It's time to get the carbon credit market right. Carbon offsets are increasingly being used by corporations to offset emissions. This is only the beginning, as companies and investors are showing a willingness to pay for carbon offsets.
Max Nova, Co-Founder and COO of NCX, discusses the rise of carbon markets, the role investment banking plays and the future of the climate industry with Aniket Shah, Global Head of ESG and Sustainable Finance Research at Jefferies Financial Group.
Watch the video version of the podcast here.
Below is a partial transcript of Max's discussion with Aniket.
Aniket Shah: Hey, Max, how are you doing today? Can we start by you telling us a little bit about your work at NCX.
Max Nova: Sure, Aniket, and thanks for having me on the show. I'm feeling great these days. It's really exciting time for our company. I started NCX, the natural capital exchange, over a decade ago out of a basement lab at the Yale School of Forestry with my co-founder. And they finally feel like the world is catching up to our original vision from so long ago. It's been very exciting past few months for a company. As you may have seen, we just closed out our 20 million dollar series A led by Marc Benioff with participation from the Microsoft Climate Innovation Fund and the Wall Street Journal last month just covered the launch of our first cycle of the Natural Capital Exchange. It was the largest forest carbon project ever in the United States. We had over a million acres and rolled over one hundred landowners participated. And yeah, it's just a really important moment for climate in the forests right now. Forest carbon credits are on the news every day, and we're right in the middle of that conversation. We're working hard every single day, and we're building the future over here.
Aniket Shah: I'm really excited to dig deep into NCX. So, thanks so much for that. Taking a step back, Max, how have you seen the financial industry evolve over these past 10 years when it comes to climate change and natural capital? What stands out to you most?
Max Nova: Yeah, the financial industry has really changed a lot over the last 10 years when it comes to climate. The biggest thing, honestly, that it's changed is the willingness to pay. None of this works if there's not willingness to pay for these climate solutions or carbon. And every week in 2020 and 2021, it seems like there's a new company announcing a net zero pledge or a climate commitment. And so that's really been the enormous macro change in this whole space that makes all the rest of this possible. It's almost hard to believe, but it was really just over a year ago that Microsoft announced they have a negative climate commitment to sequester all the carbon that Microsoft have committed throughout its history. And that was really just like, I think, January of 2020. And so, a lot has happened over these last 18 months. It's been a really exciting time in the space. And there's just more and more dialogue about integrating the climate into the larger economy. I mean, you see this and things like everything from BlackRock, his letter talking about climate risk and emissions and disclosures for all that the task force for climate related financial disclosures is really taking off. And it's just been an enormous sea change in the industry. And there's a huge opportunity for investment because really what's happening here is the fundamental reevaluation of an enormous asset class. This is we're moving beyond just valuing forests for timber and saying carbon is valuable, biodiversity is valuable, wildfire risk reduction is valuable. And critically, there's now a willingness to actually measure and pay for these things. One manifestation of this, too, that I'm now intimately familiar with is the flood of VC money into this space. There it is actually climate tech investing growing five times faster than AI investing, which was already very hot. So, this is why you see top tier VCs like Union Square Ventures who let our seed round getting into this space. But circling back, you know, you said, well, what's changed over these 10 years? I think it behooves us to remember what happened 10 years ago, which was the Chicago Climate Exchange kind of fizzled out. That was the last big wave of sort of climate tech, climate finance. And the reason why that happened is because fundamentals really matter. Ultimately, those credits that were trading on the Chicago Climate Exchange buyers lost confidence that those credits were creating real environmental impact. And this time around, we can, and we must do better.
Watch the video version of Max's discussion with Aniket here.