Voluntary carbon markets face a reckoning over credit quality and environmental impact. Are carbon markets a key pillar of climate finance, or an empty exercise in double-counting and greenwashing? After soaring in 2021, voluntary markets for carbon credits slumped last year as a series of reports took aim at the quality and integrity of the projects underlying the credits. Demand for such credits, which at least purport to represent a ton of carbon emissions avoided or removed, dropped by 4%, according to BloombergNEF. Credits for avoided deforestation plunged by 40%. The downturn has spurred debate over whether the purpose of the credits is solely to help companies meet their net-zero goals, or also drive revenues for projects that, for example, restore mangroves and peat bogs, preserve forest land and local livelihoods, retrofit housing in low-income communities, and deliver other social and environmental co-benefits. “Carbon markets often provide incentives and financing for the most downtrodden and the first responders to climate change,” Sandeep Roy Choudhury of VNV Advisory in India wrote in response to critics. Annual market demand now stands at around $2 billion; the We Mean Business Coalition estimates that if 1,700 of the world’s highest-emitting companies used credits to offset just 10% of their emissions, $1 trillion could be mobilized by 2030.
Dealflow: Climate Tech
Climate tech venture Ecozen raises $25 million, giving early investors a partial exit. Ecozen, in Pune, India, launched a decade ago to provide affordable, clean energy-fueled products for India’s smallholder farmers. The company makes solar-powered irrigation pumps and refrigerators that support more than 100,000 farmers’ livelihoods and help them weather climate-related impacts. Ecozen says its products also curb food waste and help offset the four billion liters of diesel fuel and 85 million tons of coal used for irrigation in India. The company raised a mix of debt and equity from Nuveen, Dare Ventures, the Export-Import Bank of India, Hivos-Triodos Fonds, Northern Arc and others. The financing provides a partial exit to early investors Omnivore and IFA.
Six Short Signals: What We’re Reading
♿ ESG and disability data. People with disabilities and their families control over $13 trillion in disposable income per year, yet only 4% of businesses are expanding their offerings to include people with disabilities. The Valuable 500, a collective of 500 CEOs and their companies, is calling on its members to increase disability disclosures, including reporting on workforce representation, inclusion goals, training, employee resource groups and digital accessibility. (The Valuable 500)
Agents of Impact: Follow the Talent
Christine Chow, ex- of HSBC Asset Management, joins Credit Suisse Asset Management as managing director and head of active ownership… The Center for Sustainable Finance and Private Wealth North America is looking for a remote managing director… The San Francisco Foundation has an opening for an associate initiative officer… Uber is hiring a sustainability product marketing manager in San Francisco… The New York State Energy Research and Development Authority, or NYSERDA, seeks a CEO and chief of staff to the president in New York… 2X Global is recruiting a remote global associate.
ImpactAlpha, May 28 – On this week’s podcast, ImpactAlpha’s David Bank and Amy Cortese join host Brian Walsh to unpack thestunning news at Exxon, Shell and Chevron – Big Oil’s Big Reckoning. Plus, the headlines.