This specific type of fund will engage into Carbon related investments which consists generally in trading carbon emission rights.
The principle about the Carbon trading resolves around three options to reduce greenhouse gas emissions :
- Company limitation of Carbon production
- Carbon Tax per amount of Co2 produce for companies
- Creation of a Carbon market
The revenue generated are mainly used to finance green, sustainable and renewable projects development leading to a Carbon reduction.
The purchase and trading of Carbon credits futures contract on specific exchanges & indexes ( i.e. HIS , Barclays, etc) are often the main type of assets traded by such Carbon Fund.