EU Regulations Poised to Catalyze Global Carbon Market Convergence, Says Trafigura’s Hauman

In a recent episode of SmarterMarkets, David Greely interviews Hannah Hauman, the Global Head of Carbon Trading at Trafigura.

Trafigura is a leading global commodity trading company founded in 1993 that sources, stores, transports and delivers raw materials including oil, metals and minerals. With over 12,000 employees across 150 countries, Trafigura connects producers and consumers through efficient supply chains.

Greely and Hauman talk about the significant impact of new EU regulations on corporate sustainability reporting, carbon removal certification, and green claims. 

These regulations are not only redefining what it means for companies to be “net zero” but are also driving a new era of corporate climate action.

The Carbon Market Conversation Delves into Several Highlights:

1. The EU Corporate Sustainability Reporting Directive (CSRD) is a game-changer, requiring around 49,000 companies across Europe to disclose detailed information on their emissions, business model, strategy, policies, risks, and targets in their management reports. This mandatory reporting covers scopes 1, 2, and 3, effectively putting sustainability reporting on par with financial reporting. Hannah emphasizes that this brings sustainability to the core of business decision-making and competitiveness.
2. The EU Carbon Removals and Carbon Farming (CRCF) regulation is crucial in defining what qualifies as a verified carbon removal. This regulation is pivotal in determining the “net” in net zero, as it sets the standards for what can be counted as a legitimate offset. Hannah highlights how this regulation is fostering advancements in carbon removal technologies and practices, which are essential for achieving net-zero emissions.
3. The EU Green Claims Directive adds another layer of accountability by regulating how companies can make carbon neutral and low carbon claims. Companies must back up their claims with objective measures, preventing greenwashing and ensuring transparency.

Source: Smarter Markets Podcast

Hannah also stresses the following key points:

• The convergence of these regulations is creating a new framework where corporate climate commitments and progress are not only regulated and verified but also factored into financial reporting. This represents a significant shift from purely voluntary corporate action to a regulated corporate carbon market that will increasingly converge with compliance markets over time.
• The EU is effectively exporting these regulations globally through supply chain reporting requirements and carbon border adjustments. This is catalyzing the development of domestic carbon pricing schemes in other countries, as they seek to remain competitive and avoid potential trade barriers.
• Investing in high-quality carbon removal projects that benefit from scale and strong governance is crucial. Robust verification and certification mechanisms are needed to ensure the integrity of carbon removals.

READ MORE: Why Standards Matter: The CRSI’s Role in the Carbon Removal Boom

• Corporates face challenges in developing future-proof strategies to achieve their net-zero targets. A holistic approach that encompasses emissions reductions, carbon removals, and transparent reporting is necessary.

By creating a new definition of net zero and driving regulated corporate climate action, these regulations are set to have a profound impact on the global fight against climate change. 

Find out how Trafigura is investing in carbon removal projects to help in this fight here.