The carbon equivalence principle: minimising the cost to carbon net zero
A method to align incentives with sustainability in financial markets is introduced
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Chris Kenyon, Mourad Berrahoui and Andrea Macrina introduce the carbon equivalence principle (CEP), which requires carbon equivalent flows enabled, or caused, by a financial product to have equal status with cashflows (ie, term sheets). This reveals that existing financial products already have an environmental impact and so are linked to environmental, social and governance criteria, without the need for any add-on terms. The CEP is then applied to minimise the
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