 What kind of world do I want to live in? I think about this question a lot. For our generation and for specifically my group of people, which is refugees, the circumstances might dismantle any vision of the future that we have. You're trying to rebuild, you're trying to make a future for yourself and then the climate-related disaster can only start again. It's not about how it's affecting you now, it's about how it's affecting you your entire life. The first step to understand is that we're all a part of it. None of us are going to be left out by the crisis. We're at a stage where if we don't act now, there won't be very much left. There are generations that will never see certain things that we grew up seeing in real life. We have to start treating this like the emergency it is to achieve the 17 sustainable development goals. We have to go from an intention to a serious commitment. Business leaders really need to rethink how they conduct their business and invest in creating systems that are climate friendly. It is accountability, structures being put in place where countries aren't just asked to do something but they're kept accountable to the decisions that they make. There has to be that strong collaboration between government, between corporations, between youth activists to drive change forward. The world I would want to live in is a world where imagining the future is not a privilege. I want to live in a world where people do not give up on hope. Hope that a positive change is possible. The fact that you're listening today means that you are willing to make a change. Welcome everybody. Good morning, good afternoon, good evening wherever you're joining us from. My name is Justin Adams. I co-lead our nature-based solutions work at the World Economic Forum. It's my great delight to be leading this issue, briefing this afternoon about unlocking carbon markets. Carbon markets right now are really hot. There isn't a week that goes by without new announcements from corporates, from governments and stories that are in the press. But it's also no exaggeration to say that there are a few more polarizing and contentious topics in the environment movement right now than carbon markets. So a couple of quick thoughts to set the scene. We've seen this dramatic increase in corporate interest, corporate investment. Ecosystem marketplace published a report just last week highlighting that the voluntary markets are corporate investment has reached almost three quarters of a billion dollars. And they expect it to top a billion dollars in the year ahead. Back in January, we at the Davos Agenda Week hosted Mark Carney's launch of the task force for scaling these voluntary carbon markets. And just this week, just a couple of days ago, they've announced a stellar new advisory board. Carbon markets are also a perennial flashpoint in the formal UN negotiations due to kick off in the next round to kick off again in a few weeks in Glasgow. But many activists fear that governments will try to dilute ambition by using carbon markets and the provisions of what's called Article 6 and the Paris Agreement to try and reduce overall ambition. So there's lots of buzzwords and I'm sure we'll touch on a few of them, but I just want to drill it down to in essence what carbon markets are for those of you who may be looking at this issue for the first time. And at the simplest level, carbon markets are where if you have overcommitted or overachieved rather overachieved on your climate commitments, you can sell excess carbon credits to somebody, another entity or polluting entity or a country that is looking to try and increase their own ambition, but not able to decarbonize quickly enough. We've got existing regulated markets in places like Europe with the European Emission Trading Scheme in California and these voluntary markets that we've already said that corporates are investing into. So the theory has always been that done right, these markets could actually lower the overall cost of achieving our climate ambition without diluting any of that ambition that we know is needed. So done right, we also know and you'll hear from one of the panelists in particular today, that they could also be a crucial source of finance for critical issues like how do we stop deforestation by providing crucial incentives, crucial financial incentives for countries with tropical forests for how the forest can be more valuable standing rather than today where we see more value when it's clear for agricultural production. So in theory, they can be a really great thing, but the challenge for the last 20 years they have not fully delivered on the promise that they've always held out. And too often there's both perception and reality that the real reductions have not resulted from the use of these carbon markets and that they can be susceptible to greenwashing claims. So we've got a stellar panel now. And what we're going to do is unpack some of this to really think about what has worked what hasn't worked and what might we be able to hold on to as we go forward. So the three panelists I'm delighted we've got Rachel Kite the Dean of the Fletcher School from Tufts University in the US Joaquim Levy the director of economic strategy and market relations from Bank of Saffra in Brazil and Aaron Blumgarden the executive director of emergent but all three of them have also got incredibly rich backgrounds and past Joaquim as former CFO from the World Bank former minister of finance and the president of the Brazilian Development Bank Rachel heading up climate at the World Bank for many many years and Aaron been involved in private markets for carbon. So great, great panel. I'm going to turn to you first Rachel carbon markets a crucial part of the solution or a dangerous distraction. And I'll turn to you with that same question. crucial part of the solution. And I think this race to zero that has really just exploded over the last 12 for 18 months with corporate commitments coming in stronger and stronger around net zero have brought real attention to the market in a way that we haven't really seen before. I'm now the co chair of the voluntary carbon markets initiative. And that's because they own the only way in which the carbon markets voluntary and regulated are a crucial part of the future is if they actually achieve the end purpose which is to put us on a pathway to 1.5 to smooth the pathway to 1.5 degrees, and that they provide a sort of that they are global and liquid, and they provide a source of revenue to the protection of the natural resources that we need to go into countries who are faced with extraordinary dilemmas in how to adapt and become resilient. So, voluntary carbon markets, carbon markets only a part of the solution, if they actually help us achieve those goals so they have to have this purpose, which means that we need to have high integrity carbon markets. And I think that's where the drama and the disagreement lies. There was a complexity to the to building these markets, and they have to be high integrity which means that a claim made by a company has to have integrity has to be transparent has to be assured and verified. And the actual performance of a country or of an asset which could be then traded also has to be has to have integrity so the voluntary carbon markets initiative is sort of established to, you know, with this end to end approach to integrity across the markets, really what we're looking at doing is trying to, through a multi stakeholder process, try to make sure that developing countries have access to these markets because without that credibility is difficult, and that the claims that are made by companies are ones which have integrity and can be verified so we're going to be doing sort of the dirty skunk works that has to happen within any market when you build it up so looking at the scope and purposes of claims looking at transparency accounting, we're going to be coming forward and putting forward sort of straw men or women for market participants to tear down. There's extraordinary innovation in the market, both on the on the supply side, and obviously Aaron's going to talk about leaf. I think there's also extraordinary potential for transplants using new data, big data technologies using blockchain using other ways to be transparent. So I think there's a huge potential to make this work for those twin goals of one and a half degrees and global participation, but we're going to have to hold ourselves to account in order to be able to do that. Very good so I mean you talked about complexity event or clearly about integrity, and obviously the part of one and a half degrees being crucial but your answer carbon markets are crucial part of the solution we're just going to have to get it right. So, Aaron let me turn to you crucial part of the solution or dangerous distraction. In my mind, absolutely crucial part of the solution Justin. I've been part of, I've been involved in car markets for the almost the last 20 years. And I think they are, if done right, as Rachel suggesting they are a crucial and need to be a crucial part of the solution and so just looking at both Rachel mentioned the supply and demand side and so just looking at both of those. You know what I'm really interested in is how do we protect nature how do we protect standing nature and ecosystems. And when you think about how you can do that ultimately, you know we're living in economic system that we have. And people make decisions government make make decisions based on incentives. So, to keep ecosystems in place to keep for standing we need to, we need to find ways to change the economics on the ground to give them some value. Non extractive value, and one of the best ways to do that. Having thought about this over the last 20 years, in my view at least is to pay for any for ecosystem services coming out of those for us there's water there's biodiversity, but the one that's the biggest and the people are frankly globally willing to pay for is carbon. And so, it might be one of the best hopes of keeping nature standing keeping ecosystems intact and forest is forest standing is through payments for from voluntary carbon markets, then on the demand side, and that's also crucial. And this is where you know some of the criticism and levy that companies are are delaying action or not. We need to hold companies account. There's no doubt companies and buyers of carbon credits need to be doing everything they can within their own operations and within their own value chains. Basically, there are some companies in some sectors that just don't have an alternative, unless, and so unless we're all happy to stop flying. Right. We have to hold those companies to account. And I think you'll find that the companies that are participating voluntary carbon markets and purchasing carbon offsets, they're actually embedding a carbon price in into their operations. We've got to shut them off. We've got to say that the emissions that you can't mitigate, you've got to cover one way or another and offsets and, you know, in my view are one of the best ways. One of the best ways to do that. Very good. So thank you Aaron. So again, talking very clearly there about using carbon finance or payment free system services to help conserve forest a crucial source of finance but this importance of getting the integrity of that right both on the supply side. So what projects are we actually doing in the in the tropics and other forests ecosystems around the world and we'll come back here more about that and then similarly for the corporates how do we ensure claims that they're making actually a part of their overall climate plan and not just some corporate greenwash. And I think we've got a good examples of where they where they are doing that but there are also examples where they're not doing that. So, Joachim, you I mean so much experience in this space you've written about it. And in Brazil. Right. Is this a key part of the solution. Is this something that we should be really sort of piling in on and helping Brazil bring this forward or is this a dangerous distraction in the Brazilian context. So this is very central to Brazil. And I think to many, many other countries for two reasons. First, because it's a very important way to bring, say, the South in the discussion and opening economic opportunities in this fight to to that zero. The second, which is related to that is that in many cases, we don't have technologies yet. I don't think that by having carbon offset carbon credit and supporting nature based solutions that exist today. We are hindering the development of new technologies that we all look for. But the fact is that we have a number of ways to reduce emissions today, and in an inclusive way, not only in terms of countries but also populations within countries. And the carbon credits can have a huge impact on that. Now, responding to to to supply two things. First, integrity and transparency is fundamental. You have to think about what kind of activities should be eligible. And I think that in addition to just conservation, which is very important because of all the service that Aaron has mentioned. I think that change the economics, especially in the agriculture sector are very important. So anything that's creating sentence for instance to have a low emission agriculture or to change the dynamics in meat production. There are many things. There are ways to stimulate new new ways of doing things for intensifying cattle raising that to free land to reforestation. These are good things that should be recognized that they need to have, say, clear guidelines and a framework to work to work with that. And also because one thing that I learned now looking at the demand. One thing that I learned when I was issuing papers that from the World Bank or from Brazil is that corporations need things that are simple to understand that are liquid that our people can recognize. The same way that when you issue a simple that or even if it's a green bond or say result link the bond, these things have to be easy to understand verifiable so that you really get a market and people can price it. So I think we have to continue to work on both sides and the supply and demand, but we know broadly what you have to do increase the range of activities that can be covered integrated these in the voluntary and mandatory market and have these sort of standardization where you can really identify what a project that is say underlying a credit or whatever security is really bringing to our final goal, which is net zero. Terrific. And the one and a half degree pathway that Rachel talked to so so I mean, again, great examples examples of kind of how you can use it to incentivize, you know, different sectors of the economy and that transition that we know is needed to to net zero and to one and a half degrees. But I want to turn now to each of you again with the same question. Yeah, there's such a great idea why have they why have we not seen more progress in the last 20 years. And what do we need to think about differently as we as this new wave of money comes in as the new interest comes in, if we're going to avoid some of the mistakes that we've seen in the past Rachel. Well, I think that I think we need we need we'd need more than 30 minutes to discuss all the things that haven't happened over the last 20 years that could have happened and perhaps should have happened. But I think where we stand now is that we have huge distrust, because you haven't seen the flow of finance and support and resources into the communities you haven't seen the slowing down of the rate of destruction of forest and nature. And you've seen some outrageous and egregious greenwashing and outrageous and egregious claims and some really quite, you know, absurd credits and so absurd that my dog agrees with me. So the issue is really now how do we build credibility. And so we have to call out the greenwashing. And we have to recognize on the demand side that there is only a business case for a venture carbon market, if it is high integrity. If it's not high integrity, then we don't actually have a venture carbon market that helps and it won't help anybody. And then we have to assure access by developing countries into this carbon market so that it can provide the kind of financial flow. So I think we have to, and I think this is why the work that I'm doing, the task force which has got its new governance in place now is so important, is that we actually have to form greater and greater agreement about the rules that we will operate within and how we will be transparent. So I think those are part of the reasons why it hasn't worked up to now. And that's what we need in order for it to work going forward. And I'm going to mute now. Thank you. Aaron, let me come to you to build on that exactly the same question. Great, so I love this question. I would actually maybe I'll be a bit of a contrarian here and say, I actually think that in many ways carbon markets in the last 20 years have been a huge success. They lowered the cost tremendously of, you know, implementation and smooth the transition implementation of the UBS China, which was a great beneficiary was, you know, was frankly brought to the table in a much more meaningful way. Because they were recipient of CDM finance. And so I so we may not have seen the type of action we're seeing at the national level now with the carbon market in China. I could go on and on and I think, yes, there have been problems but you know this is the you know there was a frankly learning by doing face in terms of also I mean I also think a few things I think first of all, we do need to say on the green on the green washing side I think that Rachel raised, we do need to see more rigorous standards on buyer criteria. We've tried to implement that through leaf talk more about but and then on the on the supply side. You know, I spent the last 20 years investing in developing probably about 30 carbon projects. There's some great projects with great impacts. Two things one is, there have been a lot of great projects there have been a few bad projects and so there's a bit of a bad Apple thing that kind of tarnishes the whole, the whole thing. My personal view is, you know, we're in such an emergency climate emergency right now that it's time to think beyond projects, not abandon projects we still need projects. But we need much, we need to move much faster and much larger scale and way, way to do that my view. And this is the focus of leaf and emergent is at the jurisdiction approach again, not abandoning projects, we got to do both, but we need to mobilize and connect carbon markets to this jurisdiction action as a way to aggregate. Very good. So we'll come back to that in the final round in a moment but Joachim, your thoughts on the progress and or lack of progress, different views from Rachel and Aaron there in the last 20 years. Oh, look, I think the dynamics of carbon and the carbonization has changed dramatically in the last three or four years since 2015. So you cannot compare what happened say the few years after Kyoto, where actually, as Aaron said there was a lot of things happening but with the learning process with low demand with a new level of commitment of corporations, including corporations in countries that don't have say regulated carbon markets. So if you were an American company, how you deal with the environment there's no, no framework for you so you try your best. And I think leaf is an example of people trying to to band together to have something meaningful and they would have a word on the so called jurisdictional approach which is I mean trust local governments in doing that and what is the advantage is that project preparation is a real problem and it takes time and so on. So if you don't have some sort of a framework, sometimes provided by the local government is very difficult to have these and then you may even have incentives for a sort of lower integrity projects and so on if things are done in a very unstructured way. So I think that we with increasing demand with the sense that this will be something that has a time of horizon so it's not something that happens today a flash and appear you will start to get in place. What are the typical things needed to build a market to build an industry which is this sort of say be able to foresee the future to have some sort of framework where you can build. So also the responsibilities of the different actors are more well specified and they're very encouraging examples of these are happening, but this early we need to accelerate that. Very good. So we're going to go into a final round now right I think really fascinating what you each outline there that that actually there's been a lot of learning the last 20 years. There's been some real progress but we've also sort of fallen short in a number of areas you talked about the trust issue Rachel and clearly the integrity issue sort of runs throughout this. Yeah, as we head now to Glasgow we've got five minutes to sort of try and bring this together. What are the things that are happening and Aaron you've talked about leaf and but but you've each got examples of where there are signs of hope of how we're going to scale and how we're actually going to ensure the promise of carbon markets can finally deliver at the scale and the urgency of action that so desperately needed, given all the science so so Rachel to you first. So I think that there's been important work done this year and that the UK presidency has been sparing, they will be the presidents for the following on I mean, the presidency is assumed just before the Cup right so I think that Alex Sharma will look to continue to drive towards smooth operating a high integrity voluntary carbon markets that then can scale. And so I think that this progress being made by the task force BCMI will be offering in the weeks after Cup 26 different guardrails and ways to think about integrity, and that we can start to sort of gather some critical mass around high performance. I think what you should see before, before Cup 26 is obviously continuing commitments by companies in a race to net zero but I think that those companies that understand that that the high integrity is the absolute sine qua non of a functioning voluntary carbon market for the goals of Cup 26. I think you'll start to see companies coming out saying, we understand that we have to be transparent and we have to meet the highest standard so, you know, a claim in a voluntary carbon market has to come after a company can show how it's going to manage its transition, and that the voluntary carbon market is not just sort of laundering sort of carbon around but we are actually in the process of trying to reduce emissions to meet 1.5. So I think you can see lots more announcements. You're also going to see, I think pledges by developing countries to get their houses in order and to build the mechanisms that they need in order to be able to participate. UNDP will be doing a lot of work in that respect. So we're on a very tight time track but I think there'll be things coming in to view before Cup 26 but then after Cup 26, voluntary carbon markets become a very big on ramp. For some, hopefully a successful Article 6 negotiation in Glasgow means that this is an on ramp to regulating markets but if the regulation is still out into the future then voluntary carbon markets have got a role to play and people like Emergents and LEAF are very, very important. Great. So thank you. So Aaron, let's go straight to you. We're running a little tight on time. Emergent, LEAF, how are you playing your part? What are you seeing in the run up to Glasgow? Yeah, and so I, you know, one of the things, one of the signs of hope I think in that emergent we're speaking to corporates, CSOs and every day and I think one of the things that we, that is a sign of hope is that these corporates are really moving now. It's much different than it was two years ago. There's a lot of pressure on companies to act. They're starting to really build it into their core businesses. Really understand what this means and think deeply about how they engage in this. In terms of emergent and LEAF, we have, you know, we launched LEAF in April at the White House Climate Summit. We announced the target of a billion dollars, so a hundred million tons at $10 per ton. So you'll, you'll let, you know, hear progress about how, you know, where we are towards that. But I would say beyond that, look, we know that LEAF, the billion dollars is way too small. I mean, it sounds like a lot. It's a headline, but this needs to be much, much bigger with 10X, 20X. And so, you know, and LEAF is really a platform for collective action, public, private, civil society action. And so, you know, additional partnerships, you know, additional companies coming on and certainly now starting to, you know, highlight some of the jurisdictions that we're talking to. So that's what's coming for us. That's terrific. And it's great to see yesterday, you know, Boeing, PwC joining you and then hopefully these announcements of real partnerships with states and provinces in the critical forest countries as well. So terrific. Joachim, last thoughts from you in terms of what are we looking forward to, what gives you hope? I have hope because we're seeing a lot of activities, including from the financial sector. I mean, banks, as well as asset managers, et cetera, they're putting together funds and other instruments so that you can channel capital to forest areas and also for those activities that they mentioned that can reduce emissions or even capture emissions efficiently. And we are working in many cases together with institutions like the NCWRI. And we could have a number of very good examples of things that have on their own already some, say, scale, but are also pilots of things that could really become, say, standards for these type of activities. Now, I would say that in addition to that, we have to integrate voluntary and regulated carbon markets because otherwise pretty soon we're going to start to have questions about, say, a company does something and where it would come to be in the headquarter country of the company or you'll be in the place that these are happening and so on and so forth. In this aspect, I think that the discussion of companies having dialogues with subnational governments sometimes can be very helpful for the reason I mentioned. Governments can provide frameworks, can provide an environment where a lot more things can happen in, say, more transparent and more monitored way. So, a lot of things to do, but I think the last 18 months we made a lot of progress too. Very, very good. So, I want to thank all the panelists for a really engaging discussion. I think we could have probably gone double the time and still not touched all the issues, but hopefully that gives you a sense of the opportunity to unlock carbon markets certainly challenges ahead. But I think unanimity from this group that carbon markets will play a crucial role. Lots of lessons we can learn from the last 20 years of what's gone well, what's gone less well. And then as we move forward, some of the things we're hearing about the innovation that's there, the financial sector getting involved, the partnerships that are going to be crucial public private to actually make this work. The relationship between the voluntary market and where so many corporates are piling in, but then the necessity of regulatory markets as well. And then the crucial, crucial piece of the rule based system to ensure that there is integrity and the great work that the BCMI is doing that Rachel is now co-chairing, the great work on integrity that LEAF is doing, working with the forest countries to ensure larger scale impact. And I think really an opportunity for if we can get this right and work together, then this can play a really substantial part of climate action in the decade, this crucial decade ahead. So thank you all. Hopefully that's been an engaging session for you, the audience. Great panel. Thank you so much to each of you. And please enjoy the rest of the Sustainable Development Impact Summit in the next couple of days.