The call comes amid frequent weather emergencies wreaking havoc in India and many other parts of the world, killing and displacing hundreds of thousands of people and destroying billions of dollars worth properties and crops
Experts have called for urgent measures to make carbon credits an attractive asset class by promoting massive retail investor participation in reforestation and renewable energy projects which will provide them access to resulting credits, generating attractive returns.
The call comes amid frequent weather emergencies wreaking havoc in India and many other parts of the world, killing and displacing hundreds of thousands of people and destroying billions of dollars worth properties and crops.
“There is an urgent need to direct trillions of potential retail investor capital to reforestation and renewable energy projects, which could give retail investors access to the resulting credits,” Prakash Somosundram, Co-founder and CEO of Enjinstarter, a venture which leverages Web3 to help governments and companies fight climate change, told Arabian Business.
“These credits can then be sold, leveraged, or retired, and will provide retail investors with a passive income stream,” he added.
Other industry and environmental experts also said urgent and ‘out-of-the-box’ actions are needed now instead of rhetoric to fight climate disasters.
Somosundram said the only exposure most retail investors currently have to carbon credits is through offset schemes for flights – fashionably named as ‘Green Fares’ – and similar other activities.
“It’s effectively a “guilt tax” model where a donation must be made in order to offset environmental sins,” he said, adding that on the whole this approach has been ineffective.
IATA estimates suggest only 1-3 percent of fliers actually purchase offsets with their flight.
The Enjinstarter chief executive said far from a donation model, the direct retail investor participation model will help incentivise climate action in a big way.
Sustainable banking: Unlocking $8.2 trillion for ESG investments
A report by Standard Chartered on sustainable banking has found that $ 8.2 trillion of investable retail wealth could be channelled into sustainable investments by 2030 to finance ESG (environmental, social and governance) objectives in growth markets.
The report also revealed that about 40 percent of retail investors across all markets and income brackets consider climate change and carbon emissions a top investment priority.
The research showed that Mainland China and India have the highest potential for growth in sustainable investing, largely due to their sizeable populations and rising domestic wealth, with China alone could mobilise $5.7 trillion in sustainable retail investment by 2030.
The report also highlighted the need for climate-themed investment solutions to be made more widely available to translate this investor interest into actual impact.
Policy measures needed to nudge retail investors
Somosundram said urgent policy measures are needed to democratise access to sustainable investments by making more solutions available in more markets via digital platforms.
He said from a Web3 – or digital asset – policy perspective, the UAE, and especially Dubai, is among the global leaders.
“However, there is an urgent need for more policies aimed at changing [public] behaviour. We know that climate action requires demonstrable change from all of us, but this is unlikely without strong policies.”
The co-founder of Enjinstarter, which recently got approval from Dubai’s Virtual Assets Regulatory Authority for operating in the UAE, said there are various ways to attract retail investments in climate action projects.
“There are four ways. The first is to increase the transparency of climate assets by issuing things like carbon and renewable energy credits on-chain, or even bringing off-chain credits on-chain, ” he said.
Unlocking access to climate assets, developing low-cost and efficient incentive infrastructure and creating immersive experiences to help educate people, especially younger generations, about the impact of climate change and the potential benefits of climate action, are the other ways to promote retail investments in this space.
“This can be done through a combination of Web3 solutions, such as the metaverse and NFTs, and adjacent technologies like AI and VR/AR,” he said.