On October 27, Global Finance conducted a Sub-custody Roundtable, moderated by publisher and editorial director Joseph Giarraputo.
Early in November eight titans of 21st-century industry—including Amazon, Alphabet/Google, Microsoft and Netflix—formed the Business Alliance to Scale Climate Solutions, or BASCS.
The same goes for a Delta Airlines flight from Paris to New York, oil that Shell extracts from the Gulf of Mexico or fumes from a Cemex cement plant in Mexico—to cite a few companies that have set ambitious carbon-cutting targets.
That could expand “10- to 20-fold” over the next decade, says Romina Graiver, a London-based partner at asset manager William Blair.
Companies feel pressure to cut their carbon counts right now, though, for one of two broad reasons: They have to, or they want to.
Ripples reach from Mexico, where Cemex is pushing to be a global climate beacon, to Russia, where steelmakers like NLMK, Evraz and Severstal are mulling carbon diets.
“We will be subject to the EU’s carbon import tax by 2026,” notes Boris Sinitsyn, head of metals and mining research at Renaissance Capital in Moscow.
“Our members are moving from ambition to action on living in line with their values,” says Ameer Azim of Business for Social Responsibility, the San Francisco-based consultantcy that helped organize BASCS.
Wind power in China, for example, might have qualified under Article 6’s distant ancestor, the late-1990s Kyoto Protocol, the EDF’s Barata says.
Brazil’s International Chamber of Commerce projects that maintaining the Amazon jungle could earn the country up to $100 billion by 2030.
The problem with forests is there are not nearly enough of them to soak up modern society’s carbon output.
“Just planting a tree doesn’t mean the right tree has been planted in the right place,” says Ursula Finsterwald, head of Group Sustainability Management at LGT, the private bank controlled by Liechtenstein’s princely family.
Microsoft’s 2020 tender for carbon-offset projects, which others are studying as an example, indicates how arduous sourcing will be.
It lately entered a 10-year agreement with Climeworks, a Swiss company that will remove 9,000 metric tons of CO2 from the atmosphere and permanently store it beneath volcanic soil in Iceland.
“This is a business decision for us,” Finsterwald explains.
That could mitigate up to 660 million tons of CO2 a year by 2050, an Intergovernmental Panel on Climate Change report estimates.
Puro.earth’s projects, three of which made the cut for Microsoft funding, are concentrated in Australia and Germany, along with Finland.
For that, or anything like it, to happen, those clear carbon-removal accounting standards of which Microsoft speaks will have to evolve from the framework laid down at COP26.
Unchecked, airlines’ carbon footprint would increase another 50%, or 300 million tons a year, by 2035, the International Air Transport Association estimates.
The tech/consumer giants uniting in BASCS have access to an alphabet soup of third parties vying to vet their offset projects: Gold Standard Foundation, Integrity Council for the Voluntary Carbon Market and the Verified Carbon Standard program of Verra, to name a few.
More good news is that everybody around the world, or a critical mass, now understands the urgency of checking carbon emissions: industry, government, investors and consumers.
One day, the Article 6 agreements from COP26 may be looked back upon as a Magna Carta for the multibillion-dollar trade to come—hopefully not too late.