“If the number of events taking place and people traveling to New York were a sign of climate progress, we would have no concerns about achieving 1.5°C.”
This marked my first experience with Climate Week NYC. With 500 events across the city, it was unlike any conference I had attended before. My back sore from miles paced, voice hoarse from conversations extended, I was overwhelmed by a sense of enormity: both the event and the challenges that the voluntary carbon market (VCM) must overcome to grow from $2 billion USD to anywhere near $200 billion USD. Relative to the task at hand, a strikingly small community is trying to bring scale and substance to the VCM.
Given it was just Zach and me zigzagging across the city, we only scratched the event’s surface. Having lunch in the same restaurant as Janet Yellen is not quite the same as having a seat at the UN General Council. But with 25+ meetings and three conferences under our belts—in addition to a new favorite spot to drink coffee and reflect (Bryant Park)—we left with a clearer sense of how far carbon credit insurance has come and how much further it has to go.
1. There is a broader and deeper grasp of carbon credit insurance across the spectrum.
Nearly a year ago, we launched Oka, The Carbon Insurance Company™ with an ambitious mission: Ensure every carbon credit is insured. In 2022, as it is today, the VCM was poised for growth on the back of international tailwinds (e.g., political acknowledgment that 1.5°C depends on carbon removal plus regulator, investor, and corporate pressure to bake climate disclosures into financial reporting), but it had an image problem. Left unaddressed, buyer risks could be its existential undoing. It was clear (to us) that insurance—integral in almost every sophisticated market, untapped in the VCM—could protect buyers and unlock corporate demand and price stability.
Initially, our challenge was twofold. Like any climate tech startup, we needed to make the case for our company and product. On top of that, we also needed to build market awareness of carbon credit insurance, a relatively new concept and industry. Fast forward to this September, and we were blown away by the comparative caliber and volume of conversations we enjoyed with senior executives. From VCM standard bearers and innovators to internationally renowned financial institutions, there was a markedly deeper understanding of and interest in how carbon credit insurance can unlock VCM stability and scale.
2. There is lingering suspicion about quality (assurances) in the VCM ecosystem.
There is a danger in swimming with the tide and overlooking the challenges—and challengers. In addition to encouraging buy-in, Climate Week NYC gave us plenty of opportunity for debate and education, respectively. One large oil major contended that buyer confidence is a fundamental problem that requires total industry (and registry) reinvention and seemed skeptical that existing risk-mitigation solutions could bring about integrity. Separately, many people with whom we spoke needed more detail about how a reversal or invalidation risk would give rise to a claim in specific projects, as well as the unique characteristics of carbon credit insurance relative to quality audits and buffer pools.
Baked into the latter questions is a negative assumption about quality assessments and risk models on show elsewhere in the VCM. On a constructive note, we realized the counterbalancing value of “showing our workings.” Communicating the details of our methodology—which benefits from a strong legacy of risk pricing and multiple data sources—goes a long way to allaying inherited and entrenched suspicions.
So, with new connections and a new appreciation for collaboration, I departed with fire in the belly, albeit tempered by the somber realization that the path ahead will remain bumpy for months, if not years. Oka can help enable market growth, but we cannot do it alone.
Together, our community must address what E.ON’s CEO described as “the incentive gap.” The motivations for climate commitments are wobbling, and VCM stability (or lack thereof) is a concern for any business leader weighing up carbon offsetting.
To protect the world from climate change, we need the VCM to prosper. To cultivate prosperity, we must tackle obstacles to growth urgently. Collaboration and commitment to action is the bare minimum. The theme of the week was “We can. We will.” I would add, “We must.” In 12 months, we fervently hope to see that “the largest attendance in +10 years” has turned conversation into action.
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