And, no, we’re not talking about buying stock in Tesla, Rivian, or the latest electric vehicle darling.
A carbon credit, according to an article on Investopedia, is a permit issued by a national or international governmental body that entitles a business to emit a set amount of CO2.
This system is known as a cap-and-trade program, and it produces a double economic incentive to emit less carbon.
Because these ETFs are a speculative asset, investors would be making a bit of a prediction by going long on one of these ETFs.
However, there may be a spot for a carbon ETF in your portfolio, even if you aren’t passionate about the topic yourself.