State Street Corp. launches new tool to integrate carbon-related assets into portfolios

State Street Corp. introduced a new tool that allows asset managers and other financial services institutions to integrate carbon-related assets into their portfolios.

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State Street’s Carbon Asset Servicing Solution provides a range of fund administration and depositary services, including recordkeeping, NAV calculation, reporting, and other oversight functions. By providing fund administration and depository services, State Street’s Carbon Asset Servicing Solution provides asset managers, asset owners, and other financial institutions with seamless integration of carbon assets into State Street’s core investment servicing offering. It can coordinate multiple parties’ data, including top carbon registries, exchanges, and cash agents. This allows clients to gain exposure to this growing asset class via spot and derivatives markets.

“The carbon assets market is growing dramatically—as the total traded value for compliance and voluntary credits reached a record €865 billion in 20222 and is expected to grow fifteen-fold by 2030 as new regulations in major regions push corporations globally to report on and offset their greenhouse gas emissions3,” Phil Kim, global head of ESG Product at State Street, said. “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.”

Historically, the carbon assets market has been made up of many disparate components and manual processes. This new tool helps clients navigate this complex environment and simplify the management of carbon assets. Further, it allows users to incorporate carbon assets into existing ESG and non-ESG portfolios.

“As businesses continue to move toward models that reduce greenhouse gases and emission standards increase in scale and magnitude, the price of carbon offsets are likely to increase. Investing in carbon assets can help fund the energy transition and diversify portfolios, all while offering the opportunity for investment returns,” Kim added.