Marsh allows U.S. clients to pay broking fees with carbon credits

Marsh’s U.S. clients will from Thursday be able to pay their fees in voluntary carbon offset credits or renewable energy certificates (RECs), the insurance broker said, part of a drive to help clients meet net-zero climate goals.

While most corporate buyers of carbon credits would use them to offset their emissions and then ‘retire’ the credit, many companies looking to ensure they have enough, may find they have too many after accounting for their emissions, Marsh said.

If so, clients can now pay for insurance broking or risk advisory services by transferring the credits and RECs to Bank of America (NYSE:BAC), which will pay the proceeds to Marsh, the broker said in a statement. It said it believed the arrangement was the first of its kind in the financial services industry.

“The insurance industry has a very key role to play in climate issues and sustainability,” Jack Flug, a managing director at Marsh, told Reuters. He added that paying fees with carbon credits “highlights and provides a bit of an incentive for companies to continue along that path of sustainability and try and do better”.

The market for credits is likely to grow strongly in the United States after the recent passing of the Inflation Reduction Act which offers tax breaks to U.S. companies who use renewable energy.

Going forward, Marsh hopes to expand the option for clients to settle fees using credits to other markets globally, Flug said.

Voluntary carbon offset credits are records of investments organisations make in environmental projects and infrastructure that either remove carbon dioxide or avoid CO2 emissions.

RECs are records of renewable electricity generation issued to organisations which generate power from a renewable energy source.