Finding solutions to global warming is now a top concern across the political and corporate landscape around the world. Major companies are trying to get ahead of activists with their own pledges to go carbon neutral in the coming years. Their plans include restoring rainforests in order to receive credits for their climate initiatives. But is that really enough to help curb their carbon footprints?
The basic idea is that trees and rainforests are known as carbon sinks, meaning those trees that are in the forests, they actually absorb and store carbon dioxide that would otherwise be going out into the atmosphere causing global warming and so by expanding or at least preserving the forests and the trees, it is possible to prevent some of that carbon dioxide from going into the atmosphere.
What companies have been doing is buying credits – where basically for every ton of carbon dioxide that’s going to be safely stored in a tree somewhere and not contributing to global warming – a credit will be given and then companies can use that credit to offset their own emissions that they are not able to reduce.
Southeast Asia has some of the world’s most valuable investable carbon stock, and avoiding deforestation in the region represents a valuable source of carbon offsets, as well as important community and biodiversity benefits.
There are few examples here. Delta Airlines from the United States which obviously has a lot of emissions from the jet fuel that all of its planes burn, is spending US$30 million to preserve a Cambodian wildlife sanctuary as well as an Indonesian Peat Forest. As a result, they are getting credits that they can then use in their balance books to say, look we are carbon neutral because all the emissions we have, we are offsetting them with these trees that are actually going to store other carbon and create a net-zero situation.
Japanese trading giant Mitsui & Co. started plans to preserve the Prey Lang Wildlife Sanctuary in Stung Treng Province, Cambodia in 2019. The three year project, overseen by Conservation International, is not philanthropic. It is an investment. If it succeeds in preserving the forest destruction, it will generate carbon credits, which Mitsui will then be able to sell on the Japanese market.
Mitsui’s funding is the tip of an iceberg. Billions of dollars are poised to flow into carbon offset over the next few years, as growing recognition of a global failure to rein in greenhouse gas emissions, despite the threat of catastrophic climate change, drives a renaissance in the market.
Then there’s REDD+. Private sector interest in REDD+ projects is spiking. InfiniteEarth’s Rimba Raya Biodiversity Reserve, spanning some 65,000 hectares of peatland rainforest in Central Kalimantan, sold carbon credits to Microsoft, insurance giants Allianz and Zurich, and to State Street Bank and Trust.
U.S. technology company Salesforce.com bought “blue carbon” from Worldview International Foundation’s mangrove restoration projects in Myanmar few years back; and going back to Cambodia, the Wildlife Conservation Society sold credits generated from a project in the Keo Seima Wildlife Sanctuary to multinational companies.
Lestari, which runs a platform that allows palm oil companies to buy into reforestation projects, is now working on a similar one to aggregate demand for carbon, with interest from the oil and gas industry. The Rimba Collective, developed by Lestari Capital, a Singapore-based impact investment firm, will fund projects that protect and restore more than 500,000 hectares (1.2 million acres) of tropical forests in Indonesia and the region. Major household brands and palm-oil buyers Nestle and PepsiCo have backed the scheme that aims to invest $1 billion in forest conservation across Southeast Asia over 25 years.
For all the initiatives, experts are still skeptic whether these forest credits are making a difference in helping to offset the carbon footprint of these massive companies or is it just a way for corporations to escape the tough task of actually cutting down on emissions.
Climate finance experts and environmental groups say this whole thing does not deliver near the benefits that it should because for example, it is really hard to prove what would happen if you didn’t pay people to preserve these forests. How do you know that a wildlife forest that isn’t cut down was going to be cut down if you hadn’t paid this money and if you can’t prove that, you are not really reducing carbon from the atmosphere. You are really just generating something that these companies can use in their advertisements to investors who are climate focused to say they look really good and they are offsetting their emissions when in fact, when it comes to the climate balance books, things are still getting worse and that’s the big concern that people have particularly as this industry is growing rapidly following the climate summit in Glasgow and efforts by businesses to show they are really taking climate change seriously.