MMC Enterprise Risk is structuring a range of derivatives designed to protect companies' balance sheets from potential fines or loss of business from CO2 emissions regulation. Partho Ghosh, senior v.p. in new products in New York, speaking at the 2nd Annual GreenTrading Summit in New York, said MMC is developing insurance type products using over-the-counter derivatives including swaps, forwards, calls, puts and collars.
The range will include derivatives that offer protection against non-delivery of carbon credits due to poor performance. Political risk and errors and omissions transactions, which give protection for professionals, such as accountants, against legal liability related to carbon credit quantification, are also in the works as is protection against environmental liabilities affecting carbon business lines by factors such as weather, explained Ghosh.
Research by Innovest Strategic Value Advisors, a U.S.-based firm specializing in environment investment analysis, found firms profits in the financial services, transportation, semiconductor, telecommunications and electronic equipment sectors can be adversely affected by CO2 emissions.
