In times of global warming, every organization needs to think about ways of acting more climate-friendly. This poses a major challenge for companies from chemical and pharmaceutical industry since the reduction of greenhouse gas emissions is only possible to a limited extent. This is where ClimateTrade can help out: the Spanish startup, which is part of 5-HT’s digital ecosystem, has developed a blockchain platform for carbon offsetting. On this marketplace, companies can balance out their carbon footprint by buying carbon credits from projects that capture CO2 from the atmosphere or prevent its emission. In this interview with 5-HT, CEO and co-founder Francisco Benedito explains how ClimateTrade makes the process of carbon offsetting more transparent and more efficient, thus contributing to the fight against climate change.
Why should the chemical and pharmaceutical industry put more effort into carbon offsetting?
In the Paris Agreement of 2015, the United Nations committed themselves to limiting global warming to well below 2 °C above pre-industrial levels. In line with the Paris Agreement, the EU even aims to become carbon neutral by 2050, as declared in last year’s European Green Deal. We clearly see that governments around the world are striving to achieve decarbonization. This will be the major political challenge of the future. However, governments alone will not be able to drastically reduce GHG emissions – it will be necessary to also decarbonize economy. The pharmaceutical and chemical industry have a great responsibility in this regard, because especially chemical companies consume a lot of energy. Since it will not be possible for them to reduce their GHG emissions to zero, it will be necessary to offset the rest of their emissions to achieve carbon neutrality. Companies will have to take very good care of this topic in the future, not only for the planet, but also for their consumers and investors who expect them to act in a sustainable way.
How does carbon offsetting work?
Every company has a carbon footprint which can be measured by its emission of CO2 andother equivalent substances. These emissions can be compensated on the carbon market: if a company is not able to reduce its emissions in the first place, it can buy carbon credits, e.g. for reforestation, forest conservation or renewable energy projects. One carbon credit equals one ton of CO2. Therefore, if a company emits one million tons of CO2, it can offset its carbon footprint by buying one million carbon certificates. In the future, we imagine every single transaction in the world to be carbon measured and carbon compensated. Only then will we be able to achieve global carbon neutrality.
How does ClimateTrade help companies to offset their GHG emissions?
ClimateTrade is a marketplace that connects companies that would like to balance out their carbon footprint with projects that are already working on reducing GHG emissions. Once a customer has signed up on our platform, he can look at the various projects we support, e.g. a reforestation project in Amazonia, a wind energy project in Mexico or a biomass power plant in Chile. We also help the sustainability departments of our customers to take the best decision. Then, the companies can directly buy carbon credits for specific projects on our platform, thus compensating their carbon footprints.
What are the key benefits of ClimateTrade compared to other methods of carbon offsetting?
Up to now, it has been common to cooperate with brokers who conduct carbon offsetting transactions manually. With our platform, however, companies can balance out their carbon footprint without intermediaries by buying carbon credits directly from the source. The removal of third parties makes the process faster, cheaper and more efficient, reducing costs for the buyers in more than 30 %. Blockchain technology allows us to trace and securely document every single transaction, so you have total transparency of where your money has gone. Furthermore, you have all the information related to sustainability together in one place. On your dashboard, you can see all your purchases, invoices and certificates of origin. With one click, you can simply download them and include them in your sustainability report. So far, there has been no platform that digitizes the whole process like this, with such a unique user experience. We also offer the possibility for big companies to create their own white label website for their providers. When they want their subsidiaries to become carbon neutral, they can give them the chance to offset their carbon footprint on this website. Since our APIs allow to integrate our technology in the different processes of the companies, they can also offer carbon neutral products to their customers.
Who are your customers?
At the moment, there are about 150 Spanish companies from very different sectors using our platform, e.g. construction groups, airlines, hotel chains, transportation companies, retailers, water suppliers, telecommunication companies, banks or cosmetic companies. Some of these organizations give their individual customers the choice to make their transactions carbon neutral, e.g. by booking a carbon neutral flight or hotel room. Up to now, there have been more than 1500 individuals using our services. With our API tool that allows the offsetting of every transaction, we make it possible to integrate both providers and consumers. Thus, we intend to close the loop and to achieve carbon neutrality throughout full business circles.
How did ClimateTrade get started?
I had been working as a banker for 15 years when one of my partners and I were both having a baby. As we thought about the future of our children, we began to worry about climate change – and decided we wanted to do something about it. Our aim was to develop a technological solution that would enable us to fight against climate change. First, we started with an innovative cryptocurrency, but then we shifted our focus to carbon offsetting. In 2018, ClimateTrade was founded. Today, there are eight people working for our startup in Valencia. Since governments around the world are urging their industries to become carbon neutral, companies are increasingly interested in our solution.
What are your next goals for the development of ClimateTrade – and how can 5-HT help you in this regard?
At the moment, we are fully focused on growing our customer base. We need to open to new markets. This is why we are searching for customers in Germany and other European countries. Therefore, we are very happy to be part of 5-HT – we hope that our collaboration will help us to find a frame for entering the German market, especially for getting in contact with potential customers in the chemical and pharmaceutical industry.
What is your vision for the future of ClimateTrade?
As our API ClimateTradeGo is very easy to integrate in any company’s systems, we would like to become the tool for all commercial transactions that need carbon offsetting. Furthermore, in the future we would like to become a universal climate platform that is not just focused on carbon offsetting, but provides services for everybody who wants to do something against climate change and for sustainability.