The new Exchange Market, developed by Soil Association Exchange, will operate as an innovative insetting fund, aiming to achieve carbon reduction without engaging in the sales of carbon credits.
While traditional carbon credits finance decarbonisation projects to offset emissions, insetting focuses on investing directly into carbon reduction initiatives within a company’s own supply chain. This strategic shift promotes greater accountability and impact in reducing emissions.
The Exchange Market program will consolidate funds from various companies sharing supply chains, enabling them to compensate farmers for their emissions reduction efforts. This collaborative funding model fosters a collective approach to addressing carbon footprints in the food manufacturing sector.
Lloyds has played a supportive role in this initiative, helping bring together key retailers and landowners such as the Co-Op, Lidl, Tesco, and the Church Commissioners for England, who have contributed to the fund.
In its inaugural funding round, Exchange Market successfully secured £1 million, marking a significant milestone.
Co-developed with technical experts Finance Earth, the fund also benefits from insights provided by a farmer steering group, ensuring that action plans are practical and relevant for the agricultural sector.
Led by farmers themselves, these plans will be crafted with guidance from expert advisors at Soil Association Exchange. Potential actions eligible for funding may include reducing fertiliser usage through nitrogen-fixing companion crops, enhancing fuel efficiency, or investing in solar energy solutions.
Soil Association Exchange chief executive Joseph Gridley highlighted the program’s significance, stating, “Collaboration like this enables greater scalability, affordability, and ultimately more impact in reducing agricultural emissions and advancing positive environmental outcomes.”
Participating farmers stand to earn £60 per tonne of CO2e (carbon dioxide equivalent) reduced annually, with 50% of payments provided upfront to facilitate their transitions toward sustainable practices.
Moreover, farmers who have already made strides in sustainability will receive additional rewards, alongside those who undertake new initiatives to cut carbon emissions.
Farmers whose emissions fall below the average benchmark established by Soil Association Exchange will qualify for maintenance payments, recognizing their current achievements and encouraging ongoing improvements.
James Hay of Barton Place Farms and a member of the farmer steering group remarked, “As subsidy funding changes in the UK, schemes like Exchange Market give our business further resilience by offering new income streams from private markets.”
Elizabeth Beall, Managing Director of Finance Earth, emphasized the importance of this initiative, stating, “Mobilising private capital to address the climate and nature emergency is critical to speed up action. Farmers are on the front lines and should be remunerated for the work they have done and incentivised to do more. We’ve designed a mechanism which enables both to happen – private finance is mobilised, farmers get paid, while businesses can share costs in reducing emissions in their supply chains.”
Farmers interested in joining the Exchange Market must complete a baseline assessment and submit a verified emissions reduction plan, with support from Soil Association Exchange advisors. Payments will be awarded annually based on verified results.
