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New Foresight Sustainability Series Podcast: Carbon Credit Considerations

In our latest Foresight Sustainability Series podcast, Natasha Frost, Investment Manager at Foresight is joined by Rachael Nutter, Director of Nature-Based Solutions at ClimateCare to explore some of the latest developments in carbon market trends, and to share their insights on the industry.

You can listen to the latest episode here. 

ClimateCare is a leading B-Corp which finances and delivers a wide variety of carbon reduction projects across the globe. Helping clients to turn their climate responsibilities into positive outcomes, they finance high-integrity, high-impact projects. Learn more about Rachael’s work and ClimateCare, here.

In this episode, the pair consider carbon credits; offering a distinction between voluntary carbon markets and compliance markets, how the carbon investment market functions and why it’s attractive to investors. But, taking a step back, first we consider the climate context that has given rise to initiatives such as carbon credits, to drive urgent climate action.

At the moment, climates are changing and greenhouse gas emissions are reaching dangerous levels, precipitating a potentially catastrophic sequence of events. To curb climate change, global warming needs to be limited to 1.5 degrees Celsius and a significant reduction in CO2 emission is required, as laid out in the 2015 Paris Agreement. Finding and mainstreaming effective solutions for carbon sequestration – the removal of carbon dioxide from the atmosphere – is an integral element in international efforts to achieve these targets.

So, how is the global community encouraged to mobilise its efforts towards carbon sequestration?

Emissions trading. Carbon Credits. Forestry and land-use carbon sequestration schemes. All enabled by the burgeoning carbon market. By establishing an economic incentive for action and in some cases introducing regulatory mandates, businesses can address their carbon footprints and landowners are financially supported.

Carbon Credits: a hot topic, but what are they?

Today, the voluntary carbon market is on the cusp of a boom as the private sector commits to a net-zero journey.

Alongside taking action to reduce emissions, companies can choose to take full responsibility for their remaining emissions by offsetting them. They do this by purchasing carbon credits from emissions reduction projects around the world.

Each carbon credit represents one independently verified tonne of CO2 reduced. On purchase, these credits are retired, so they cannot be used again. By effectively ‘putting a price’ on carbon, offsetting like this helps drive further reductions within companies. And demand for carbon credits provides a potential income stream for project developers looking to scale activity that sequesters atmospheric carbon dioxide and reduces emissions.

This market is evolving to become an opportunity for innovation in project finance, robust methodologies and technical capabilities. For businesses, it’s an opportunity to align their activities with a net-zero future.  And for landowners, the carbon market provides a means to generate revenue streams from their forests without requiring unsustainable felling or diversification.

Forests have become a strategic economic resource, as well as an invaluable asset to be protected for their inherent ecological value. Financing forestry and land-based projects across the globe that reduce or actively draw carbon from the atmosphere is encouraging long-term sustainable thinking. It’s an opportunity for companies to offset their carbon emissions in tandem with climate change mitigation. For many companies, the voluntary carbon market is an appealing avenue to be explored.

You can listen to Rachael and Natasha exploring in more detail, the exciting complexities of the carbon market and the investment case for carbon credits; an initiative that is rapidly becoming one of the most effective incentives for corporate decarbonization at a mass-scale.

Listen here. 

The opinions of speakers are their personal opinions and not necessarily those of the company.

Rachael Nutter, Director, ClimateCare

Natasha Frost, Investment Manager, Foresight