If I were a young person looking for a place to start a career in finance, one niche that I might consider is ESG Consultant But Evil. A lot of big companies and investors these days are looking for ways to improve their environmental, social and governance ratings, and a lot of them will go to various sorts of ESG consultants who will tell them how to cut emissions or whatever. But some of them will go to ESG Consultants But Evil, who will sort of sneak in through the back door and say “hey I’ve got some carbon credits that fell off a truck, I’ll sell ’em to you for 20 cents on the dollar.” Lots of people want to go into ESG to save the world, so that is a competitive business. Getting into ESG for the financial engineering seems pretty interesting and possibly less crowded.
***
So if you are a carbon-sensitive company, you find a carbon-insensitive company, and you park your carbon on its balance sheet. And you pay it some fee for the service, which is presumably less than you’re saving on your sustainability bonds or whatever. It is the purest sort of financial engineering, transferring this abstract cost to the cheapest bearer of the cost.
Source: Matt Levine’s Money Stuff: Binance, FTX and Cars – Bloomberg
