Howden, the London-based insurance intermediary group, announced the placement of the first carbon credits warranty and indemnity (W&I) insurance policy.
The W&I policy provided insurance cover on the sale of carbon credits for the reafforestation project of degraded forest lands by Mere Plantations, a UK-based company that owns and operates a teak plantation in Ghana, West Africa, and has been underwritten by a leading managing general agent.
This is an important milestone in the evolution of the voluntary carbon market. The presence of a carbon credits W&I policy dramatically improves trust in the quality of carbon credits and has the potential to unlock a wave of capital into the carbon market.
The demand for high-quality credits is strong, and by using insurance as a governance mechanism, the W&I policy significantly increases the integrity and value of the carbon credits. Mere Plantations can demonstrate to buyers that their credits have met the highest levels of environmental, social and financial diligence, and are backed by an insurance policy that guarantees their provenance.
This insurance policy allows project developers to access the underwriting expertise of the M&A insurance market, providing assurance in the methodology and implementation of their carbon credit projects.
Recognizing the value of this protection, and the high quality of the credits, buyers are purchasing the credits at a premium compared to other reafforestation projects currently offered in the market. Uniserve, a UK-based logistics company, is the first company to buy these credits.
This announcement follows other Howden-led initiatives in the carbon space, including the first voluntary carbon credit insurance product to market in 2022 and the introduction of an insurance product that covers the leakage of carbon dioxide from commercial-scale carbon capture and storage facilities, announced in January 2024.
“The carbon markets are the best tool we have for putting a price on emissions. Traditionally held back by poor governance, the voluntary market can now be improved using market-based mechanisms,” commented Charlie Pool, head of Carbon Insurance, Howden, in a statement.
“With insurance guaranteeing the credibility of carbon credits, this product will ensure credits attract a higher value and encourage further project development. By addressing the lack of trust and transparency, this innovative policy introduces a much-needed structural improvement and represents a significant step forward on behalf of clients,” Pool added.
“Our ultimate goal at Mere Plantations has been to demonstrate how reestablishing degraded forest land can be a viable, standalone commercial enterprise without any need for aid or government intervention,” according to Mark Hogg, CEO, Mere Plantations.
“Working with Howden to launch this first-of-its kind insurance offer, we are now poised to unlock the potential of the carbon market and achieve that mission,” Hogg added.
“Mere Plantations shares Uniserve’s commitment to sustainability and integrity, making them an ideal source for our investment in carbon credits as part of our ongoing carbon reduction plan,” said Gary Cobbing, Uniserve’s group chief commercial and operating officer.
“The transparency and assurance afforded by the additional insurance policy further boosts our confidence in this partnership and we look forward to witnessing the impact this development has on the carbon market. Beyond environmental benefits, this collaboration also delivers true social value by supporting local communities in Ghana and brings positive impacts to many lives, something we are truly proud to be part of,” Cobbing continued.
About Howden
Founded in 1994, Howden provides insurance broking, reinsurance broking and underwriting services and solutions to clients ranging from individuals to the largest multinational companies. The group operates in 55 countries across Europe, Africa, Asia, the Middle East, Latin America, the USA, Australia and New Zealand, employing 17,000 people and handling $38 billion of premium on behalf of clients.
About Mere Plantations
Founded in 2007, Mere Plantations owns and manages over 4,000 hectares of previously degraded forestland within the Afram Headwaters Forest Reserve in Ghana that has been transformed into a plantation of more than three million teak (Tectona grandis) interspersed with other species. The company delivers high-quality teak hardwood products through a turnkey solution attractive for luxury industries including the yachting industry. From 2024 the company is releasing 3.2 million carbon credits to the voluntary carbon market over a 20-year project period based on carbon absorbed at the plantation, backed by a first-of-its-kind insurance policy.
Source: Howden
Topics New Markets
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