Carbon markets have transformed over the past five years, with updated standards and rigorous due diligence frameworks giving sustainability leaders much more confidence in project design. Still, signing an agreement to buy an invisible good in the future remains a tough sell, particularly when that good is not strictly required.
At Symbiosis, a buyers coalition representing Google, Microsoft, Meta, McKinsey, Salesforce, REI and Bain, our members have signed deals covering more than 40 million metric tons of nature-based carbon removal over the past three years. Long-term offtake agreements have been core to this effort. The deals lock in price and volume today, providing budget predictability while ensuring the supply needed to hit sustainability goals. Yet some of our members had never signed a 10-year offtake agreement before joining Symbiosis.
Here are three strategies we used to get CFOs comfortable with these deals.
Evaluate delivery risk
The job of any CFO is to manage risk. To justify committing budget toward carbon removal offtakes, they need assurance that the tons will be delivered as promised. That means addressing what’s known as “delivery risk.”
This is a separate challenge from assessing project design or the quality of a credit that’s already been delivered. An early-stage project could develop a high integrity project design with the most robust carbon accounting methodology and stakeholder engagement plan, and still fail to deliver due to implementation delays, financing gaps or regulatory change. These risks should be part of your diligence — look at factors such as project developer financing, track record and pilot implementation. To mitigate delivery risk for participating buyers, Symbiosis carefully examined each of those factors as part of its diligence process with project developers Mombak, Living Carbon and Thryve.earth.
Apply the renewables playbook
Fortunately, corporate buyers
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