Saudi Arabia, the world’s largest oil producer, plans on going net-zero carbon emissions by 2060.
Earlier in March, Saudi Arabia announced The Saudi Green Initiative. They pledged to reduce their global carbon emission contribution by more than 4 percent. The Saudi’s also stated that they will generate 50% of their energy from renewables by 2030 while planting billions of trees.
While these steps are admirable, the Saudis have yet to provide the world with a net-zero goal, which is why critics feel their “green” announcements are too little too late.
Many believe that the Saudis have been less open and slower to move forward with their plans due to their economy’s dependence on oil. That being said, they haven’t exactly done nothing.
Saudi Arabia opened their first renewable energy plant in April and its first wind farm in August. They have plans to develop a $5 billion hydrogen plant and incorporate green energy into their infrastructure. The Saudi’s are even focused on building a futuristic city called NEOM. The city plans to use smart city technologies for sustainable living.
Saudi officials have said that the world will need access to their oil supply for decades – even with green fuels being developed. As such, they feel they are moving as they should.
As the world takes steps to stop temperatures from rising above 1.5 degrees Celsius (per the Paris Agreement), major polluters, like Saudi Arabia, have a significant role to play.
The startup, Pledge, raised $4.5 million to develop a carbon measurement and removal API. Pledge claims that by integrating the Pledge API, businesses will be able to measure and mitigate their shipments, rides, deliveries, or journeys to achieve carbon neutrality.
Its platform will allow businesses to acquire a fraction of a carbon credit (akin to ordinary investors purchasing a fraction of a stock). This also provides access to balanced portfolios comprising various methodologies and geographies (similar to an ETF).
Pledge aims to provide clients with options for adding offsets to their transactions in industries such as freight forwarding, ride-hailing, travel, and last-mile delivery.
With the impending climate disaster, many businesses want to do their part. However, asking customers to “offset the CO2 emission of this delivery” is a big step. There is relatively little openness when it comes to carbon offsets.
According to Pledge, its emissions calculations will adhere to global standards such as the GHG protocol, the GLEC framework, and the ICAO methodology, as well as ISO standards.
Furthermore, smaller businesses seek to acquire high-quality carbon credits while calculating their impact at the product, service, and transactional levels, and be able to purchase a fraction of a carbon credit.
The carbon credit industry was valued at $300 million in 2018. It is now at $100 billion, with some experts expecting it to top $22 trillion by 2050. Many believe carbon offset growth is due to COP26 and Paris Agreement deadlines.
As companies and governments look to find ways to address climate change, what Pledge is doing can help make the carbon market more accessible. And when programs – such as carbon credits – become more accessible, we can all be a part of the solution.
The COP 26 conference in Glasgow will need to solve two dilemmas at once: offsets might just be the answer.
What do you do when you’ve got an energy crisis that requires dramatic increases in production, but a climate crisis forcing you to decrease production to reduce CO2 emissions?
For the various world leaders meeting in Glasgow in November, that’s not a rhetorical question.
Europe faces an acute energy shortage, with comparisons being drawn to the 1970s oil crisis. The parallels are more than skin-deep; there’s a strong geopolitical element to today’s crisis, just like back then.
That was then and this is now.
But direct comparisons are rarely cut-and-dried, and Europe’s energy crisis owes much to a combination of factors that include a growing but untested renewable energy sector and rising carbon prices.
Take the UK as one example.
UK natural gas storage is a pitiful 4%, giving virtually no reserves in case of a shortfall. With most of Europe’s natural gas supply coming from Russia, that opens a geopolitical weakness.
Not to worry, though, because the UK is a bit different – most of their supply comes from Norway, not Russia. Besides, growth in renewable energy investment, including offshore wind farms in the North Sea, would more than cover any gap.
But in September and October, the UK was hit with a perfect (non)storm.
Geopolitical concerns from Russia led to a constriction of gas prices in the EU. That drove up prices across the board – even the supply from Norway.
Renewables couldn’t cover the gap; September was unusually warm and still, and wind-generated energy dipped. A dry summer also hit the UK’s hydro power. Renewable prices remained mostly steady, but there was no way to ramp up supply when the gas crisis hit.
At the same time, demand surged. Industries side-lined by the pandemic cranked back up in 2021, causing a spike in demand. Ongoing logistics and supply chain issues drove demand further.
Behind it all lies a drumbeat of ever-growing populations and increasing urbanization, factors that together are expected to push electricity demand upwards steadily for the next few decades.
So what’s the takeaway?
Shun renewables because of the inelasticity of supply?
Double-down on domestic fossil fuel production?
Turn to increasingly desperate methods of reducing demand, at the risk of severe economic damage?
None of those options hold much long-term potential. Offsets just might.
Carbon offsets acknowledge the need for current production, even (in drastic circumstances) from admittedly dirty sources like coal.
And yes, the crisis forced the UK to fire up one of its coal-powered plants, despite a promise to phase out coal-fired energy production by 2024.
With offsets, the damage of high-emissions energy sources can be at least partially mitigated. There’s a longer time scale involved, as most offsets rely on natural forms of carbon capture that can take decades to mature. But in the short-term, it offers a chance to keep the LNG flowing while at least starting to address the climate issue.
Companies are jumping on board; over 30 offset deals have been signed since 2019 with leading providers such as BP and Gazprom.
But back in reality, everyone realizes the need to continue fossil fuel production and energy production based on hydrocarbons. The energy crisis is simply the most pressing example.
Even given that crisis, none of the world leaders’ meetings in Glasgow are proposing an energy limit on the forthcoming COP 26 summit. That demand, at least, needs to be met.
Given that reality, offsets – while admittedly not perfect – provide a way to address long-term concerns in the here-and-now.
The gas must flow (for the time being). So too must the offsets.
In the race against climate change, companies and governments are searching for ways to reduce their carbon emissions. Yes, we need advances in technology so that there is no carbon, to begin with, but many industries are not quite there yet.
This is why the carbon offset industry is so important – and Karen Fang, Bank of America’s Head of Global Sustainable Finance, agrees.
According to Fang, carbon offsets are necessary for combating climate change, even though they may be imperfect. Because of this, the industry needs to grow fast since the demand is there.
The carbon offset industry is on track to reach $100 billion by 2030 (up from $300 million in 2018). Some believe it could even reach $22 trillion by 2050. The carbon marketplace has grown in popularity due to its ability to improve the environment and support socio-economic growth – a win for ESG initiatives.
Although the industry has great potential, critics have their concerns – many of which Fang agrees with. This is especially true when it comes to the lack of a standardized, global verification process.
Right now, the primary registries for carbon offsets are all non-profit, non-governmental organizations.
“I almost hope, maybe this is naïve, that they [leaders] could all come together with a unified form of standard recommendation,” Fang said. “Because the world needs it [offsets] and needs a lot of it and needs a lot of it really, really, fast.”
Put ever so simply, Fang said, “Planting a tree is better than not planting a tree. I don’t think anyone can argue with that, from a carbon perspective.” In other words, while the carbon market may not be perfect, it’s doing a lot of good.
With COP26 approaching, leaders have the opportunity to address critic concerns by placing their support behind a global standard. If they do, it will only help drive quality projects and strengthen the carbon offset industry.
The COP26 is scheduled to take place in Glasgow, Scotland, October 31 – November 12.
Right now, the voluntary carbon markets are still in their early stages.
Having surpassed $10.8 billion USD in transaction value in 2023, there’s tremendous amounts of room for growth – as well as plenty of catalysts.
The Taskforce on Scaling Voluntary Carbon Markets forecasts that in order to meet the climate change targets set forth in the Paris Agreement, the voluntary carbon markets will need to grow 15-fold by 2030 and 100-fold by 2050, from 2020 levels.
Those are the kind of returns that make any investor sit up and take notice.
But the question then becomes: what’s the best way for retail investors to capitalize on this expected growth in the global carbon markets?
As of the time of writing, there still isn’t a very well-developed retail market for the voluntary carbon markets. Corporations and institutional investors have a better selection, as they can negotiate directly with carbon offset projects and the like.
Still, there are a couple ways to get your feet wet in the carbon markets if you’re an individual investor. We’ll go through some examples.
One of the simplest and lowest-risk ways to invest in the carbon markets is through a fund. As many such funds have diversified holdings, this helps to reduce the risk of investing in one, although in exchange, your potential return will also be lower.
There is a wide range of levels of exposure to consider here. The lowest possible level of exposure to the carbon markets would be to invest in funds that are considered “low-carbon”.
These are funds whose mandates are not restricted purely to carbon-credit-related companies, but include any business whose operations are considered to have a low impact on the environment, or companies who have made voluntary emissions reductions or even net zero pledges.
In funds like these, you won’t find any holdings from oil & gas, coal, steel, or any other such “dirty” industries unless they’ve already made net-zero commitments. Examples of such funds include the iShares MSCI ACWI Low Carbon Target ETF (CRBN), or BlackRock’s U.S. Carbon Transition Readiness ETF (LCTU).
Still, that leaves plenty of options on the table – for instance, many such funds often include the FAANGM companies in their holdings, as they are investment industry darlings with relatively clean operations thanks to their business as tech companies. And even some companies with dirty operations, like Exxon Mobil or ConocoPhillips, can make the cut due to their net-zero commitments.
Some other low-carbon ETFs focus on so-called “green bonds” instead, which are fixed-income debt instruments specifically issued by companies and governments looking to finance sustainable, environmentally friendly projects. A municipal government, for instance, might issue a green bond to help fund the development of a public transit system. An example of a fund focusing on green bonds would be the iShares Global Green Bond ETF (BGRN).
While such low-carbon funds may not seem like a very direct way of investing in the carbon markets, removing any exposure to dirty companies from your portfolio is a great way to start making green investments. After all, it is very likely that as the global push for net-zero goes more and more mainstream, dirty companies will be first on the chopping block for investors and institutions alike.
Think of it like paying off your debts before investing your money. By first eliminating the dirty companies and funds that will drag your portfolio down in the future, you will be able to put your money to better use elsewhere.
Fossil Free Funds tool.
There already exist tools such as Fossil Free Fund to help you identify mutual funds and ETFs that have minimized their exposure to dirty investments. Choosing these low-carbon funds over competing products that lack such restrictions would be an easy change to make as a start to your carbon portfolio.
Moving up from funds that simply do not invest in dirty companies, the next level of exposure would be funds that only invest in green, carbon-market-related companies. We’ll call these “green funds.”
Green funds invest in industries like electric vehicle manufacturers, renewable energy suppliers, green tech companies, and so on. Examples of such funds include the iShares Global Clean Energy ETF (ICLN), or the First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN).
In such funds, you’d be able to find companies like Tesla (TSLA) or Brookfield Renewable Partners (BEP).
Since the carbon and clean energy markets still aren’t fully developed yet, there aren’t all that many companies in the space. As a result, there are fewer green funds than there are low-carbon funds.
However, these green funds have significantly more exposure to the carbon markets than the low-carbon funds that simply do not have any dirty companies in their holdings.
That’s because most, if not all, of the companies that green funds invest in are already net zero, or even net negative. TSLA, for example, earned around $1.79 billion in revenue from carbon credit sales in California’s compliance market in 2023.
In other word, these companies can already generate carbon credits, and would most strongly benefit from the explosive growth that needs to happen in the voluntary carbon markets to stay on track with the Paris Agreement’s targets.
The final category of funds would be those whose primary holdings consist of carbon credit futures. These funds are the riskiest, as they aren’t diversified at all, but they also directly track the performance of their underlying carbon credits nearly one-to-one.
Investing in such funds would be analogous to investing in a fund that only holds physical gold, rather than a fund that invests in gold producers and explorers. Though the performance of such a fund would most closely match the performance of carbon credits themselves, that doesn’t necessarily mean they would provide the best return, either, despite their riskiness.
This type of fund is best left to veteran investors who have a specific goal in mind when adding such a fund product to their investment portfolio.
You can find all listed funds of each type described above on our Stocks Watchlist.
2. Green Companies
Telsa is one of the most well-known green company out there.
For sophisticated investors with a narrower scope in mind, green companies are another great way to invest in the carbon credit market.
Many green companies, such as TSLA, are net negative carbon emitters. As a result, they’re already creating carbon credits that can be sold in their respective compliance markets, if applicable.
However, since there are far more jurisdictions without compliance markets than those with, there are lots of green companies who haven’t been able to fully tap into the carbon credit market yet. A unified global carbon credit marketplace, such as one put in place through the ratification of Article 6 of the Paris Agreement, would go a long way towards solving that.
Electric vehicle manufacturers, renewable energy companies, biofuel companies, battery tech companies, and waste recovery companies are just some of the examples of the many different types of green companies that could potentially leverage the sale of carbon credits as part of their revenue streams down the road, on top of their regular business operations.
There are already many publicly listed green companies that could make for potential investment opportunities, such as Tesla competitor NIO Inc. (NIO), or solar energy equipment and services provider First Solar (FSLR). However, since the green tech craze is starting to take off, there are also many private companies looking to raise capital right now.
While investing in private companies can be much riskier than investing in publicly traded companies since there’s no guarantee you’ll be able to exit your position easily, they tend to offer much more attractive pricing and terms for that exact same reason. If you can get access to private deals through your broker or other means, they can be worth considering if they fit your risk profile.
3. Carbon Credits Futures
European Union aims to be climate neutral by 2050. Carbon Credits are a key part of their strategy.
For the most direct exposure to the voluntary carbon markets, purchasing carbon credit futures, such as European Union Allowance futures on the ICE, is a viable option as a retail investor.
However, this method can be quite complicated and risky compared to other forms of green investing and is beyond the scope of this article.
Carbon offset projects would theoretically offer the next best exposure to carbon credits. Unfortunately, at the moment it’s quite difficult for retail investors to directly invest in carbon offset projects, as they tend to raise capital privately.
That said, there are companies that focus on investing in carbon offset projects, making the generation and sale of carbon credits the primary component of their business model. These companies have excellent exposure to the growth of carbon credits and the voluntary carbon markets. Carbon Streaming Corporation (NETZ.NEO) is one such example.
4. Company Watchlist
The full list with ticker and prices can be found here. A summary of the companies are shown below.
CRBN
The iShares MSCI ACWI Low Carbon Target ETF tracks the index of the same name, and contains holdings comprised of over 1,000 low-carbon companies around the world. Top holdings are heavily weighted towards U.S. stocks and include Apple, Microsoft, and Amazon. While it’s low risk thanks to its broad diversification, it provides less exposure to the growth of the carbon markets in return. Similar to, but much larger than, LOWC which is managed by a different firm.
GRN
The iPath Series B Carbon ETN tracks the Barclays Global Carbon II TR USD Index, which is almost entirely comprised of EU ETS carbon credit futures. As a result, this ETN will closely follow the price performance of EU ETS carbon credits, providing good exposure to the growth of the carbon markets, though with greater risk and volatility.
KCCA
The KraneShares California Carbon Allowance ETF provides direct exposure to the California Carbon Allowances that trade under California’s cap-and-trade program. As a result, this ETF will closely follow the price performance of California’s CCA carbon credits, providing good exposure to the growth of the carbon markets, though with greater risk and volatility.
KEUA
The KraneShares European Carbon Allowance ETF provides direct exposure to the European Union Allowances that trade under the EU’s Emissions Trading Scheme. As a result, this ETF will closely follow the price performance of EU ETS carbon credits, providing good exposure to the growth of the carbon markets, though with greater risk and volatility.
KRBN
The KraneShares Global Carbon ETF provides exposure to the EU ETS carbon credits, California’s CCA carbon credits, and the RGGI carbon credits of the northeastern United States. Though current portfolio weighting heavily favours European Union Allowances, this ETF does cover all three major compliance markets, providing good exposure to the growth of the carbon markets with less risk and volatility than the other carbon credit futures ETFs.
LCTU
The BlackRock U.S. Carbon Transition Readiness ETF is comprised of mid-to-large-cap U.S. companies that are considered to be better positioned to benefit from the transition to a low-carbon economy. With over 300 holdings in its portfolio, this ETF won’t provide as much direct exposure to the growth of the carbon markets but will provide more long-term stability thanks to its diversified holdings.
LCTD
The BlackRock World ex U.S. Carbon Transition Readiness ETF is comprised of mid-to-large-cap global companies that are considered to be better positioned to benefit from the transition to a low-carbon economy. With over 300 holdings in its portfolio, this ETF won’t provide as much direct exposure to the growth of the carbon markets but will provide more long-term stability thanks to its diversified holdings.
LOWC
The SPDR MSCI ACWI Low Carbon Target ETF tracks the index of the same name, and contains holdings comprised of over 1,000 low-carbon companies around the world. Top holdings are heavily weighted towards U.S. stocks and include Apple, Microsoft, and Amazon. While it’s low risk thanks to its broad diversification, it provides less exposure to the growth of the carbon markets in return. Similar to, but much smaller than, CRBN which is managed by a different firm.
NETZ.NEO
Carbon Streaming Corporation is a royalty-type company focused on growing a portfolio of high-quality carbon credit streams. By providing capital to fund carbon credit projects, NETZ earns the right to receive all or a fixed portion of all future carbon credits generated by said projects. Revenue can then be derived from the sale of these carbon credits. Though a higher risk investment, NETZ provides excellent exposure to the growth of the carbon markets.
SMOG
The VanEck Low Carbon Energy ETF is a green fund that tracks the MVIS Global Low Carbon Energy Index, and its holdings are comprised of clean energy companies. These components include renewable energy companies, electric vehicle companies, battery tech companies, and so on. With just over 70 holdings, this ETF is less diversified than most low-carbon funds but provides more targeted exposure to the growth of the carbon markets in return.
SPYX
The SPDR S&P 500 Fossil Fuel Reserves Free ETF tracks the S&P 500 Index but doesn’t hold any of the companies in the S&P 500 that own fossil fuel reserves. That’s just 11 companies out of 500, so this ETF will still closely mimic the performance of the S&P 500 Index, but with a lower carbon footprint. This ETF would serve as an excellent replacement in any portfolio that already holds a fund or other product linked to the S&P 500.
BGRN
The iShares Global Green Bond ETF follows an index comprised of investment-grade green bonds issued to fund environmental projects around the world. With over 600 holdings primarily comprised of sovereign and other government-related debt, BGRN can add green exposure to fixed income portfolios.
GRNB
The VanEck Green Bond ETF tracks the S&P Green Bond U.S. Dollar Select Index, which is comprised of U.S. dollar-denominated bonds issued to fund environmental projects around the world. With nearly 300 holdings largely comprised of sovereign and other government-related debt, GRNB can add green exposure to fixed income portfolios.
The maritime industry accounts for 90% of global trade and 3% of global emissions. Now, through a pledge by The Aspen Institute, nine major companies have pledged to reach zero-carbon shipping by 2040.
The Aspen Institute expects other retailers and manufacturers that use maritime shipping to sign up. If not, maritime emissions could reach 10% of global emissions by 2050.
Dan Porterfield, President of The Aspen Institute – the non-governmental organization that has coordinated these zero-carbon pledges — would like to see all those involved in the supply chain, as well as the government, join in.
“Maritime shipping, like all sectors of the global economy, needs to decarbonize rapidly if we are to solve the climate crisis, and multinational companies will be key actors in catalyzing a clean energy transition.”
Current companies include Amazon, Brooks Running, Frog Bikes, Ikea, Inditex, Michelin, Patagonia, Tchibo, and Unilever.
The push for zero-carbon shipping.
The Paris Agreement and upcoming COP26 summit have certainly lit a fire under companies, as consumers, investors, and governments alike, recognize the need to go green.
In fact, many feel the Paris Agreement and COP26 are the reason behind the carbon credit boom taking place.
Companies that signed the pledge are thrilled to do so, even though some, such as Amazon, have been criticized for not doing more.
Michelle Grose, Head of Logistics at Unilever, said, “By signaling our combined commitment to zero-emission shipping, we are confident that we will accelerate the transition at the pace and the scale that is needed.”
The cost of zero-carbon shipping.
It is estimated that the cost for the shipping industry to be net-zero is $2 trillion. This is mainly because of how much it costs to make cleaner fuels (and newer ships).
There are shipping companies that are making the transition. Still, at almost $175 million per ship, change can’t happen overnight.
However, as companies move forward with cleaner shipping solutions, develop new technologies, and utilize carbon credits to offset emissions, net-zero goals are attainable. This is especially true when companies – such as these nine — join to meet them.
Boreal Carbon Corp., a Canadian private company raises $4 million seed round from strategic investors.
Key backers are Canadian billionaire David Thomson’s private company (Osmington), Senvest Capital Inc (owner of the Toronto Star), and NordStar Capital.
The chairman of the company is Paul Rivett, former President of $14 Billion market cap Fairfax Financial. Mr. Rivett is also a co-founder and Chairman of NordStar Capital, one of their seed investors.
The $4 million investment will allow Boreal to fill important company positions such as chief forester, carbon-credit experts, and investment analysts, as well as source possible acquisition prospects.
Boreal envisions becoming a leading carbon credit developer through the acquisition and management of forestry projects in North America. There are positioning themselves as a pure-play forest carbon credit developer.
Brendon Abrams, Boreal CEO, said “As the world moves towards a net-zero GHG economy, carbon credits will play an integral role to facilitate governments and corporations in meeting their GHG emissions targets”.
“Combined with the growing influence of ESG investing, an increase in the cost to pollute, and the prospect for significant regulatory changes in Canada and the United States, we believe the value of high-quality verifiable carbon credits will increase over the coming years.”
“These projects are quite capital intensive because we’re essentially buying land where forestry projects operate,” Abrams went on to say. “Each project will be in the multiple of millions of dollars.”
This will likely lead to a second round of financing early next year, depending on their acquisition prospects.
The global market for carbon credits is expected to grow exponentially with some estimates reaching $50 billion by the end of the decade.
During the pandemic, carbon emissions dropped nearly 6%. However, according to the latest Climate Transparency Report, carbon levels are on the rise again.
The biggest offenders? The G20 – who are responsible for 75% of emissions worldwide.
The report found that carbon emissions are on track to rise 4% across the world’s wealthiest nations by the end of this year.
The report’s authors blame the increase in emission levels due to fossil fuels. Gas usage has been up by 12% since 2015, and coal use is projected to rise by 5% this year too.
Emissions levels have increased to the point that China, India, and Argentina are on track to top their 2019 emissions levels. It is important to note that China is responsible for 60% of the increase. However, coal increases are taking place across the US and India as well.
Most G20 members didn’t use pandemic recovery packages to promote climate initiatives. For example, out of the US $1.8 trillion package, only $300 billion went into “green” programs.
What is being done to combat carbon emissions?
Though carbon emissions are increasing, the report did have some positive news.
Renewables are now 12% of power, compared to 10% in 2020. Plus, all G20 members have new 2030 carbon plans to present during the COP26 summit at the end of the month. Most G20 countries now acknowledge the need to reach net-zero targets by 2050.
Though these moves are a step in the right direction, leaders must put stringent policies into place. Investing in technology and carbon markets, which have grown exponentially, are both ways to fight climate change. Experts expect the global carbon market to be valued at $22T by 2050.
If this report highlights anything, it is that more needs to be done – especially from the G20. As US President John F. Kennedy once said, “For those to whom much is given, much is required.”
The latest and greatest in Greenpeace’s single-handed war on carbon offsets landed a couple of week ago.
Jennifer Morgan, Executive Director for Greenpeace, called for a complete end to carbon offsets in a Reuters interview.
“There’s no time for offsets. We are in a climate emergency and we need phasing out of fossil fuels.”
Surprised? Greenpeace makes a three-part case against the voluntary carbon market:
Offsets take too long/are unreliable
Only radical decarbonization will reduce CO2 levels
Offsets are mere greenwash
This “greenwashing” accusation is the heart of the matter. So, is Greenpeace onto something? Or are they once again ignoring the real benefits of carbon offsets in a push to achieve their own version of a perfect solution – one that doesn’t work in real life?
The Greenwash Accusation
More and more businesses are jumping into the Voluntary Carbon Market (VCM), expanding their own portfolio of offsets and using terms like “NetZero” and “carbon neutral” in their advertising.
The energy sector alone witnessed a 5x increase in offsets between 2020 and the first half of 2021!
In response, radical environmentalists like Greenpeace are increasingly deploying the greenwashing accusation as a means of discrediting any big-business solutions to the climate crisis.
Vast growth in the size of the VCM? Greenwashing!
Ever-increasing efforts to achieve carbon-neutral practices? Greenwashing!
Greenpeace raises some legitimate concerns with the current state of the young VCM. Most nature-based offsets do have a long lifespan – 20 years or more – but they get applied instantly. Forests can burn or become diseased, and the overall impact of a given offset may not always be what was predicted.
At the same time, calling the entire VCM greenwashing hints at a darker motivation:
Greenpeace doesn’t think businesses can or should solve their own problems.
No one denies that the same business sectors that drive our modern world are also responsible for the vast majority of GHG emissions.
But Greenpeace, and their allies, don’t think that businesses should have a voluntary role in addressing those issues. The key word there is voluntary – governments should, in Greenpeace’s solution, play a far more active role in forcing big business to decarbonize.
What Greenpeace suggests is simple, but not reasonable: massive reduction in GHG emissions as fast as possible, even when that reduction would cripple or transform entire sectors of the economy.
The only way to decarbonize that quickly is to reduce production and consumption in those sectors. That means dramatically reducing the amount of meat and dairy products people consume.
What would the impact be on rural communities? How would that transformation affect the agricultural and meat-producing sectors more broadly?
These are questions Greenpeace doesn’t answer, instead they falling back on their claims about how dire the need is.
Offsets: part of a real-world solution to the climate crisis
Lost in Greenpeace’s protests is the fact that carbon offsets and the VCM are real-world solutions to real-world problems. The VCM allows farmers to shift production, turning farmland into grassland or forests for offsets.
Those offsets provide a much-needed revenue stream for those farmers, easing the transition. In fact, some offsets, like no-till farming, provide environmentally-friendly ways to continue production and still achieve GHG reductions.
Is the VCM perfect? No. But it’s worth remembering three things:
The VCM is in the early stages
Standards are improving
VCM growth recognizes the problem
Offsets have only taken off in the past decade. Growth has been meteoric in the past few years, but the market is still young. Like all emerging markets, standards will improve and companies can adjust to increasing regulation and best practices.
Finally, what Greenpeace fails to see is that the VCM is a genuine recognition of the problem. It may not be a perfect solution, but the rapid growth of the VCM speaks to a growing recognition of the climate change problem.
For that, Greenpeace should be praising the VCM – Not revolting against it.
In a joint Dealbook interview, Meghan said, “From the world I come from, you don’t talk about investing… You don’t have the luxury to… That sounds so fancy. My husband has been saying for years, ‘Gosh, don’t you wish there was a place where if your values were aligned like this, you could put your money to that same sort of thing?’
Ethic’s dedication to sustainable investing.
According to Doug Scott, an Ethic founder, Ethic screens companies and sectors based on social responsibility criteria. This includes racial justice, climate change, and labor issues.
Ethic currently has $1.3 billion under management. Assets have tripled since they started in 2015.
“You already have the younger generation voting with their dollars and their pounds.” said Harry. He feels this platform is the next step since people can invest in causes dear to them.
Interest in sustainable investing is growing.
As the effects of climate change become more apparent, individuals, companies, and governments want to fight against it. This is being done through technological innovation and carbon offset projects – which are booming.
Right now, the carbon credit and offset industry is expected to reach $22 trillion by 2050. Its growth has been fueled by approaching Paris Agreement deadlines, as well as the upcoming COP26 summit.
With Harry and Meghan serving as “impact partners” and investors, Ethic and other companies that promote sustainable investing can all play a part in combating climate change. It’s encouraging to see those with a voice using it for good.
Harry and Meghan were introduced to Ethic by friends. They hope their involvement will make investing more accessible to younger people.
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