Krane Funds Advisors has announced that the KraneShares Global Carbon Offset Strategy ETF (Ticker: KSET) now tracks the S&P GSCI Global Voluntary Carbon Liquidity Weighted Index, which it describes as the first-to-market benchmark for the current performance of global voluntary carbon futures markets.
The firm writes that KSET, listed on the New York Stock Exchange on April 27 this year, is the first US-Listed ETF to track the global Voluntary Carbon Markets (VCM), which is complementary to the global carbon allowance markets tracked by KraneShares’ flagship global carbon ETF (KRBN).
KSET’s new index tracks carbon offset futures contracts. These contracts include nature-based global emission offsets (N-GEOs) and global emission offsets (GEOs), which trade through the CME Group, the world’s largest financial derivatives exchange. Due to the evolving nature of carbon markets, an important characteristic of the index is the flexibility to reweight, add or remove constituents at regular intervals to ensure that it can adapt over time.
“Previously, KraneShares and IHS Markit, which is now part of S&P Global, made history when we launched the KraneShares Global Carbon Strategy ETF (KRBN). KRBN uses the IHS Markit Global Carbon Index as its benchmark,” says Luke Oliver, Managing Director and Head of Strategy at KraneShares. “We are pleased to deepen our relationship with S&P Global and leverage their extensive history as an index provider and their strong research capabilities to capture the complex and ever-changing voluntary carbon market through KSET’s new index.”
“We’re excited that KraneShares has selected our S&P GSCI Global Voluntary Carbon Liquidity Weighted Index as the underlying benchmark for its exchange-traded fund,” says Fiona Boal, Head of Commodities and Real Assets at S&P Dow Jones Indices (S&P DJI). “This new voluntary carbon futures index is a key addition to S&P DJI’s continued efforts to grow its suite of new and innovative thematic alternative indices for the commodities space.”
“The voluntary carbon market serves as a powerful tool in the global fight to combat climate change and an important way to accelerate the transition to a decarbonised world,” says Eron Bloomgarden, co-founder of Climate Finance Partners (CLIFI) KSET’s non-discretionary sub-advisor. “At the same time, it provides price discovery, a potential hedge for climate risk exposure, and diversification* from traditional asset classes.”
The S&P GSCI Global Voluntary Carbon Liquidity Weighted Index was launched on June 22, 2022.