Sparkchange

Carbon investing made easy

Spark Change is a technology platform that simplifies investing in carbon instruments.

Simplified Access

Designed to remove friction

Spark Change has developed a technology platform and financial product ecosystem for qualified institutional and individual investors seeking exposure to carbon allowances. Our mission is to simplify access to carbon markets and prices around the world, as more investors with access can create a bigger environmental impact.

Securities, issued via the Spark Change platform, provide investors direct exposure to the value of physical carbon allowances – without the complex and costly set-up requirements needed to access the market directly and take delivery of physical carbon allowances.

Carbon emissions markets: The basics

Incentivizing CO2 reduction

Regional legislators regulate carbon emissions via market-driven initiatives, which sets a carbon price. Spark Change believes carbon regulation may tighten as the world struggles to hit its climate goals, putting upward pressure on the carbon price.

1 permit = 1 tonne of CO2

In order to pollute, emitters must buy Carbon Emission Allowances from regulators – each allowance covers 1 tonne of CO2

Supply of allowances is reduced annually

Legislation automatically reduces the supply of allowances each year, decreasing emissions over time and creating upward price pressure

Increases pressure to reduce pollution

A rising carbon price incentivizes emitters to switch to greener solutions and reduce their greenhouse gas emissions

Why carbon is of interest today

As of June 2020, the price of European and California carbon allowances was $30.301 and $16.822 per tonne of CO2, respectively. It is estimated that carbon allowance prices need to reach a range of $50 – $100 per tonne of CO2 to achieve the emissions reductions goals of The Paris Agreement.3

The problem with today’s solutions

Current challenges for investors

Investing directly in carbon emissions requires complex market infrastructure and operational capabilities. As a result, investors have typically used a rolling futures strategy, which has drawbacks:

Futures create performance drag

A rolling futures strategy (i) incurs the cost of contango annually (ii) can lead to slippage due to negative interest rates and (iii) is operationally intensive.

Commodity futures are difficult for some investors to hold

Many investors cannot hold futures, especially physically-delivering contracts like carbon allowances.

Futures lessen environmental impact

Only by buying and withholding a physical carbon allowance, rather than buying a future, do you ensure the allowance’s use is prevented.

Allowances

Rolled Futures Spark Offsets
Investable security
Holds physical inventory
Net environmental impact
Avoids contango

Use cases

What can Spark Change products be used for?

Alternative Investing

Environmental Impact

Hedging Carbon Exposure

Qualifying for ESG standards

Green financial products issued on the Spark Change platform are designed for institutional and individual investors. The platform’s core products provide direct exposure to the value of physical carbon emission allowances.

As a standalone investment

Spark Change believes carbon regulation may tighten as the world struggles to hit its goals, putting upward pressure on the carbon price.

Blended as part of a portfolio

Integrate carbon exposure into equity and fixed income products in order to manage risk, deliver ESG goals/metrics and accelerate the transition to a low carbon economy.

Estimation of how example investor profiles may leverage Spark4

About us

World-class leadership team

Our leadership team has 100+ years combined experience across ESG, ETFs and algorithmic trading and deep domain expertise in designing, executing and monetizing low carbon investment strategies.

Our team

15


Team members

3


Offices: London, Seattle and Boston

100+


Years experience across financial technology and sustainability

1BN+


Our mission is to remove 1 billion tonnes of emissions

Benefits of our approach

How Spark Change can aid investment strategies

As a standalone investment

Capture investment returns

European emission allowances are one of the best performing commodities over the last 5 years5 supported by regulatory tailwinds

Improve impact

Create more direct, tangible environmental impact than traditional green investments, by withholding emitters’ permits

Blended as part of a portfolio

Hedge risk

Instead of divesting securities, neutralize a portfolio’s exposure to tightening climate regulation and a rising carbon price

Qualify for ESG standards

Combine with equity/fixed income structures to qualify for ESG standards such as CTB/PAB benchmarks

1 Data from ICIS as of 30th June 2020
2 High-Level Commission on carbon prices
3 World Bank State and Trends of Carbon Pricing 2019
4 Based off Spark Change internal estimation
5 “After Topping Commodity Gains in 2018, Carbon Set to Surge Again” Bloomberg, December 27, 2018

Investors and partners