The carbon market offers fertile ground for investors, according to the specialists at Lombard Odier.
The Swiss banking giants’ investment managers unveiled a new Global Carbon Opportunity strategy to take advantage of the increasing global drive to tackle climate change.
The alternatives strategy is part of Lombard's Circular, Lean, Inclusive and Clean (CLIC) framework and will focus on providing access to new and emerging carbon markets.
It plans to capitalise on market inefficiencies, actively mitigate against price shocks, and promote the race towards net zero and a worldwide nature-positive transition.
The asset manager’s head of climate and environmental solutions, Lorenzo Bernasconi, said: “We believe carbon markets are one of the most exciting investment opportunities of the climate transition mega-trend.
“We are seeing growing and more ambitious climate commitments which cover over 90% of global GDP, and an increasing proportion of these are legally binding.
“Carbon markets are a mission-critical policy tool for meeting government and corporate climate commitments and are trading at a deep discount to where they need to be.”
The strategy will be headed up by Callum Lee, who joined Lombard in the summer and has extensive experience in investing across compliance and voluntary carbon markets.
He will work closely with Bernasconi and chief carbon and environmental markets strategist Ruben Lubowski, and they will be backed by a research team and guided by an independent advisory group.
To stay on track to meet global net zero goals to restrict the planet’s temperature rise to 1.5C, carbon dioxide emissions will need to decrease by almost 70% by 2030.
And Lombard predicts the price of carbon will need to go up substantially to meet emission reduction commitments, which have increased ninefold by companies since 2019.
Lombard managing partner Jean-Pascal Porcherot said: “We believe carbon markets will play a central role in accelerating the global economic transition towards a more sustainable future.
“Our Global Carbon Opportunity strategy seeks to capture these market opportunities, with the objective to promote the net zero transition and generate compelling sustainability-linked alpha for investors.”
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