Carbon credits won't solve the climate crisis, but they can fund nature

Fran Price is forests lead and Manuel Pulgar Vidal is climate and energy lead at WWF.

The world does not need more companies writing cheques for planting trees just to tick the box that they have offset their carbon footprint. It just isn’t that simple.

Corporate value chains are responsible for the vast majority of human-caused greenhouse gas emissions annually, and companies are clutching at straws if they believe they can grow enough trees fast enough to offset the modern world’s emissions.

The world needs companies to prioritise rapid and deep cuts to their emissions. These cuts should be in line with climate science, and companies must be held accountable through transparent checks of their emissions-cutting activities.

But it cannot stop there.

To reach the elusive but crucial net-zero emissions goal that can put us on a trajectory to limit global warming to 1.5° Celsius by the end of the century, we need companies to go beyond reducing emissions in their value chains. Firms must also invest in high-impact nature-based solutions to protect and restore nature and its ability to sequester carbon.

At the U.N. biodiversity summit in December, governments raised global ambition by committing in this decisive decade to bring nature loss to “close to zero by 2030”. This has zero chance of happening if we do not coordinate public and private investments in scaling up a diverse suite of nature-based solutions, which protect and restore ecosystems, increase the removal of carbon dioxide from the atmosphere, and provide tangible benefits for people.

Many of the criticisms of the voluntary carbon market are warranted . Poorly planned and executed carbon crediting projects can result in harm to local communities, indigenous peoples and the global climate, as well as low carbon credit prices that are very unlikely to result in the benefits promised.
But the polarised and highly-charged debate risks turning off the tap of corporate carbon financing altogether, when we need a 200-fold increase in forest finance to meet current climate and nature targets.

We must now help companies differentiate between low- and high-integrity credits. Guidance produced by eight organisations including WWF can help companies do this, identifying high-integrity credits associated with transformational activities on the ground.

The Tropical Forest Credit Integrity Guide recommends companies: 1) plan a tropical forest credit portfolio that aligns with global needs; 2) drive demand for high-quality credits associated with large scale sustainability programmes; 3) conduct due diligence; and 4) follow up with complementary actions and stay attuned to new developments.

While it’s clearly important to raise the bar in the voluntary carbon market, we also need to move the conversation beyond a fixation on credits and associated offsetting claims.

We need business leaders to take a more holistic approach to tackling the climate and nature crises through their nature-based investments, supporting transformational interventions.

WWF recommends a “contribution approach”. After implementing wholesale emissions cuts following science-based targets, companies cost their remaining emissions with a true social cost of carbon – investing this in high quality nature-based solutions without making carbon neutrality claims prior to achieving net-zero emissions. These investments need not be constrained to carbon credits and can support a broader range of essential measures to address drivers of deforestation.

Businesses can make meaningful and long-lasting change by responsibly addressing the impacts of their supply chains and supporting landscape-scale projects, which are co-designed with local communities, and which benefit people, climate and nature from the start. Finance must support the best management practices for smallholders; enable indigenous peoples and local communities to secure land rights and access sustainable livelihoods; build local multi-stakeholder coalitions around shared benefits; and bring opportunities to stewards of all the world’s standing forests - not just those currently being deforested.

With ambitious global climate and nature targets now in place, we need a drastic scale-up in investment to reverse nature loss. There can be no space for offsets based on the lowest carbon prices and hollow publicity exercises that ultimately discredit the market and drive away investors.

High-quality carbon credits can be part of the solution. But we also need companies to step up and show real leadership with transformational investments in nature-based solutions that deliver nature, climate and social benefits.