and depositary services such as recordkeeping, NAV calculation, and reporting.
The total traded value for compliance and voluntary carbon credits has reached €865 billion in 2022 and is expected to reach a fifteen-fold higher number by the end of the decade as new regulations push companies to report and offset their emissions, said Phil Kim, global head of ESG Product at State Street. “Our new carbon asset servicing solution will help clients gain access to this emerging asset class so they can directly hold carbon allowances and credits and trade them as they would other products, and ultimately look to maximize the potential of their investment portfolios using State Street’s fund administration expertise.”
With its fund administration and depository services required in the EU, the State Street asset servicing solution allows clients to integrate CO2 assets into the company’s core investment servicing offering, which is coordinating multiple parties’ data, including CO2 registries, exchanges, and cash agents. This will provide asset managers, owners and other financial institutions with exposure to the carbon asset class through spot and derivatives markets.
As companies and organizations move toward models that bring down emissions and the emissions standards grow in scale and magnitude, the price of CO2 offers is likely to increase, said Kim, adding that investing in CO2 assets will help fund the energy transition while allowing for investment returns.