South African Company Lists Carbon Credit Notes

Climate Forests Investments Jan 1, 2001

South African company, Sterling Waterford Securities today became the world's first to list a structured financial product based on Certified Emissions Reductions of GHGs on a recognized securities exchange. According to the offering brochure, the product, known as a carbon credit note, is basically a "fully underwritten obligation to deliver a carbon credit (a CDM registered Certified Emission Reduction) to the purchaser, at a date in the future (in this case three years)." The brochure further states that "Sterling Waterford in turn hedges the delivery of the Carbon Credit by contracting with individual projects in a variety of countries through established intermediaries in the emission reduction market for the delivery of an amount of CER's corresponding to the notes issued. Sterling Waterford's counterparty risk is managed through a variety of individual project insurance policies in order to ensure full delivery of the CER on the effective date." According to company literature, the Carbon Credit Note allows institutional and retail investors to participate in the market for credits generated through Kyoto's Clean Development Mechanism without having to participate directly in the sometimes onerous tasks of administering and managing these projects. For more on these notes, visit the company's web site at: Or read the attached article: