A new chief for Climate Impact X

This is a reduced version of The Business Times’ ESG Insights newsletter. Sign up here to get the complete version in your inbox every week.

??This week: Singapore carbon exchange Climate Impact X (CIX) has finally found its new chief executive, appointing capital markets veteran Choo Oi-Yee to the helm after a six-month search.

Choo will take over from interim CEO Mark Glossoti, who stepped into the role on Jul 1 following the departure of previous CEO Mikkel Larsen. Larsen resigned from CIX to focus on his family but will remain on CIX’s board as an executive director during the leadership transition.

CIX was set up in 2021 as a joint venture between DBS Bank, Singapore Exchange, Standard Chartered and Temasek.

In selecting Choo, CIX is tapping a name well known in the Singapore financial sector. Choo was a prominent investment banker who held leadership positions at Nomura, Morgan Stanley and UBS before joining private market exchange ADDX in 2020.

She also sits on the board of CapitaLand Ascendas Reit, and was previously a member of the Civil Aviation Authority of Singapore, giving her experience in two carbon-intensive industrial sectors.

Choo joins CIX as the voluntary carbon markets are still in a state of turmoil amid questions about the credibility of credits.

Data compiled by Ecosystem Marketplace showed that total global transacted value in voluntary carbon markets fell 61 per cent in 2023 to US$723 million, the second year in a row that the markets contracted. Ecosystem Marketplace attributed most of the drop to media scrutiny of the credibility of credits.

Furthermore, although the industry’s Integrity Council for the Voluntary Carbon Market (ICVCM) has come up with a set of guidelines to address credibility concerns, implementation has been delayed, while the influential Science Based Targets Initiative has held back on providing detailed guidance for companies using offsets to achieve their net-zero objectives.

One of Choo’s challenges will be to help CIX develop a viable product in these trying times. The company describes its mission as “turning trust in carbon credits into tangible and actionable outcomes”. That can be difficult to accomplish when there isn’t much trust in carbon credits.

There are two approaches to handling the issue of trust. The first is to build a higher fence.

That could mean being more picky about verifiers that CIX is willing to work with, although the VCM market is so dominated by Verra and the Gold Standard these days that there really isn’t much choice there.

It could also mean CIX imposing another layer of checks and curation on top of what the independent verifiers are already doing, so that the CIX platform can claim to only offer the most credible credits.

The second approach comes from a capital markets perspective, which is to try to find a structural solution. This could involve incorporating contingent elements into contracts, or finding ways to aggregate or tier risk, or something else altogether. The point would be to create products where the risks and rewards are somewhat transparent.

The two approaches are not mutually exclusive.

Interesting times provide interesting opportunities. The new chief behind CIX’s wheel has a chance to cut a new path through the voluntary carbon markets’ chaos.

??Top ESG reads:

1. Singapore’s penalties for misleading accounts at Noble Corp and corruption at Keppel were surprisingly low, says Amar Gill, secretary-general of the Asian Corporate Governance Association.
2. Singapore-based Air Carbon Exchange will restore the sale of carbon credits from the Southern Cardamom forestry project after verifier Verra reinstated the project.
3. Sembcorp Industries has agreed to buy a 30 per cent stake in energy supplier Senoko Energy from Engie for an undisclosed sum.
4. The European Union’s tariffs on electric vehicles will hurt both China and Germany, China’s commerce minister said during trade talks with Germany.
5. Financial companies have pledged support for US$386 billion of funding to help India expand renewable capacity by 2030, says the country’s renewable energy minister.

What do you think about today’s newsletter? Let us know at [email protected]. Sign up for the full version here.