GIC’s financial and advisory services focus on assisting agricultural companies in managing their GHG emissions and developing a comprehensive strategy for monetizing their value. GIC seeks to educate its clients on the importance of incorporating carbon emissions management into their short-term and long range business plans. This includes analyzing the impact of potential mergers and acquisitions, adopting new mitigation technologies and practices, and valuing carbon assets and liabilities.
As part of its valuation analysis and monetization strategies, GIC has developed two financial instruments to assist agribusiness companies in projecting and valuing their GHG emissions and related emissions reduction activities. The first is GIC’s Agricultural Carbon Index (GIC-ACI). The GIC-ACI is designed to capture the global GHG footprint of agriculture, including production agriculture, the value-added agribusiness sectors, and the agricultural input sector. The index also captures emissions associated with land use, such as forestry, crop land, and pasture land. The index features a proprietary algorithm that benchmarks the annual change in aggregate agricultural related emissions as a function of changes in macroeconomic and industry related factors. To date, GIC has utilized the index to quantify, project, and value the mitigation potential of agricultural input technologies in the row crop and animal feed additive sectors. This has included examining the potential of nitrogen-use efficiency technologies and feed input designed to reduce carbon emissions generated by livestock.
GIC’s latest financial product is a new concept known as the Commodity Plus Carbon (CPC) futures contract. This new derivative contract targets individual commodities and functions by bundling the value of a producer’s carbon reduction practices with the value of the physical commodity. The CPC will enable producers and processors to capture the marginal value of their verifiable GHG reductions and hedge that value in international transactions as well as regional and international voluntary markets. The CPC will facilitate better aggregation among producers engaged in growing a particular commodity with a carbon reducing trait, while lowering transaction costs and improving the traceability of commodities produced with lower GHG emissions.
Our first project involving the CPC will be in Ecuador where we and our local partner, C&D, will be developing a new carbon monetization vehicle for cocoa growers in Ecuador. By means of a new commodity (cocoa) plus carbon futures contract, participating growers of aromatic cocoa will be able to maximize their revenues derived from good agricultural practices and incentivize additional tree plantings of aromatic cocoa varieties. Under the project, Ecuador will serve as a pilot project for all aromatic cocoa crop production.