Confluence Analytics has released the first three optimized carbon indices (Global, Korea, Norway), which are risk-adjusted baskets that provide exposure to highly rated ESG (Environmental, Social, Governance) companies projected to not only improve their ratings over time, but also perform well economically.
Future indices will expand to more regions, and also extend to more general UN Sustainable Development Goals, beyond addressing climate change.
These indices are computed by an EU-certified index publisher (BITA), with current and historical daily prices. Daily price feeds (which could potentially be computed hourly or more frequently if necessary) can support a perpetual synthetic tracking each index.
These synthetics could stand alone - but would also be ideally suited for inclusion in liquidity pools (e.g., Balancer), since they would never expire and need to be replaced.
Similar to the existing rDAI-based DeFi index pools (PieDao’s BCP + rDAI benefiting carbon offset projects), these synthetics would also be backed by rDAI, with a portion of the yield flowing directly to Offsetra (carbon offset projects) and other UN SDG organizations. For instance, in the case of the regional funds, the recipients could be local counterparts of Offsetra.
Minters of the synthetic would direct benefit programs related to the underlying index - and pool investors would gain broad to exposure to crypto, fiat, and commodities such as gold. The pools would likely embed other DeFi indices (e.g., DPI or BED), and would also include carbon-related tokens: either tokenized offsets already purchased, or shares of “future carbon removals”.