Our investment in ERS

Ever since publishing The Climate Equation, and making our first investments in companies like Sylvera and Supercritical, the carbon markets have been a prominent feature of our investment thesis in technologies to counter the effects of climate change.

A quick Google search will be enough to reveal that these markets are not working as well as they should: carbon offsetting projects don’t always deliver the reduction or removal in emissions they were designed to, there are project types currently allowed to generate carbon credits that really shouldn’t be, project certification bodies are slow and inefficient, companies might use offsets to greenwash activities that should be decarbonised... the list goes on.

So, why invest in technologies for the carbon markets? One fundamental belief we have is that in order for climate change to be mitigated, the economics of our global system of production need to incentivise climate-friendly decisions. By associating a cost with offsetting emissions, carbon markets can play an important role in doing so. Despite the flaws, many companies have embraced this same way of thinking as part of their Net Zero planning, leading to more demand (and a supply crunch) for carbon offsetting projects.

As part of a credible Net Zero roadmap, the world needs carbon markets to scale to $50bn in traded volumes by 2030 according to McKinsey. For that to happen, we first need a rapid increase in the supply of verifiably high-quality projects. Enter ERS, a new certification standard that leverages technology to a) measure and verify impacts of offsetting projects on climate, biodiversity, and livelihoods, b) enable lower cost certification removing barriers to smaller projects, and c) enable faster certification allowing for the rapid increase of project supply needed.

Before investing in ERS (then known as Wildsense), we met with dozens of teams working on the problem of scaling carbon markets supply. What won us over was Thibault and Priscille’s incredibly mission-driven mindset; their closeness to and intimate knowledge of project developers; time spent with local communities; and, finally, their awareness that the road to scaled, high-integrity carbon markets would be long and require feedback from all relevant stakeholders. On this note, a public consultation on the new standard will open on March 21st: if you’re a carbon markets participant, we would love for you to take part here.