The progress ART achieved in 2021 with collaborators significantly broadened opportunities to unlock inclusive, large-scale solutions from forests that support achievement of the ambitious climate and sustainable development goals of the Paris Agreement.

We would like to acknowledge the continued leadership from ART’s independent board of directors, who provide ongoing strategic guidance and help to ensure the environmental and social integrity of ART. We would also like to acknowledge our colleagues within forest jurisdictions who are demonstrating remarkable leadership in this space, together with the broad range of other partners and stakeholder organizations who are continuing to help define and implement our collective vision of jurisdictional action to protect and restore tropical forests around the world. We look forward to our continued work together in the year ahead.

Launch of TREES 2.0.

After an 18-month development and approval process, publication of the second version of The REDD+ Environmental Excellence Standard (TREES) was one of the main headlines for ART in 2021. TREES is our standard for measuring, monitoring, reporting, verifying and crediting climate progress in the forest sector.

The Paris Agreement paved the way for large-scale climate solutions from forests by endorsing international cooperation to protect and enhance forest carbon stocks and reduce emissions from deforestation and forest degradation, collectively known as REDD+. A major barrier to mobilizing large-scale finance has been the lack of a high-integrity, standardized approach for the measurement, monitoring, reporting, verifying and crediting of emission reductions and carbon removals from forests at a jurisdictional scale, including the assurance of strong environmental and social safeguards.

ART was created to meet this challenge with the objective of attracting finance at scale to support ambitious climate action in the forest sector by countries and large subnational jurisdictions such as provinces or states. The first version of TREES, released in February 2020, focused on ensuring the integrity of credits for emission reductions from reduced deforestation and forest degradation ─ the most urgent priority for the forest sector.

Published in August 2021, TREES 2.0 expands options for participating jurisdictions to access carbon market finance by including crediting for additional mitigation actions from the forest sector, notably: (i) Protecting forests in jurisdictions with high forest cover and low rates of deforestation; and (ii) Enhancing carbon “removals” from reforestation and forest restoration efforts. It also creates a pathway to recognize the important contributions of Indigenous peoples to protecting forests.

The launch of TREES 2.0 comes amidst a major surge in corporate interest in including forest carbon credits as part of their climate action strategies. TREES 2.0 gives companies the opportunity to pay for high-integrity emission reduction and removals credits from countries and large subnational jurisdictions that are achieving results in protecting and restoring tropical forests. It will also bolster the growing interest from major economies – such as the U.S., U.K. and Norway – to support enhanced climate action in tropical forest countries.

While developing TREES 2.0, the ART team also prepared communications materials that enhanced clarity for how project-level activities can fit within a jurisdictional approach, as well as how TREES operationalizes the social and environmental safeguards defined by the United Nations Framework Convention for Climate Change (UNFCCC) for the implementation of REDD+ activities – known commonly as the Cancún Safeguards.

Growing number of participating jurisdictions.

Nine jurisdictions now have approved TREES Concept documents, which are publicly listed on the ART Registry. These include Amapá (Brazil), Colombia, Costa Rica, Ecuador, Ghana, Guyana, Maranhão (Brazil), Tocantins (Brazil), and Vietnam.

The approval of a TREES Concept is the first step to register a jurisdictional REDD+ program under ART. Once TREES Registration documents have been submitted and the results independently verified by an accredited verification body, the ART Board may approve the issuance of serialized TREES credits to the participating jurisdiction.

Beyond this, more than 20 other jurisdictions have expressed interest in ART and are at various stages of preparing a TREES Concept document. We look forward to this list continuing to expand in the year ahead along with progress through the ART registration cycle of those jurisdictions already listed.

Launch of LEAF coalition grows demand for ART-issued TREES credits.

2021 also saw the launch of the LEAF (Lowering Emissions by Accelerating Forest finance) Coalition, one of the largest-ever public-private efforts to protect tropical forests. LEAF has already mobilized $1 billion for the purchase of ART-issued TREES emission reduction and removals credits from forest country governments committed to increasing ambition to protect forests and reduce deforestation. The LEAF Coalition is coordinated by the U.S. non-profit Emergent, which aims to catalyze new capital flows into tropical forest protection by streamlining access to a wide range of REDD+ buyers of TREES Credits. Through LEAF, the total demand for ART-issued verified emission reductions is estimated to potentially reach at least several billion dollars in the period ahead.

At the U.N. Climate Change Conference (COP26) held late last year in Glasgow, LEAF signed the first Letters of Intent (LOIs) for transactions of ART-certified TREES Credits with Costa Rica, Ecuador, Ghana, Nepal and Vietnam. To date, 23 jurisdictions have submitted eligible proposals in response to the LEAF Call for Proposals. These jurisdictions collectively have the potential to protect up to half-a-billion hectares of forest, greater than the area of the European Union, and their estimated self-reported emissions reductions amount to several times LEAF’s initial goal of 100 million tonnes of emissions reductions. The Call for Proposals was designed to help catalyze significant reductions of greenhouse gas (GHG) emissions through a combination of forward purchase agreements and floor price commitments at $10 per tonne for at least 100 million metric tonnes of CO₂.

ICAO extends eligibility of ART-issued TREES credits.

Last year ART was approved by the International Civil Aviation Organization (ICAO) to supply TREES jurisdictional forest carbon emission reductions credits to airlines for their compliance under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). This decision marked an exciting milestone, making the CORSIA the first international regulated carbon market to recognize national and subnational approaches to reducing forest lost as allowable ways to achieve global climate change mitigation objectives. 

In November 2021, following this landmark decision, the ICAO Council extended the eligibility of ART-issued TREES Credits for compliance under the CORSIA. Initially approved to supply units generated between 2016 and 2020, the recent ICAO decision expands eligibility to include ART-issued units generated during the period 2021 to 2023.

This marks ICAO’s first approval of a jurisdictional REDD+ crediting program to offer post-2020 vintage credits for airlines to meet their targets in the first CORSIA compliance cycle. To date, ICAO has approved only eight carbon crediting programs globally to supply offset credits for the CORSIA, which is expected to reduce or offset between 2.5 and 4 billion tons of CO₂-equivalent through 2035.

ICAO’s updated approval of ART-issued credits was based on recent updates to our program requirements, as aligned with the recently finalized Article 6 rulebook, to ensure avoidance of double counting of credits used for CORSIA with mitigation targets under the Paris Agreement. In the context of climate change mitigation, double counting describes situations where a single greenhouse gas emission reduction or removal is used more than once to demonstrate compliance with mitigation targets.

This approval gives airlines the ability to demonstrate climate leadership by purchasing credits that are aligned with the Paris Agreement, as well as with the San José Principles. We look forward to working with first-mover forest countries and airlines to put these procedures into practice to ensure environmental integrity and transparency.

2022: The year ahead.

In the year ahead, the ART team will be shifting into an operational mode, working directly with jurisdictions on moving through the ART registration process towards the issuance of the first TREES Credits. Early in the year, we will launch a new website, together with a suite of other communications products, as part of our ongoing effort to make the relevant resources, information and guidance as accessible as possible to our broad range of stakeholders.

My colleague Tonitrice Wicks and I recently participated in the first Concordia Live event of 2022. Concordia’s monthly live webinars spark global conversations and highlight innovative partnerships across the Concordia community. The topic for this first webinar of the year was chosen intentionally because it lasers in on one of the root causes of the deep social inequities in the U.S. – one that suppresses economic growth and prosperity, and limits opportunity in historically disenfranchised communities.  

Our webinar focused on financial inclusion, which is glaringly absent in many places in the U.S., especially in rural communities across the South and Southeast. Financing is available in those areas, but it can be exclusive and difficult to obtain, especially if your enterprise is small, and more so if you are a woman or a person of color.  

We’re working to change that. 

Tonitrice and I joined a small panel of experts, including Robert Meloche, head of programs at Visa Foundation, and Caroline Yarborough, syndications and strategy officer at Calvert Impact Capital, with whom we’re working on an innovative new program to help underbanked businesses not only bounce back from COVID, but lay the foundation for inclusive, long-term growth.  

Calvert Impact Capital’s Southern Opportunity and Resilience (SOAR) Fund was created in early 2021 by local and national lenders to provide economic recovery loans to small businesses in 15 states across the South and Southeast. Since then, the Fund has drawn inquiries from hundreds of small business owners, many of whom desperately need affordable financing. Funded by the Visa Foundation, Winrock’s SOAR Technical Assistance Project is designed to help businesses in a sub-set of those states develop and submit strong loan applications, and offers continued, post-loan support so their enterprises can thrive, grow, and contribute to economic development in the places that need it most.  

The technical assistance helps small business owners navigate the process of qualifying, applying for, and complying with loan requirements, even if they’ve been turned down, elsewhere. Applicants can access workshops and training, credit counseling, business plan development, accounting and financing coaching, and other support, including mentoring from other business owners. 

“It’s reaching exactly who it was set out to serve,” Caroline said. 

Tonitrice is a senior program officer with Winrock’s U.S. Programs team. She’s also an expert at managing entrepreneurial education programs and grants, and oversees the Visa Foundation-funded SOAR Technical Assistance Project. A big part of her job involves building relationships with supporting organizations in the seven states targeted by the project: Alabama, Arkansas, Louisiana, Mississippi, Oklahoma, Tennessee, and West Virginia. She shared insights about loan access and support, including something that resonated deeply with me. 

In disenfranchised communities in the South, she said, trust is hard-won, in part because traditional bank loans and other financing often aren’t obtainable there, but also because those in charge of financial resources aren’t visible. To address that, Winrock works with well-known local partners who live in and understand their communities and can provide entrepreneurial services to prospective loan recipients.  

“We’re supporting businesses through those fears, and we’re here … connecting them to other successful businesses that have received funds” for networking, advice and encouragement, Tonitrice said. 

Robert, who has worked on inclusive financing for two decades, reminded us that socioeconomic inequities existed long before COVID struck. But those disparities have since deepened dramatically. 

“The challenges, these gaps for women borrowers, for borrowers of color, have gotten worse,” he said, adding that “one of the reasons that these borrowers have been shut out of the financial system is because of some of the structures around things like credit score that we’ve become over-reliant on as a proxy for people’s ability and willingness to repay. And if you’ve been shut out of the credit system historically, there’s really no way in.”  

SOAR is helping to open those doors.  

Loans of up to $100,000, each, already have gone to florists, family-owned restaurants, and other small businesses, including Main Street shop owners in small towns and rural communities. Many of them likely closed at least temporarily due to COVID. Ninety percent of the loans issued so far have gone to businesses with 10 or fewer employees and those with under $1 million in annual revenues; and 80% have gone to women-owned and BIPOC (Black, Indigenous, People of Color) recipients, Caroline said.  

How can you get involved, and help bridge the socio-economic divide?  

Robert urged us all to learn about and support Community Development Financial Institutions, including credit unions, which offer banking services while supporting underserved communities. Tonitrice emphasized the need for all companies to look harder, both internally and externally, at issues affecting diversity, equity and inclusion; we all need to be agents of the change we want to see. 

Winrock welcomes new donors to fund technical assistance for SOAR applicants, and we’re always looking for private and public partners that support our mission of empowering the disadvantaged, increasing economic opportunity and sustaining natural resources in the U.S. and around the world. We know that opportunity and resilience are powerful antidotes to inequality.  

With committed, visionary collaborators like Visa Foundation, Calvert Impact Capital and other organizations Winrock is connecting with through Concordia, who knows how far we can go? 

This blog was originally posted on Concordia.net.