Marex, a global broker that puts on trades and derivatives hedges for commodity producers and consumers, has pledged to help its clients move to more sustainable commodities. The UK-based firm also aims to make its own operations carbon neutral by 2022.
In its first-ever environmental, social and governance report, published this summer, Marex said it was building on policies set in place during 2020 to focus on ESG issues and support a green transition across its core traded commodities.
The company, which has 19 offices and over 1,000 employees globally, provides clients with access to major commodity markets around the world. In 2020, it executed around 35 million transactions and cleared over 175 million contracts.
"While many of our operations are in traditional energy, metal and agriculture markets, including fossil fuels, we are expanding our ESG market focus in renewable energy, fairer agriculture and circular economy sectors," Marex said in the report.
“We want this element of our business to grow considerably over the next decade as we help more of our clients move to more sustainable commodities, whether it is carbon credits; renewable power; biofuels; lower carbon, recycled metals; or low impact agricultural products that support the environment and local communities," Marex said.
Cleaner commodities
Marex's commitment to sustainability can be seen through several recent initiatives, including negotiating renewable power purchase agreements and brokering renewable energy certificates.
In the metals market, it has forged a partnership with observation analytics and image data providers Kumi Analytics and Earth-i to help monitor pollution from smelter operations. This data then helps Marex's partners at the University of Oxford's Smith School of Enterprise and Environment understand the impact of the smelters and identify strategies to reduce emissions.
In addition, Marex is looking to make acquisitions in the recycled metals space. Last year, as part of this strategy, it acquired London-based Tangent Trading, which specialises in non-ferrous scrap metals trading with a focus on copper and aluminium markets.
“We firmly believe that the recycled metals markets are poised for growth as environmental sustainability becomes increasingly important to clients,” the Marex report states.
Marex’s other ESG initiatives include sponsorship of the Oxford Programme on the Sustainable Future of Capital-Intensive Industries. The programme aims to support the transition of capital-intensive industries to environmental sustainability, which includes the role of derivative markets and technology.
Marex's involvement in this project goes beyond providing financial backing, the company said, with involvement from 61 employees who provide expertise and data across commodity, environmental and derivatives markets.
Marex is also supporting the project by processing large datasets with big-data analysis and said that its research and enterprise joint ventures will support "concrete, evidence-based recommendations to improve management practice and policymaking in global commodity markets."
"I am impressed with the creativity and ambition our businesses have brought to innovating ESG products for our clients. While there are many examples to choose from, the Mangrove Swamp initiative perhaps best captures how we have approached this" – Ian Lowitt, CEO of Marex
Carbon sequestration
Marex is also involved in carbon sequestration, the term used for projects that remove carbon from the atmosphere. For example, the firm is helping fund The Global Mangrove Trust, a Singapore-based not-for-profit involved in the conservation and reforestation of mangrove forests.
Trees are highly efficient at carbon sequestration, converting carbon dioxide into plant matter and holding this material for the life of the tree. Mangroves absorb more carbon than any other tree, sequestering it at a rate two to four times greater than mature tropical forests.
"Climate change is one of the fundamental challenges for humanity to solve in the next decade," Marex said. "While energy reductions and renewables are key first steps, some of these reductions need to be generated from carbon offsetting and sequestration. However, current carbon offset schemes can be slow, with onerous verification processes and prohibitively high costs."
Working with The Global Mangrove Trust in Indonesia as well as Kumi Analytics and The Smith School of Enterprise and Environment, Marex is developing a sequestration methodology that relies on remote verification and machine learning to support a transparent and robust carbon market.
The verification data will be collected by Kumi Analytics via satellite. Marex will hand data to The Smith School, which will host and validate it through a separate commercial entity – Oxford Carbon Services – and use the data for research. Marex is financially supporting The Global Mangrove Trust for two years to bridge the gap between setting up carbon sequestration projects and being ready to sell the carbon offsets.
"I am impressed with the creativity and ambition our businesses have brought to innovating ESG products for our clients. While there are many examples to choose from, the Mangrove Swamp initiative perhaps best captures how we have approached this," said Ian Lowitt, CEO of Marex. "This is part of our ambition to become carbon neutral by 2022," he added.
