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.

Forests truly are the lungs of our planet. They absorb massive amounts of carbon dioxide (CO₂) and release oxygen (O₂). Their protection is vital to regulate our climate, but also to maintain biodiversity, filter and regulate water, and form the soil and clouds that feed our fields and pastures. At the U.N.’s 2021 Climate Change Conference (COP26) in November 2021, countries pledged to provide $12 billion in forest-related climate finance between 2021 and 2025 and signed a landmark agreement to end deforestation by 2030.

However, what many people may not know is that global market mechanisms to save forests have historically focused on forests on the margin – those forest areas that are directly in the path of the bulldozers and are most imminently threatened by degradation and deforestation. Meanwhile, “stable forests,” which are remote, old-growth forests untrammeled by human feet and make up 16% of this global lung, remain highly vulnerable. While good reasons exist to first focus on threatened forests, if we forget to value these remote wildwoods too, we lose an important incentive for countries and regions to harbor what is left.

An article in the journal Climate Policy by Jason Funk, Naikoa Aguila-Amuchastegui and others defined stable forests as “those not already significantly disturbed nor facing predictable near-future risks of anthropogenic disturbance.” These well-preserved forests are some of the richest in biodiversity and other ecosystem services – the various benefits to humans and other life provided by the natural environment ─ and are a vital solution to climate change. Yet they have not been historically included as eligible to participate in the vast majority of market-based solutions and schemes designed to protect and restore global forests. Forest policy that incentivizes protecting only areas at high or immediate risk of loss is akin to funding only emergency care in hospitals, while ignoring preventative health care for the broader community.

Value of global stable forests

In July 2020, a team of Winrock analysts alongside Professor Brent Sohngen and policy expert Robert O’Sullivan began a project to analyze stable forests funded by the Forest Carbon Partnership Facility at the World Bank. Our goal was to determine the global distribution of stable forests, quantify their worth, and develop strategies to best protect them.

In our spatial analysis, which built on research already published by Funk et al., as well as studies of intact forests and other work, we defined stable forests as those: a) With tree canopy cover greater than 25%; b) At a distance of at least 1 kilometer from the forest edge; and c) With a low-to-moderate Global Human Footprint Index (of less than three). We classified any forests that didn’t fit these criteria as at-risk.

We found that stable forests cover 625 million hectares, representing 16.6% of all global forests. Almost all stable forests (88%) are in the tropics, making this region a key policy priority (see our story map for more results, including case study countries).

These forests store approximately 140.9 gigatonnes of carbon, a huge reserve that is almost 11 times more than all annual global carbon emissions. They remove an additional 416 million tonnes of carbon from the atmosphere per year – or almost as much as annual emissions from the entire global waste sector, all of Brazil’s annual emissions, or double the total amount of Canada’s emissions in 2018.

And stable forests aren’t only valuable for their incredible carbon removal capacity. They also provide immense benefits to humankind by regulating climates, providing food, filtering waterways, and enriching cultures. Valuing stable forests is a crucial step in making a range of financial and policy mechanisms available to better protect them. If we consider and quantify the value of just three other ecosystem services provided by forests in addition to carbon removal (biodiversity, non-timber forest uses, and hydrology), the value of stable forests in the tropics, alone, tallies a tremendous $4.9 billion.

Carbon markets, results-based payments, and stable forests

Carbon markets for Reducing Emissions from Deforestation and forest Degradation (REDD) have been predominantly led by projects based on “avoided deforestation,” with their value based on the value of what would have otherwise been lost, and bilateral and multilateral results-based payments approaches for REDD+ have focused at the jurisdictional level on efforts to reduce deforestation. However, stable forests, due to their remoteness, have very low rates of deforestation. If we only value them based on the current threat of deforestation, the annual loss of tropical forests would stand at $5.7 billion – or just 0.12% of their actual value, to use the $4.9 billion figure cited above. Conservation of stable forests, therefore, has not been incentivized under these approaches.

Our analysis makes clear the need for a paradigm shift in how we evaluate forest change. Despite historically low deforestation in stable forest areas, over the last decade (2010-2019), 20.6% of stable forests were identified as transitioning to a higher risk of fragmentation, degradation, and ultimately, deforestation. In other words, they were converted from stable to at-risk forests.

Conventional approaches to evaluating forest cover overlook that transition (see figure below), while the stable forest paradigm highlights it. This novel paradigm promotes preventative action to conserve all forests by stopping the initial conversion from stable to at-risk forests, maintaining forests in a healthy, threat-free condition for the long term.

The annual resources needed to prevent conversion and to ensure that the services provided by stable forests do not decline is estimated to be $177 billion per year. This “maintenance value” price tag could be a new way to help drive financing and protection of stable forests.

Moving forward: protecting stable forests with policy solutions

To protect stable forests, we first need to focus on domestic policy and governance, for which solutions should be tailored to national circumstances. Domestic funding – both public and private – can be mobilized by either increasing the costs of damaging stable forest through subsidy reforms, for example, or by creating additional revenue linked to forest protection through ecological fiscal transfers or payment for environmental services. Countries with especially weak governance could (and should be) encouraged to focus on improved forest governance to control illegal activities along with fiscal reform over other policy options, such as designing market-based protection mechanisms or attracting green finance.

Another possible solution, as we note in the World Bank report, Options for Conserving Stable Forests, is  to develop a crediting mechanism for stable forests, which would support the goals of the Paris Agreement, the Convention on Biological Diversity, and domestic policy. The annual “maintenance value” of stable forests (including a range of ecosystem services in addition to carbon, which could vary based on national priorities) could serve as a benchmark for the value of the credits, ultimately incentivizing the continued protection of stable forests.

Note that since the publication of the report for the World Bank, Architecture for REDD+ Transactions (ART), for which Winrock serves as the Secretariat, released TREES 2.0, an enhanced and expanded version of its standard for measuring, monitoring, reporting and verifying emission reductions from jurisdictional REDD+. TREES 2.0 includes an innovative crediting approach for jurisdictions – both national governments and subnational areas including Indigenous Peoples territories – that is intended to incentivize the protection of intact forests. TREES 2.0 addresses these intact forest areas that have high forest cover and low levels of deforestation (also known as High-Forest, Low Deforestation (HFLD) jurisdictions) through a flexible, dynamic scoring mechanism for crediting that takes into consideration the unique characteristics of HFLDs, specifically the percent forest cover and the deforestation rate. Through the HFLD approach, TREES 2.0 aims to incentivize jurisdictions to protect intact forests, since guarding the carbon sequestered in these forests is essential to meeting the goals of the Paris Agreement.

To link to the Winrock story map click here; to link to the World Bank report click here.

A storyline in the NBC sitcom “The Good Place” results in all humanity being damned to “The Bad Place” because the nature of modern life ─ not least our seemingly innate, hyper-consumptive human nature ─ means we cannot avoid negative impacts on the planet and all others who live here.

Is this the reality of modern life? That just by shopping, eating and even living we are doing harm to the planet? The preponderance of palm oil and soybeans in the products we use, and our ever-increasing consumption of animal proteins is undeniably and historically linked to deforestation, environmental degradation and greenhouse gas emissions. Our car miles, flights, and our air heating and cooling requirements certainly result in damaging greenhouse gas emissions. And undoubtedly, many companies egregiously maltreat both their own workers and the local communities from which they source.

Yet the negative impact of modern consumption is not inevitable. Thanks largely to consumer pressure, commodity producers are now paying attention and making commitments to protect animal welfare, workers’ rights, and to reduce single-use plastics, water pollution and greenhouse gas emissions. And modern technology and instant international communication mean it is now easier to track what companies are doing and to hold them to account.

Focusing just on greenhouse gas emissions: Have a look at any given producer’s website under the sustainability section. There is a good chance you will now see listed a greenhouse gas ambition, perhaps under a “science-based targets” or other similarly described initiative. Huge multinational companies including the likes of Nestlé, Tyson and Unilever have publicly committed to net zero emissions by 2050; in other words, to balance any emissions with equivalent carbon sequestration or other offsets either through investments local to their supply chains (known as insets), or through the carbon market. Companies including Netflix are working toward carbon neutrality almost immediately, while in extremes cases, others like Microsoft have committed to canceling out all emissions stretching back to startup.

Therefore, we should not feel condemned to a ”Bad Place” of irredeemable guilt in our modern habits of consumption. Making important pledges does not equate to actual positive impact, and companies must be held accountable to keep their commitments and demonstrate they have done so with high-quality quantification, such as through the verification methodology used by the Intergovernmental Panel on Climate Change (IPCC), the U.N. body responsible for advancing knowledge of human-induced climate change. In this year already full of anxiety due to accelerating climate change and extraordinary, seemingly endless, rounds of natural disasters, we must not cease to demand high ambition and action from the companies we live alongside, and we must hold companies to account to meet their pledges.

This year’s annual meeting of the U.N. Climate Change Conference in Glasgow (COP26) can be an opportunity to move away from our collective guilt and climate anxiety ─ which the IPCC’s recent 6^th Assessment Report no doubt greatly amplified ─ towards taking collective action against greenhouse gas emissions and reversing the damage we have done to the Earth’s climate.

What can we consumers do? I urge you, for any companies whose products play an important role in your kitchen, your bathroom, your travel, your home life or your wardrobe: Go to their websites to see what they have achieved already in terms of sustainability, and what they pledge to achieve in the future. And make decisions on how you spend your money based on the ambition and achievements of these companies. If we do this together, today, we can get to a better place.

In a few days, nations across the globe will convene at the 26^th U.N. Climate Change Conference of the Parties (COP26) in Glasgow to accelerate actions to meet the goals of the Paris Agreement and keep global warming below 2 degrees Celsius, and preferably below 1.5 ⁰C.

The outcomes of COP26 will be critical, especially in light of the findings of the Intergovernmental Panel on Climate Change’s recent Sixth Assessment Report: The Physical Science Basis. Those findings present a dire warning, based on the most up-to-date physical science, that transformational change is essential to avoid the most catastrophic effects of climate change. The report finds that global surface temperatures have risen approximately 1.1 ⁰C since pre-industrial times, and are expected to reach 1.5 ⁰C within the next 20 years. To limit warming to 1.5 ⁰C  and avoid the associated additional negative impacts, “immediate, rapid, and large-scale reductions” in greenhouse gas (GHG) emissions are necessary.

That’s where the Climate Pathway Project comes into play. This project was financed by Norway’s International Climate and Forests Initiative, managed by The Climate Group, and implemented under the technical coordination and leadership of Winrock International, with expertise from the Center for Climate Strategies and partners including the Governors’ Climate and Forests Task Force, World Wildlife Fund, Reforestamos Mexico and and Libélula. The Climate Pathway Project assisted six state and regional governments in Latin America to develop long-term plans, or pathways, to reduce GHG emissions in different sectors and to enhance removals at scale, while promoting continued socio-economic development opportunities. Subnational governments play key roles in implementing public policies and promoting change at a more localized level, fulfilling an important role in helping to meet national commitments under the Paris Agreement.

 

The participating subnationals included the states of Amazonas, Mato Grosso, and São Paulo in Brazil; Querétaro and Quintana Roo in Mexico; and Madre de Dios in Peru. In the decarbonization pathways, these states and regions each elected a suite of priority actions to reduce net GHG emissions while also maximizing socio-economic and environmental benefits.

The scope of these actions varied significantly, from improving energy efficiency, strengthening land tenure rights, combating deforestation and optimizing industrial processes, to restoring forest cover in the productive agricultural landscape. Implementing all priority actions determined by the six participants and their stakeholders is expected to lead to emission reductions of 339 million tonnes of carbon dioxide equivalent (CO₂e) in 2030, a 53% reduction compared to the “business-as-usual” (BAU) scenario, and reductions of 735 million tonnes in 2050, an 87% reduction compared to the BAU scenario.

While these projected emission reductions are a fraction of the total ambition needed at the global level, the project provides an important framework to guide subnational jurisdictions and other stakeholders in development of their own tailored decarbonization pathways. More governments and private sector entities are making commitments to reduce or even achieve net zero emissions. To turn commitments into reality however, they must continue to define their decarbonization pathways, refine plans for achieving them, and begin implementing those plans. This is a substantive undertaking that requires cooperation and organization across diverse stakeholders and high levels of expertise.

With the Climate Pathway Project, Winrock and its partners demonstrated that it can be done. More subnational and national governments must follow the lead of these six states and regions and develop their decarbonization pathways; the lessons learned under this project provide a strong foundation to do so.

For more information on the Climate Pathway Project including reports and updates, click here.