British company Kana Earth has launched an open ledger and investment platform for the UK’s carbon offsetting market, which it claims will address many of the major obstacles holding the sector back for fund managers investing in this sector.
The company says it’s already in talks with several UK based fund managers, who collectively have over a trillion in assets under management and are interested in using the platform.
The Kana proposition will enable UK landowners with carbon offsetting projects to list and promote these on the platform at an early stage of the project development, detailing the seed capital required for the projects to start. This will provide ‘unprecedented levels of transparency’ in terms of overall goals and carbon reduction targets for the schemes, and how these will be achieved. This, the company says, will make it easier for fund managers and other professional investors to reduce their carbon footprint through buying and investing in transparent UK offset credits at an early stage of the project.
With the average Woodland project in the UK being 50ha and Peatland 200ha, these projects are normally too small for fund managers to invest in, but with the Kana Investment platform providing the technology and legal framework, fund managers will be able to invest, manage, report and insure credits to create a portfolio of UK credits thereby scaling the investment in this UK Nature sector.
Under the Glasgow Financial Alliance for Net Zero (GFANZ) initiative, over $130 trillion of globally managed assets have been committed to achieving net zero by at least 2050. Fund managers including Invesco, Vanguard and BlackRock have signed up, aiming to achieve a net zero target across their business operations, but also across their investment portfolios.
Kana says more fund managers will increasingly look to compensate for all or part of the carbon emissions linked to their portfolio companies through the purchase of carbon offsets. It also expects to see more fund managers launch new “carbon neutral” share classes enabling investors to offset the carbon emissions attributable to their investments by paying a slightly higher management fee.
It also predicts that more active fund managers will start to re-invest part of their performance fee into a charitable pool or foundation whose goal is to back carbon offsetting projects.
Andy Creak, CEO and Co-Founder at Kana Earth Ltd said: “If the UK is to meet its carbon neutral targets, it needs to find a way to make it easier for fund managers to invest in projects in the country. However, there are significant challenges facing the UK carbon offsetting market, which is adversely affecting this goal.
“The challenges the UK carbon offsetting market needs to address include limited data availability, scarce financing, and the inability to attract private investment at scale, inadequate risk management , and the lack of a process, technology, and legal framework to standardise how UK Nature Carbon works. There also needs to be a greater standardisation of codes in the UK carbon offsetting sector. We have developed Kana to address many of these challenges and in so doing, hopefully encourage fund managers and other professional investors to back more UK carbon offsetting projects.”