Hedge fund veteran proposes carbon footprint strategy for banks
To tackle climate change, alternative investment expert Andrew Hohns is pioneering a strategy to help banks slash their carbon footprint. Formerly of Mariner Investment Group and leading Newmarket Capital, Hohns is actively engaging with multiple banks to introduce this innovative approach.
Traditionally, banks have sought to manage risk by transferring credit liabilities to less-regulated private fund managers. Now, Hohns proposes leveraging this practice also to address environmental concerns.
The potential for double-digit returns entices investors, while banks stand to gain capital relief, allowing for increased business operations. Stay tuned as we delve deeper into this groundbreaking initiative and its potential implications for the financial sector.
Newmarket, an alternative asset manager based in Philadelphia, specializes in structured credit. They are now proposing a method for banks to repackage and transfer their financed emissions.
Also read: European carbon prices drop amid rapid decarbonization
These emissions are associated with greenhouse gas pollution resulting from the bank’s lending and investment activities. For instance, banks heavily investing in the fossil fuel industry would have high financed emissions.
The Partnership for Carbon Accounting Financials, the global authority on reporting financed emissions, currently lacks guidance on these securitizations.
CDP, a nonprofit organization providing advice on carbon footprint measurement and reporting for both public and private entities, stated that such transfers fail to address the broader issue of reducing emissions in absolute terms.
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