Gro and Kepos Capital Partner to Launch the Gro-Kepos Carbon Barometer™

According to the Intergovernmental Panel on Climate Change’s (IPCC) synthesis report released in mid-March, keeping global warming to 1.5°C is achievable with a quantum leap in climate action. This leap is only made possible through a global effort to enact policies and measures that will lead to deep and sustained reductions in greenhouse gas emissions. 

To better analyze carbon emissions policies at the country level, along with the cost of compliance implied by each country’s CO₂ reduction policies, Gro and Kepos Capital have partnered to launch the Gro-Kepos Carbon Barometer™. 

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The Carbon Barometer™ tracks seven major CO₂ emissions reduction policy categories for more than 25 countries which make up over 83% of global emissions, using both public databases and government sources. It normalizes the policies into a “Carbon Barometer Price™” – the amount, in US dollars, that emitters must pay on average per ton of CO₂ emissions as an incentive to develop and leverage low-carbon drivers of economic growth. This makes it simple to analyze the financial incentive for each country to comply with policies designed to reduce carbon emissions.

The “carbon barometer” concept was originally developed by world-renowned financial and quantitative investing experts Bob Litterman and Mark Carhart of Kepos Capital in consultation with climate economists and carbon policy experts. That concept has been operationalized by bringing together Gro’s and Kepos’s combined domain expertise in climate and economic research, and by leveraging Gro’s demonstrated success in the automated ingestion and organization of complex, global datasets. Throughout its development and on an on-going basis, this joint Gro-Kepos effort is supported by carbon policy thought leaders from academia, environmental non-profits, and the private sector who provide advice and feedback, serving as the Carbon Barometer™ Advisory Board.

Operationally, the Carbon Barometer™ will enable high-emitting countries committed to climate action to identify and understand CO₂ policy actions that have been successful elsewhere and then, in implementing their own policies, to consistently measure progress against global benchmarks. And because the Carbon Barometer Price™ is provided globally, the metric supports the creation and monitoring of new, Paris-aligned sustainability investments in typically lower-emitting developing countries.

By providing a standardized metric for measuring countries’ CO₂ emission reduction policy progress, the Carbon Barometer™ can be used to study which policies are the most effective at reducing a country’s CO₂ emissions. For example, if the Carbon Barometer Price™ is low versus other countries or the global price, it indicates that a government is doing comparatively little to reduce its emissions via policy action. As the Carbon Barometer’s™ time series goes back to 2008, users can also use it to track the evolution of policy over time, signaling how serious each country has become about enacting carbon policies. 

Additionally, the Carbon Barometer™ will serve as an important new benchmark for financial markets, enabling issuers to measure performance of sustainability-linked instruments and lenders to invest in line with sustainability goals for their portfolios. With almost 15 years of high-quality, back-testable data, this automated metric can be leveraged by asset managers as both a signal for research and for investment analytics.

In less than eight months, world leaders will be gathering at COP28 in the UAE to launch the process for preparing the next cycle of nationally determined contributions, due in 2025, making a clearer view into how much countries are doing to reduce CO₂ emissions even more critical. These national climate plans aimed at reducing emissions and adapting to the impacts of climate change will need to reflect the accelerated climate action that the world needs during this decade and the next. 

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For any questions on the Carbon Barometer™ or to learn more about Gro’s data and analytics, contact us at support@gro-intelligence.com.

About Gro’s Partnership with Kepos Capital 

Gro’s partnership with Kepos Capital represents a unique opportunity to advance efforts to reduce CO₂ emissions and advance climate financing. Under the terms of this agreement, Gro was provided with the underlying data that supported Kepos’ earlier version of the Carbon Barometer™. 

Kepos Capital was founded in 2010 by Mark Carhart, Giorgio De Santis, and Bob Litterman, the co-developer of the Black-Litterman Global Asset Allocation Model, a key tool in modern investment management. Litterman also chairs the Gro-Kepos Carbon Barometer’s™ Advisory Board. 

The Gro-Kepos Carbon Barometer™ Advisory Board, which was created to facilitate research in the climate-policy and climate financing space, does not participate in any aspect of Kepos Capital LP investing, Kepos Capital LP, or Gro Intelligence operations, and it in no way endorses any Gro Intelligence or Kepos Capital LP products.