Morgan Stanley sets up carbon neutral service

LONDON (Reuters) - Morgan Stanley on Tuesday continued a foray into carbon markets, partnering with consultants DNV to advise companies that want to go carbon neutral.

Morgan Stanley said last year it would invest $3 billion in environmental markets, including the trade in permits to emit greenhouse gases, called carbon credits.

Carbon markets allow companies and individuals who want to offset their emissions to shop around for the cheapest carbon credit.

Carbon trading is split between mandatory markets for countries that have binding emissions targets, and voluntary markets for companies and individuals that have made a choice to offset their emissions and go carbon neutral.

The voluntary market is unregulated, and Morgan Stanley's move continues recent steps by investors to shore up confidence in this small but booming industry.

"It's important the voluntary market expands on a responsible basis to provide confidence these markets work," said Morgan Stanley's Olivia Hartridge.

"DNV provides the quality assurance part and Morgan Stanley takes care of the offsetting and cancellation."

Tuesday's move should boost sales from MGM International, in which Morgan Stanley took a 38 percent stake last year, and which generates carbon credits from emissions-cutting projects in developing countries.

Morgan Stanley would sell carbon credits generated from both the voluntary and mandatory carbon markets, using standards applied under the regulated market administered by the U.N.'s Kyoto Protocol, Hartridge said.