Portfolio Managers Mathew Kaleel, Andrew Kaleel and Maya Perone consider how investors can utilise carbon futures, both as an active tool to help mitigate carbon emissions and as a potential additional source of returns.

  Key takeaways:

• With demand for commodities expected to increase materially in the years ahead, measures that can help to mitigate the impact of these industries are increasingly relevant.
• A maturing market for carbon futures has been reflected in growth in demand, as well as regulatory pressure from the EU to encourage higher pricing for emissions over the next decade.
• Commodities indices are likely to incorporate the impact and mitigation of carbon emissions as a natural part of their evolution, warranting a consideration to include carbon futures as part of a broader commodities allocation.