NatWest Cushon Allocates Funds to Carbon Removal Efforts
NatWest Cushon declared on Thursday, June 19, its plan to allocate 2% of its Sustainable Investment Strategy towards the Aviva Investors Carbon Removal Fund. This move signifies a committed focus on natural capital as part of its long-term sustainable investing strategy. NatWest Cushon operates as the pensions and savings division of the UK-based NatWest Group, which primarily centers on banking and insurance services.
Aviva Investors Carbon Removal Fund Overview
The Aviva Investors Carbon Removal Fund is dedicated to financing both nature-based and engineered solutions for carbon removal. These solutions encompass a range of initiatives, such as afforestation, ecosystem restoration, commercial forestry, and innovative nature technologies, utilizing private equity and venture capital both domestically in the UK and on a global scale. Veronica, the Chief Investment Officer at NatWest Cushon, expressed enthusiasm for diversifying their investment strategy, emphasizing their leadership in private asset investments.
IFRS Introduces New Climate Transition Guidance
On Monday, June 23, the International Financial Reporting Standards Foundation (IFRS) released new guidance aimed at enhancing the clarity of corporate disclosures regarding their climate-related transition plans, in accordance with the IFRS S2 Climate-related Disclosures standard. This initiative is part of a larger effort by the Foundation to facilitate the implementation of the International Sustainability Standards Board (ISSB), which aims to establish a global standard for sustainability-related financial reporting.
Role of IFRS Foundation and ISSB
The IFRS Foundation is responsible for overseeing global financial reporting standards and the ISSB’s work, which developed IFRS S1 and S2 to ensure greater consistency and comparability in climate-related disclosures worldwide. The newly released guidance expands upon the framework established by the UK’s Transition Plan Taskforce (TPT), adapting it for international use. It specifies how companies should communicate their progress towards climate targets, covering both mitigation and adaptation strategies when addressing material risks and opportunities under IFRS S2.
Disclosure Requirements Under IFRS S2
While IFRS S2 does not mandate companies to have a transition plan, it does require the disclosure of significant climate-related information that could influence a company’s future prospects. The guidance clarifies what should be disclosed if such a transition plan exists. Sue Lloyd, the ISSB Vice-Chair, noted that this guidance aims to alleviate the inconsistencies surrounding disclosures about transition plans, which can be burdensome for both companies and investors. Additionally, it stresses that these disclosures should align with financial materiality and be distinct from broader ESG (Environmental, Social, and Governance) reporting.
Flexibility for Local Jurisdictions
Jurisdictions that implement IFRS S2 may opt to enhance the mandatory disclosures with additional information tailored to local stakeholder requirements, provided that the sustainability-related financial disclosures remain clearly distinguishable and are not confused with other reporting. The IFRS Foundation highlighted that while this guidance does not alter the requirements under IFRS S2, it may be revised in the future based on the application of the standard by companies, with any formal changes following the Foundation’s established processes.
Microsoft Signs Carbon Credit Deal with Agoro Carbon
Agoro Carbon announced on Tuesday, June 24, a significant 12-year agreement to provide Microsoft with 2.6 million tonnes of soil carbon credits, equivalent to carbon dioxide emissions. The credits will originate from Agoro Carbon’s regenerative agriculture projects in the United States, utilizing practices like cover cropping, reduced tillage, and improved grazing techniques. These projects are developed following Verra’s VM0042 methodology for Improved Agricultural Land Management.
Soil Carbon Credits Explained
Soil carbon credits indicate the amount of carbon dioxide removed from the atmosphere by enhancing soil carbon storage through improved land management practices. These nature-based removals are increasingly sought by companies aiming to achieve their long-term climate objectives. The credits generated under this agreement will undergo third-party verification to ensure their validity. Agoro Carbon has stated that its methodology incorporates advanced modeling, on-site soil sampling, and ongoing monitoring to meet Microsoft’s standards for reliable, scientifically-backed carbon removals.
Microsoft’s Broader Sustainability Goals
This agreement follows Microsoft’s earlier acquisition of 60,000 soil carbon credits from Indigo Ag, which were issued under the Climate Action Reserve’s Soil Enrichment Protocol. Both agreements are part of Microsoft’s strategy to source high-quality, nature-based carbon removals across a diverse portfolio. Brian Marrs, Microsoft’s senior director of energy and carbon removal, remarked that this deal aligns with their broader sustainability objectives, promoting scalable agricultural solutions that deliver measurable impacts over time. According to Agoro Carbon, this partnership is expected to stimulate further investments in sustainable agriculture and illustrates the growing corporate demand for reliable, science-based soil carbon removals.
Importance of Staying Informed on Carbon Markets
Carbon markets are at the forefront of climate innovation, serving as a crucial link between corporate sustainability ambitions and global climate objectives. Through various mechanisms, including nature-based credits and biochar, developments in voluntary carbon markets (VCM) are establishing benchmarks for impactful climate finance. To navigate this evolving landscape, subscribing to the Fastmarkets Carbon Newsletter is recommended. Subscribers will receive weekly updates that include comprehensive carbon price data, industry news highlights, analyses of retirement and issuance trends, and in-depth explorations of market dynamics and opportunities. Staying informed in the rapidly changing carbon markets can provide a competitive advantage.
