At a time when concern about climate change is growing, the reduction of carbon emissions can play a vital role in slowing global warming. We talked to Sébastien Nunes, CEO of ClimateSeed, BNP Paribas’ business-to-business digital carbon offsetting platform that is structured as a social business.
Hello Sébastien, thanks for taking the time to talk to us. In a nutshell, what exactly is ClimateSeed? ClimateSeed is a digital marketplace that connects businesses and funds with sustainable projects around the world. These projects preserve the environment and contribute to the Sustainable Development Goals set by the UN. Companies can buy carbon credits from them to compensate voluntarily for greenhouse gas emissions.
On the website, a business enters how many tonnes of carbon dioxide equivalent it wants to offset and then chooses between different kinds of projects in different places. It then receives an offset certificate and regular reports on the project.
ClimateSeed is BNP Paribas’ first social business and is accredited by Grameen Creative Lab. It was launched during the Global Social Business Summit in November 2018 with Nobel Peace prize laureate Professor Muhammad Yunus. All its profits are ploughed back into the business. Project developers set their own prices for their carbon credits, and ClimateSeed’s fee is 15% of the total amount of the transaction, which is only paid by the buyer.
Our aim is to use BNP Paribas’ savoir-faire to help organise the market and make it more safe, transparent and effective, so that this tool can fully play its role in the energy transition.
Tell us about yourself and how you came up with the idea.I joined BNP Paribas in 2006 and spent all my career in Securities Services. I worked for several years in Corporate Development, then headed up New Markets and after that the Pension Funds client segment. I also created the Corporate and Social Responsibility Department there, and I built and ran Venture Catalyst, whose mission is to promote relationships with startups and to support intrapreneurs – in-house entrepreneurs – in the fintech area.
In 2015 I participated in a workshop on sustainable development. In a debrief of a survey of contributors to a big Dutch pension fund, I learned that 75% of voters had been in favour of an investment strategy that was 100% environmentally and socially responsible. I realised that there would not be enough products on the market for all funds to be 100% ESR compliant, and this led to the idea of creating a platform for carbon compensation.
We talked about it internally for two years, but initially nothing came of it. Eventually the tide turned and we were able to provide support for ourselves as intrapreneurs!
One thing that drives me in all this is the fact that I have two daughters, and I don’t want them to reproach me for not doing anything about the scourge that is climate change.
Tell us more about Grameen’s roleProfessor Yunus’s Grameen Creative Lab supported us from spring 2018 until our launch in November 2018, and helped ensure we were set up properly as a social business. They continue to promote the business and audit us every year to ensure that all our costs are in line with the market and our suppliers and partners are all treated equally. This provides a guarantee of transparency and fairness.
Talking about social business, why was ClimateSeed set up as one?As Antoine Sire, Head of Company Engagement at BNP Paribas, said, this is the bank playing its part in the fight against climate change. It also means we are doing something different from what’s already on the market.
So there are no other businesses similar to ClimateSeed?When a company buys carbon offset certificates in the voluntary market, in many cases this is via an intermediary who has purchased them from a project and then sold them on for a profit. These brokers can put pressure on project developers to sell – and unfair conditions can leave developers without adequate funds.
Two other platforms do exist, however, in Switzerland and the US, though they are essentially retail platforms while we are B2B . They are not social businesses and they don’t have the same due diligence procedures for projects as we do: we have two levels of control with Know Your Client (KYC) and anti-money laundering/combating the financing of terrorism (AML/CFT) procedures. These “filters” are very important.
There clearly is a need for platforms like ours, as 50% of carbon compensation projects fail due to a lack of funding, and funding comes from the sale of certificates.
How do you find projects for your platform?Initially, when ClimateSeed was not well-known, BNP Paribas’ CSR [Corporate and Social Responsibility] team suggested projects to us. However, once BNP Paribas CEO Jean-Laurent Bonnafé had announced the launch of ClimateSeed, we started to receive calls from project developers. All our projects must be certified by one of two programmes – Verra’s Verified Carbon Standard or Gold Standard certification – and these organisations also tell projects about us.
Where are the projects situated?Voluntary carbon compensation was created with a north-south approach, with the idea that projects of benefit to the South would be bought by the polluting North.
However, Verra, for example, now validates projects in the US and Canada – and one of the projects on our site is in Canada. A low-carbon label has also been launched in France to encourage projects that reduce and sequester emissions: companies are increasingly demanding more local carbon offset projects.
In the future, ClimateSeed might even envisage helping clients carry out their own requests for proposals (RFPs), enabling them to find highly tailored solutions.
What kind of transactions have you seen on the platform so far?What might come next?There has been offsetting for corporate buildings, journeys and events. We are B2B, but we do have tools for B2B2C such as our digital voting module, which allows clients or employees to choose between several carbon offset projects for their company.
Investment funds are also seeking to offset their emissions, and we envisage a roundup app for retail, enabling people to pay for carbon offset when they buy clothes, for example.
Do you see yourselves as having an educational role?Yes! Carbon offset only makes sense in tandem with reductions in emissions. We aim to help people understand climate risk. Profits from ClimateSeed will be reinvested in four ways: to improve the platform, to educate people about decarbonisation, to help project developers and the people involved in or affected by the projects and to invest in energy transition-related startups.
We also see ourselves as having a “connecting” role, bringing together different participants in this market. And we are thinking of making a tool for small companies to measure their emissions.
What would you say to recent comments from the UN that carbon offsets have been used by polluters as “a free pass for inaction”?The UN is one of the main promoters of carbon offsetting. While it’s true that corporates sometimes do “pay to pollute”, if they are buying carbon offset certificates, they need to have squeaky-clean pollution policies elsewhere, otherwise they lay themselves open to criticism.
Carbon offsetting is a formidable way of accelerating the energy transition and reducing carbon emissions.