A first-of-its-kind insurance for carbon credit forwards
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In 2024 we partnered with goodcarbon, a Berlin-based climate start-up, to launch the first insurance for long-term carbon credit purchases that offers in-kind replacements in case of defaults of carbon credit sellers.
The demand for carbon credits is expected to rise as large corporations work towards their net-zero goals. Against this backdrop, we developed a solution that helps companies secure their future carbon credit supply by insuring the provision of global carbon credits from afforestation, reforestation and revegetation projects with delivery dates up to five years in the future. The insurance of non-delivery due to natural catastrophes, weather events, and certain political risks aims to enhance confidence for carbon credit buyers in the purchase of credits on a forward contract basis and attract more private investment in nature-based climate solutions.
As a sign of Swiss Re’s innovation power, this new insurance product focuses on de-risking long-term carbon credit purchase agreements. The transfer of the non-delivery risk of such contracts through our partnership with goodcarbon allows us to help clients increase the resilience of their climate ambitions.”
By allocating a small percentage of credits from each nature-based project into a buffer pool, in-kind replacement credits can be provided to companies in the event of non-delivery. If the buffer pool were to hold insufficient credits, Swiss Re Corporate Solutions would compensate the differential on the basis of the purchase price.