Management consulting firm Bain & Company, together with the World Economic Forum (WEF), has published a white paper titled ‘Scaling Voluntary Carbon Markets: A Playbook for Corporate Action’.
The paper by Bain and WEF is a much-needed guide for corporate leaders that encourages taking action to ‘unlock the potential of the VCM’ (voluntary carbon market).
In the wake of the raging climate crisis and alarming rate of rising global temperatures, there is an undeniable need to reduce greenhouse gas (GHG) emissions and remove residual emissions from the atmosphere.
Expectations are that, if meaningful action is not taken now, climate change may result in a reduced global GDP by roughly 14% and in 1.2 billion climate refugees by mid-century.
As it is, flows of climate finance investment are dramatically lower than what they should be. Namely, as the white paper states, the figure for annual investments in 2021 is only 20% of the $4.3 trillion required by 2030.
Relevant: Citibank Publishes VCM Report, Says Market Needs To Close $1.7T Climate Investment Gap
The VCM is one of the few tools that can be used to channel funds toward climate projects fast enough to help new technologies scale and have an actual impact on climate change.
With an estimated value of $1.3 billion last year, the VCM has the potential to grow to over $50 billion by the end of this decade with a more strategic approach to investment on behalf of companies and if governments create regulatory mandates to drive corporate action.
The paper outlines some of the main challenges of the VCM, but does not focus on them as much; instead, it aims to provide ‘a flexible framework for action that can empower companies to act despite these market limitations’.
Read more: ICVCM and VCMI Partner To Operationalize High-Integrity Carbon Market
