CFC, the specialist insurance provider, pioneer in emerging risk and market leader in cyber, today announced the development of a groundbreaking new insurance policy first deployed with Standard Chartered Bank.
In a true first for both the insurance and carbon finance markets, CFC built a policy that reduces the risk associated with providing debt financing to carbon credit projects.
“This is a great example of how lending institutions and the insurance industry can combine the best of their commercial and innovative skills to facilitate greater investment in the nascent carbon dioxide removals market by the private sector and help our planet reach net zero by 2050,” said Chris Leeds, Head of Carbon Markets Development at Standard Chartered Bank.
We understand the huge role that the lending community must play in the global fight against climate change. CFC’s unrivalled talent and innovative approach helped us solve key problems that unlocked our capacity to lend. The solution they created represents a significant step forward in helping de-risk the loan process as our business seeks to accelerate climate finance around the world.
Having proved the value of the concept, CFC is now in the process of bringing the lender insurance product to more banking institutions to enable them to provide commercial loans to carbon credit projects.
“The International Monetary Fund estimates that the world needs to invest in the region of $2 trillion annually by 2030 if it is to reach its goal of net zero by 2050. Governments simply don’t have this type of money readily available and it is clear that the private sector is going to play the most vital role,” said George Beattie, Head of Innovation at CFC. “This creates the single biggest lending opportunity for banks and other financial institutions in history, and we believe that insurance can and must play an essential role in helping these institutions to de-risk their financing activities directed at high quality carbon initiatives.”
Beattie continued: “We have developed this brand new Carbon Lender Insurance policy to deliver risk mitigation for lenders. We believe this will open up new opportunities for them to offer financing to high quality carbon projects and, having taken the lead, hope this signifies the starting gun for the insurance sector to redouble efforts to drive positive climate finance.”
Read more about CFC’s carbon insurance solutions here.
Download CFC’s in-depth report “An unmissable opportunity in the carbon market” here to read CFC’s view on why the insurance industry’s involvement is key to driving growth and sustainability of the voluntary carbon credit market.
The deal between CFC and Standard Chartered Bank was brokered by WTW.
Oliver Colman, Director, Financial Solutions at WTW commented: “Given the significant challenge the world will face to reach its net zero goals, this deal is an important proof of concept for the role insurance can play in facilitating funding to high quality carbon projects. Carbon removal methods play a pivotal role in reducing current carbon dioxide levels, which need to scale at pace to support global climate commitments. WTW is delighted to have worked with CFC and Standard Chartered Bank in this achievement to help inventive climate technologies and concepts become reality, in turn driving the development of sustainable solutions into the future."
