🌿 Takeaways from Climate Week NY 2024

Ian McKee
Oct 12, 2024
5 min read

It's been just two weeks since Climate Week New York (CWNY), and in that short period, two devastating hurricanes—Helene and Milton—have struck the US East Coast. The themes and insights from the event in NYC resonate more deeply as extreme weather continues to unfold across the globe.

Here's what I took away from that week.

🌿 The markets are underestimating the problem

According to two of the world’s largest credit rating agencies, climate change is not properly factored into asset prices, and if it were, we would likely see a 40% cut in some industries.

Insurance risk is also increasing as providers exit markets. This signals an even greater challenge as to how we are going to address climate costs being transferred from the private sector to the public sector (e.g., FEMA) and the political challenges that will arise.

🌿 Climate finance is not working well

According to Goldman Sachs, we are seeing outflows from sustainability funds and stagnation in financing dollars toward emerging markets. Despite all of the talk on the need for climate finance and a focus on the global south, we have not begun to move the needle there. While some important organizations are stepping up (the World Bank increased climate finance by 22% in fiscal '23), in absolute terms, we are a far cry from the $3 trillion additional investment required annually. The market needs new financing instruments, and I will propose some suggestions in a follow-up post.

🌿 The circular economy is now a key pillar for decarbonization

There will be no serious discussion on climate change from here on out without the subject of the circular economy as part of the solution. It is just too big to ignore.

The linear economy is responsible for more than 45% of global emissions and 90% of land and biodiversity loss, and circularity offers some of the quickest and cheapest ways to reduce emissions today. This is where the rubber is going to hit the road—for everyone.

And the evidence of this "awakening" for lack of a better term?

CWNY’s schedule was packed with events on land use, food production, food waste, food circularity, product design, material design and engineering, reuse, recycling, refurbishment, waste management, supply chain traceability, circularity certification, circularity standards, etc.

No climate event I've attended before came close to tackling these topics in the breadth, depth and quality I saw at CWNY this year. It is clear that the need for companies to understand the impact of their supply chains and, in particular, scope 3 emissions is the undercurrent driving this shift, which is understandable given that for most companies it represents between 73% and 95% of total emissions.

The launch by the WBCSD – World Business Council for Sustainable Development—of the new Global Circularity Protocol (GCP) was a highlight of the week, and I hope it can deliver on the promise of accelerating circularity while avoiding the growing pains we saw in the voluntary carbon market. The WBCSD claims the GCP alone could reduce an additional 67 to 76 Gt CO2e over the next 25 years.

This is the kind of boldness we need!

🌿 Methane must be top priority

Methane has received only ~3% of climate finance, despite the IPCC identifying methane as a top priority given its global warming potential (84X when compared to CO2 over a 20-year period.) According to Ilissa Ocko, Senior Advisor in the Office of the U.S. Special Presidential Envoy for Climate at the Department of State, tackling “economically feasible" “fast mitigation” methane emissions could reduce warming by 0.23 ºC by 2100.

The term “economically feasible” peaks interest. Perhaps if we can apply market solutions to push the bar higher, we could go further, potentially coming closer to the full 0.91 ºC reduction potential.

Landfills and wastewater represent approximately 25% of global methane emissions and get little focus. My guess is that food waste may be taking center stage by next year as a focal point on global methane mitigation. (Full disclosure: Carrot has a product already in the market called BOLD (Breakthrough in Organics Landfill Diversion) tackling this very challenge :-)

🌿 The carbon market needs to mature quickly

While the science and standards communities are searching for consensus on the definition of “high integrity," the market still suffers from serious structural problems. The VCM (Voluntary Carbon Market) is still not actually a market. More than 93% of carbon credits are sold over the counter (i.e., from a project developer directly to a buyer.) There is no liquidity or means of obtaining a real price, and credits are valued for their co-benefits rather than the actual 1-ton equivalent of CO2 avoided or removed.

A few bad actors have destroyed confidence, and lack of liquidity has caused some very concerning mispricing of carbon in the market, which has been particularly damaging for important mitigation projects that are delivering results right now.

MIT Professor Desirée Plata put it best:

"We are inverted in our prioritization of how we price carbon today. We're willing to pay very high prices for technologies with limited impact, even in the long-range, whereas we are not willing to pay those same high prices for mitigation measures. We absolutely need to be incentivizing mitigation now."

Everyone needs to understand that there simply will be no Net Zero without a functioning carbon market, and we really need everyone getting involved right now in helping to build it.

Just don't wait.

🌿 A light at the end of the tunnel

Something meaningful happened during Climate Week NY 2024.

The caliber of attendees, particularly the tone of seriousness and determination by corporate leaders, was unlike anything I had experienced before. It signaled to me that we may finally be at an inflection point.

Government officials are also openly asking the private sector to move, stating that while more sticks can and will come, it is carrots that are going to change the status quo. I (we at Carrot), of course, could not agree more!

🌎 LET'S WORK TOGETHER 👶

🌿 THANKS

With such a great week, there are many people to thank and congratulate. Here are just a few.

Deloitte for hosting terrific panels on circularity and the VCM and for providing me with my headquarters for the week 🙏 Steven Goldbach David Rakowski Tal Viskin John Mennel Kyle Tanger Max Krasilovsky Maria Emilia Peres along with panelists Ivonne Bojoh Quentin Drewell Kathryn James Robert Metzke Kathryn James Kara Succoso Mangone Lawrence Cacciatore Kathy Cacciola Tomas Thyblad