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08-02-2023 · Insight

Leveraging carbon markets for climate investing

Carbon markets are essential to achieving the objectives of the Paris Agreement. They assign a monetary value to carbon emissions, channeling capital towards the most economically viable solutions for mitigating climate change. As such, they have the potential to halve the costs associated with tackling global warming.

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    Authors

  • Lucian Peppelenbos - Climate & Biodiversity Strategist

    Lucian Peppelenbos

    Climate & Biodiversity Strategist

Summary

  1. Carbon markets can help meet the temperature targets of the Paris Agreement

  2. They do encounter greenwashing questions over their integrity and reliability

  3. White paper explains how investors can use carbon markets to mitigate risk

However, carbon markets are not immune to the risks associated with greenwashing, as they face significant challenges concerning their integrity and reliability. Numerous instances have been recorded of carbon credit projects exaggerating their emissions reduction accomplishments. This makes it challenging for investors to operate confidently within this space.

Consequently, the very concept of carbon offsetting is being called into question, as an increasing number of cases emerge where organizations seem to use it to defer meaningful climate action. As a result, investors who may have a genuine interest in using carbon credits as part of their climate action plans face substantial reputation risks.

This raises important questions:

  • What opportunities are available for investors regarding carbon credits?

  • Under what conditions can carbon credits genuinely contribute to net-zero strategies?

  • How can investors effectively manage the associated risks?


Our new white paper, ‘Leveraging carbon markets for climate investing’, aims to address these critical questions. Climate specialist Lucian Peppelenbos explains how carbon markets are organized and how investors can navigate this landscape while effectively mitigating the risks. This aims to provide valuable insights on navigating the complexities of carbon credits while making a contribution to combatting climate change.

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We are a leader in sustainable investing. We’ve routinely integrated ESG across all our investment processes since the early 2000s, we are frontrunners in active ownership, and we continuously push the boundaries of impact investing.

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