Voluntary carbon markets are no panacea. Plus: Wall Street moves to T+1 settlement cycle.

Voluntary carbon markets aren’t going to solve the climate crisis by themselves, US Treasury Secretary Janet Yellen argued yesterday. Voluntary carbon markets “have the potential to support significant decarbonization,” but that’s only if we make sure that the carbon credits on offer in the market “meet high-quality atmospheric integrity standards.”

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ICYMI: The Biden administration along with the departments of treasury, energy, and agriculture released their Voluntary Carbon Markets Joint Policy Statement and Principles (pdf) yesterday.

Not all carbon credits do what they say on the tin: Yellen called for greater “supply integrity,” pushing for carbon credits offered up on the market to “represent real emissions reduction and removals” and for there to be regulations in place to “avoid negative environmental and social impact.” In this relatively unregulated market, “we’ve seen too many examples where credits fail to meet this criteria,” Yellen added.

Yellen also called out corporate buyers: “Corporate buyers should prioritize reducing their own emissions, particularly through transition planning, adopting net-zero targets, and transparently reporting on progress,” Yellen argued in her pitch for “demand integrity,” rejecting the notion that companies can just rely on offsetting their emissions through carbon credits to fill their responsibilities to the climate.

The market also needs to be more transparent: In her third pillar for sorting out the voluntary carbon market in the US, Yellen called for market integrity, adding that the voluntary carbon market is “a fragmented market, with high search costs and low transparency.”

ALSO- Traders in the United States, Canada, and Mexico are under extra stress this morning after they moved back to T+1 stock trading after enjoying for the past century a more leisurely settlement schedule. Look for a bit of short-term stress this week as folks adapt to the shift, which is meant to reduce risk in the financial system, Bloomberg writes.

Sound smart: T+1 trading means settlement comes one business day after the trade — the buyer gets the stocks the next day, and the seller the money at the same time. The previous standard in the US for most equity transactions was T+2.

In our part of the world: Most Egyptian stocks are on a T+2 schedule, but some brokerages can trade select equities T+0, with settlement happening the same day trades are executed. Saudi’s Tadawul is T+2, as is the Dubai Financial Market.

MARKETS THIS MORNING-

Asian shares are in the red this morning even after the IMF upgraded its China growth forecast to 5%, with the Shanghai Composite being the only major benchmark in the green this morning. US and European equities futures are down slightly after yesterday’s fresh Nasdaq record.

THE CLOSING BELL-

The ADX fell 1.0% yesterday on turnover of AED 1.2 bn. The index is down 8.7% YTD.

In the green: Sudatel (+8.3%), Palms Sports (+7.5%) and Gulf Cement (+4.8%).

In the red: Al Khaleej Investment (-10.0%), Hily Holding (-9.8%) and Abu Dhabi National Takaful (-8.5%).

Over on the DFM, the index also fell 1.0% on turnover of AED 311.2 mn. Meanwhile, Nasdaq Dubai closed down 1.7%.