Every company and every industry will be “transformed by the transition to net-zero”, delegates heard at the third and final core day of 2022 Guernsey Sustainable Finance Week, which focused on carbon markets and pricing.
Keynote speaker James Close, Head of Climate Change at NatWest Group, said that “every aspect will change,” but it would be for the benefit of the planet.
He added that there was integrity for companies in underpinning carbon credits by reducing emissions, rather than purely offsetting the carbon that businesses produce.
“We need to anchor what we are doing in integrity,” he said. “We need to bridge the social cost of carbon with the market price of carbon.”
“We have to do our decarbonisation first, then decide how to deal with residual emissions. The only way we can do that is through carbon offsets. There has previously been a lack of robust regulation, which is now being addressed.”
Integrity was the buzzword of the first panel session which discussed building an effective carbon market. Richard Kelly, Co-Founder and Co-Lead Fund Manager at Foresight Sustainable Forestry Company, said: “We aren’t going to hit net zero if everyone just buys credits. There has to be a residual balance.”
Also on the panel, were Marija Rompani, Director of Ethics and Sustainability, John Lewis Partnership; and Amy Smith, Sustainable Finance Manager, London Stock Exchange Group.
Marija expanded on the balance between offsetting and reducing emissions: “There is a fine line between really trying to mitigate and reduce your carbon emissions and actually buying yourself out of it, which can be compared to greenwashing.”
The discussion then turned towards the price of carbon credits.
“The project without the economic benefit of the carbon credit would not be economically viable,” Richard said. “Having the financial benefits of the sale of carbon credits make the whole project viable. We need a higher carbon credit price in order to finance the drive into projects that are currently un-economic.”
“For anyone purchasing, then retiring voluntary carbon credits, you can immediately count that towards your net-zero targets. You are making a direct contribution to the fight against climate change.
On the uncertainty over the future price of carbon credits, Richard’s advice was: “Don’t wait. You should be securing your supply today.
“We are seeing investors who want to drive their capital towards projects that drive more than just a financial return. Investors with those objectives are willing to pay a higher price for the assets that will come with these benefits.”
The second panel looked at pricing and offsets in creating a net-zero investment portfolio. Moderator Deputy Nick Moakes, Chair of the Guernsey Green Finance Strategy Group, was joined by Grant Cameron, MD at Ninety One Guernsey Limited; Kate Elliot, Head of Ethical, Sustainable & Impact Research at Rathbone Greenbank Investments; Claire Galineau, Associate Director at Deloitte; Catharina Hillenbrand von der Neyen, Head of Research at Carbon Tracker; and Cees Vermaas, Chief Executive of The International Stock Exchange Group.
Kate said that if we see continued uncertainty and volatility around the carbon market price, it would be difficult to plan over the short-to-medium term, but stressed that businesses should stay the course and look beyond that timeframe.
“People need to see through the short-term volatility and project through within their own net-zero plans,” she added. “Where the revenue ends up is key. We can’t end up with a situation of climate colonialism, where those who have not been the primary source of the problem are expected to be the primary source of the solution.”
The first panel session on day three of Guernsey Sustainable Finance Week, focusing on carbon markets and pricing. L-R: Moderator Josephine Bush, Sustainable Finance Strategic Advisor at Guernsey Finance; James Close, Head of Climate Change at NatWest Group; Richard Kelly, Co-Founder and Co-Lead Fund Manager at Foresight Sustainable Forestry Company PLC; Marija Rompani, Director of Ethics and Sustainability at John Lewis Partnership; and Amy Smith, Sustainable Finance Manager – London Stock Exchange Group.
For more information on Sustainable Finance Week, see our event page: https://www.weareguernsey.com/finance-events/2022/sustainable-finance-week-2022/.