New research from Kana Earth, which has recently launched a unique UK nature carbon directory listing over 1,700 nature-based carbon offsetting projects, reveals that 43% of UK retail investors would choose a “carbon neutral” share class version of a fund if it was available to them.
These grant the investor an option to offset the carbon emissions attributable to their investments at a modestly higher management fee. Overall, 50% of these investors who would choose carbon neutral share class versions of funds, would be prepared to pay up to 10% more in fees, and 13% say they would pay up to 25% more.
When asked what impact fund managers purchasing carbon offsets to compensate for the climate impact of their funds would have on their investment decisions, 55% said it would make them more likely to invest with them.
Overall, the research found that if there were more carbon neutral funds available, one in three retail investors (33%) say they would invest more in stock market related products.
Andy Creak, CEO, and co-founder, Kana Earth said: “Not only do fund managers have a duty to be transparent about the impact their investments have on the environment, and what their plans are to reduce this, they should also see this as an opportunity to use their work here to attract investors. Our research clearly shows that if fund managers can show a real commitment to reducing the impact on the environment from their investments, this can attract significant numbers of new retail investors, many of whom are willing to pay more in charges to help achieve this.”
The UK nature carbon offsetting challenge
Carbon offsetting is critical in meeting the UK’s target to reduce carbon emissions targets by 78% by 2035 from 1990 levels, and to be carbon neutral by 2050, but the domestic market is disjointed and underdeveloped.
Between now and 2035, the country will emit a sizeable 3,340m tonnes of CO2 but the UK’s nature based carbon projects to date will absorb only 18m tonnes CO2.
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The UK carbon offsetting market’s complexity and lack of scale means it is missing out to massive carbon growth in other countries.
The Kana solution in practice
The Kana Ledger introduces an open, auditable, and scalable foundation for UK carbon offset where schemes can be created, managed, and traded in a liquid marketplace. Investors, businesses, and organisations in general will be able to search a single directory of carbon offset projects that operate under a Standard Legal Framework.
The Kana Marketplace provides distribution and scale to the carbon projects and provides a straightforward process for professional investors and UK corporates to buy carbon units across multiple projects, project types and time periods, including the ability to evidence their purchases on their own website.
The Kana Investment Platform brings in private money which allows developers to scale carbon offsetting projects. The platform will be critical in supporting asset managers’ new ‘Green’ thematic funds’ investment in future carbon units and provide avenues for insurers and other institutional investors to channel money to carbon offsetting projects.
