Howden launches voluntary carbon credit insurance product to help scale market

International re/insurance broker Howden has announced the launch of a carbon credit invalidation insurance solution to increase confidence in the Voluntary Carbon Market (VCM).

To develop the product, Howden worked with the carbon finance business, Respira International, and Nephila Capital, an investment manager specialising in reinsurance risk. They were also advised by climate risk finance company, Parhelion.

The product was matured through the innovation work stream on the Insurance Task Force of the Sustainable Markets Initiative, led by His Royal Highness the Prince of Wales.

Howden notes that the trading turnover of the VCM has increased steadily over recent years to just under $2 billion in 2021.

60% of Fortune 500 companies have now set climate targets and these commitments point to substantial increases in demand for voluntary carbon credits. Howden suggests that various estimates propose that the market for carbon credits could be worth between $20bn and $50bn by 2030.

Charlie Langdale, Head of Climate Risk and Resilience at Howden, said, “For the voluntary carbon market to grow to $50bn by 2030, buyers need to be able to trust that the carbon credits they are buying are removing the promised volume of carbon from the atmosphere.”

“The added layer of security provided by this product, combined with independent verification from established, reputable bodies will help buyers to purchase with confidence and should drive more buyers towards high-quality projects like those in Respira’s portfolio.”

Ana Haurie, Co-founder and CEO of Respira, added, “The voluntary carbon market is an essential piece of the puzzle if we are to reach net zero.”

Respira affirmed that it is committed to improving integrity and transparency in the market, noting that the new product will appeal to the many corporates and financial services companies who wish to buy carbon credits as part of their own pathways to net zero.

David Howden, CEO of Howden Group, commented, “This is a perfect example of the insurance market doing what it absolutely must do to drive climate resilience; bringing the client, insurer and broker all to the table to create brand new products that help to accelerate and de-risk the move to a more sustainable future.”

Source: Reinsurance News,

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