Singapore Hedge Fund to Offset Carbon From Commodity Shipments

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A Singapore hedge fund that specializes in slow and steady returns from financing commodity trades will begin offsetting carbon emissions from its shipments.

Tradeflow Capital Management Pte will purchase carbon offsets through partners such as Carbonfund.org Foundation and AirCarbon Exchange, the company said in a press release. It’s starting by tackling shipping emissions, with plans to expand to potentially cover millions of tons of commodity life-cycle emissions.

While the fund is relatively small in the world of global commodities trade, its move underscores the pressure money managers are under to meet sustainability goals increasingly demanded by investors.

The firm, which had about $30 million in assets under management earlier this year, buys commodities, transports them and then sells them, working with smaller companies that can’t easily obtain bank financing. The company is averaging about 60 transactions a month and shipping volumes have doubled this year, Chief Executive Officer Tom James said by email.

For shipping, emissions are relatively easy to calculate and totaled about 15,000 tons this year, he said. The fund is working with researchers to be able to automate the calculation of the total emissions footprint of the commodities themselves, which could total into the millions of tons, he said. It is also exploring a project to sponsor mangrove swamps in Asia and Africa to directly create carbon offsets.

©2020 Bloomberg L.P.

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