KraneShares has announced in a press release the launch of its newest fund, the KraneShares Global Carbon Offset Strategy ETF (KSET) will be the first U.S.-listed ETF offering investors exposure to the voluntary carbon markets.
“KSET is a timely expansion of the KraneShares Climate Investment suite, which includes the $1.4bn KraneShares Global Carbon Strategy ETF (KRBN), to now cover both compliance and voluntary carbon markets," said Luke Oliver, KraneShares head of strategy, in the press release. “KSET’s addition to the suite gives investors holistic access to global decarbonization efforts and continues KraneShares’ leadership in the space.”
KSET is structured to offer global coverage of voluntary carbon markets by tracking carbon offset futures contracts comprised of nature-based global emissions offsets (N-GEOs) as well as global emissions offsets (GEOs) that trade via CME Group.
N-GEOs adhere to the Verified Carbon Standard, which set the requirements for projects within Agriculture, Forestry, and Other Land Use (AFOLU). The N-GEOs also are certified by the Verra Registry’s Climate Community and Biodiversity Standard, which selects projects that work towards climate change goals, support local communities and smallholders, and work to protect and conserve biodiversity. The GEOs meet Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) from VCS, the American Carbon Registry, or the Climate Action Reserve.
“KSET is the first US-listed ETF to combine the leading carbon offset futures markets into a single investable fund2,” said Jonathan Krane, chief executive officer at KraneShares, in the press release. “We are pleased to offer KSET as a key addition to our growing climate suite.”
KSET is also dynamic in a way that is similar to KRBN such that as new markets scale up to size, they will be included within the fund.
The Role of Voluntary Carbon Markets Looking Ahead
CME Group estimates that to reach global emission targets, the voluntary markets will need to scale up approximately 15x their current size. Carbon offsets are generated from activities that reduce emissions, are third-party verified, and are seen as a bridge for companies to utilize as they work to reduce emissions internally and within their supply chains.
“Voluntary Carbon markets are a vital tool in the fight against climate change and are increasingly viewed as a cornerstone in global efforts to achieve mid-century net-zero targets,” said Eron Bloomgarden, co-founder of Climate Finance Partners (CLIFI), KSET’s non-discretionary sub-advisor. “Investors can feel confident that the offset credits behind KSET are generated from emission reduction activities that have been third-party verified by leading carbon offset registries.”
KSET carries an expense ratio of 0.79%.
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