As outlined in Carbon Credits – Climate 101, global policy momentum is rapidly converting carbon risk from an ESG talking point into a core driver of asset valuations. Emissions-trading systems now cover nearly 28% of global greenhouse-gas output, with EU, UK, China, and Australia strengthening caps, tightening baselines, and embedding carbon costs into trade and capital flows.
This audio brief breaks down what these developments mean for institutional investors. We examine the mechanics of compliance carbon markets, how carbon prices flow through earnings and valuations, and how Potential Carbon Liability (PCL) can quantify exposure across asset classes.
Listeners will learn why carbon credits, when treated as financial hedging instruments rather than reputational offsets, can reduce downside risk, enhance transition readiness, and improve portfolio temperature alignment. With clear explanations and practical examples, this brief equips investment committees and fiduciaries to evaluate carbon-credit strategies with confidence and precision.
