Delivering on climate goals will require a rapid halt to deforestation, and reforestation and afforestation at scale. But it will also require a secure and sustainable supply of minerals and materials for green technologies and sustainable infrastructure. Many of these commodities are found in critical forest landscapes, placing forests at increased risk as demand for minerals increases. This paper explores the mining sector’s impacts on forests, and the potential for ‘forest-smart’ mining policies and practices to support deforestation-free mineral supply chains.
3. Finance and forest monitoring
This section assesses the extent to which mining’s forest impacts are acknowledged by consumers and investors, and integrated into wider corporate climate and sustainability commitments. It also considers the potential for emerging finance mechanisms and forest monitoring systems to encourage forest-smart approaches in the mining sector, and forest protection and restoration more broadly.
Consumer and investor engagement
Consumer and investor engagement around deforestation has focused on the big four ‘forest-risk’ commodities – namely timber, palm oil, beef and soy. Several international agreements and governance mechanisms guide this engagement. These include the New York Declaration on Forests (NYDF), established in 2014 with the objective of halving deforestation by 2020 and halting it by 2030,16 and the Amsterdam Declaration on Deforestation, established in 2015 with the aim of eliminating deforestation from agricultural commodity supply chains to the EU.17 Goal 3 of the NYDF looks beyond forest-risk agricultural commodities to other drivers of deforestation, including mining. However, no mining company has committed to the goals of the NYDF, and the development of data in this space has been slow. To help address this data gap, CDP, an NGO that operates a corporate disclosure system for investors, is now asking mining companies to disclose their forest impacts.18
Consumer and investor engagement with the mining sector, meanwhile, has tended to focus on human rights impacts such as those associated with resource-related conflict and child labour in supply chains, and on health, safety and environmental violations including the failure of tailings dams.19 As awareness of the mineral intensity of renewable energy and other clean technologies has grown, investor engagement with the sector on its climate impacts has also intensified.20 As Table 1 shows, many mining companies now voluntarily report their GHG emissions and set emissions reduction targets, including in some cases commitments to achieving net-zero emissions by mid-century. Some also assess and disclose climate-related financial risks, in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). However, there remains a lack of alignment in how the sector’s emissions are defined and communicated, complicating investor engagement. Mining companies tend to focus on scope 1 emissions (typically those incurred directly through fuel use) and scope 2 emissions (i.e. those incurred indirectly through power purchase agreements), and only rarely on scope 3 emissions (i.e. those indirectly incurred along the supply chain, such as through transport).21 The recently launched Coalition on Materials Emissions Transparency (COMET) initiative is developing methods to more accurately and consistently calculate and communicate climate impacts along the supply chain,22 building upon the work of the Greenhouse Gas Protocol and the Science Based Targets initiative (SBTI).
The impacts of mining and its associated infrastructure on land-use change – including forest loss and degradation – do not typically feature in corporate climate policy or reporting. Forest impacts tend to be addressed at the project level instead, through environmental and social impact assessments (ESIAs) and environmental management plans to manage these impacts, which are typically required by law. These assessments, by their nature, are context-specific. They generally focus on direct impacts, and the environmental and socio-economic implications of these impacts, at and around the mine site. The indirect forest loss and degradation that account for most of the sector’s forest impacts often fall beyond the scope of ESIAs. The emissions associated with forest impacts are not typically accounted for in ESIAs, and at an aggregate level there remains no comprehensive assessment of the mining sector’s contribution to emissions through land-use change and deforestation. As a result, there is a disjuncture between top-down company climate commitments and bottom-up environmental efforts.
The impacts of mining and its associated infrastructure on forests do not typically feature in corporate climate policy or in climate-related financial disclosures. Forest impacts tend to be addressed at the project level instead.
Where mining companies make voluntary climate commitments, these often include both mitigating and offsetting activities. For capital-intensive sectors with large-scale infrastructure requirements and long asset lifespans, offsetting may seem cheaper and easier than reducing operational emissions in the short term. The concept of engagement in voluntary carbon markets as a ‘bridge’ to more ambitious climate commitments is gaining traction, and is likely to attract even more interest as pressure on business grows to commit to net-zero emissions by 2050.23 Several voluntary carbon standards focus on verifying offset projects and their emissions reductions,24 but transparency along the supply chain and in emissions reporting remains limited. There is no easy way of tracing a carbon credit from the supplier (i.e. the project generating it) to the buyer (the company retiring it), and there is considerable variation in how companies report the use of offsets, with some providing net emissions reductions rather than disaggregated data. Greater transparency, and a clear link to operational and value chain emissions, is urgently needed if growing engagement in voluntary carbon markets is to raise climate ambition and facilitate investment in forests rather than provide a ‘get-out clause’ for companies that are unable or unwilling to decarbonize at the speed and scale required.25
Table 1: Climate mitigation targets and climate-related forest commitments, selected mining and metals companies
|
Company26 |
Mines in forest areas (MFAs)27 |
Emissions (MMt2Coe)28 |
Climate mitigation targets |
Scope 1, 2, 3 |
Climate-related forest commitments29 |
|---|---|---|---|---|---|
|
Alcoa |
82% / 9 of 11 |
24.3 |
Reduce GHG emission intensity by 30% by 2025; by 50% by 2030 (from 2015 levels). |
1, 2 |
Tree planting partnership with American Forests to ‘enhance biodiversity and combat climate change’ in 13 locations globally; exploring REDD+ opportunities. |
|
Anglo American |
18% / 13 of 74 |
17.7 |
Reduce GHG emissions by 30% by 2030 (from 2016 levels); carbon neutrality by 2040. |
1, 2 |
‘Exploring options for offsets, should there be a potential exceedance, including carbon credits.’ |
|
ArcelorMittal |
67% / 17 of 30 |
194 (nine from mining) |
Reduce CO2 emissions by 30% by 2030 (from 2018 levels) (European business); carbon neutral by 2050 (group-wide). |
1, 2 |
No stated role. |
|
Barrick Gold |
20% /9 of 45 |
7.5 |
Reduce GHG emissions by at least 10% by 2030 (from 2018 levels). |
1, 2 |
No stated role. |
|
BHP |
13% / 6 of 47 |
15.8 |
Reduce scope 1 and 2 GHG emissions by at least 30% by 2030 (from 2020 levels); scope 3 goals set for steelmaking and shipping. |
1, 2, 3 |
Carbon offsets ‘will be used as required’; support for REDD+ including investing in the Alto Mayo Conservation Initiative in Peru and IFC Forests Bond in Kenya (see Box 1); carbon offset strategy developed in 2020 and integrated in climate policy. |
|
First Quantum |
67% / 8 of 12 |
3.3 |
None stated. |
Not applicable. |
|
|
Glencore |
26% / 30 of 117 |
29.2 |
Reduce carbon intensity by 5% by 2020 (from 2016 levels); longer-term targets to be announced in 2020. |
1, 2 |
No stated role at portfolio level; purchase of REDD+ Pacific certificates at project level, to offset the emissions of the Prodeco coal mine in Colombia. |
|
Newmont |
28% / 11 of 47 |
3.55 |
Reduce carbon intensity by 16.5% by 2020 (from 2018 levels); ‘assessing pathways in line with science-based targets for 2030’ in 2020. |
1, 2 |
Forestation projects in Peru to improve the salinity of soil, mitigate Yanacocha copper mine’s GHG emissions, and increase biodiversity; tree plantations in Australia, managed by CO2 Australia and issuing Australian Carbon Credit Units. |
|
Rio Tinto |
27% / 12 of 45 |
31.8 |
Reduce GHG emissions by 15% by 2030 (from 2018 levels); to net zero by 2050. |
1, 2 |
Carbon removals and offsets will form part of Rio Tinto’s decarbonization strategy; from 2020, evaluating the potential to implement natural climate solutions at sites. |
|
RUSAL |
87% / 13 of 15 |
39.2 |
No portfolio-wide target; strategic goals for GHG emissions reductions (e.g. renewable energy use, smelting emissions) to 2025. |
1, 2 |
Plans to plant over 1 million trees in Russia, as part of its climate strategy, to reduce the company’s carbon footprint; intention to offset the remaining GHG emissions that make up the full carbon footprint of RUSAL’s primary aluminium products. |
|
Vale |
91% / 74 of 81 |
12.6 |
Reduce scope 1 and 2 GHG emissions by 33% by 2030 (from 2017 levels) ‘in line with Science Based Targets’; become carbon-neutral by 2050; scope 3 goals to be defined. |
1, 2, 3 |
‘Remaining emissions can be offset through reforestation of degraded areas or purchase of carbon credits’; will ‘recover and protect more than 500,000 hectares of native forests by 2030’ as part of Vale’s ‘New Pact with Society’. |
Sources for Table 1: Alcoa: Alcoa (2019), 2019 Alcoa Sustainability Report, https://www.alcoa.com/sustainability/en/pdf/2019-Sustainability-Report.pdf (accessed 28 Sep. 2020) – Anglo American: Anglo American (2019), Sustainability Report 2019, https://www.angloamerican.com/~/media/Files/A/Anglo-American-Group/PLC/investors/annual-reporting/2020/aa-sustainability-report-2019-v1.pdf (accessed 24 Sep. 2020); Anglo American (2020), ‘Climate Change & Mining’, https://www.angloamerican.com/sustainability/environment/climate-change (accessed 24 Sep. 2020); CDP (2019), Anglo American – Climate Change 2019, https://www.angloamerican.com/~/media/Files/A/Anglo-American-Group/PLC/sustainability/approach-and-policies/sustainability/performance/anglo-american-climate-change-response-2019.pdf (accessed 23 Sep. 2020) – ArcelorMittal: ArcelorMittal (2020), ‘ArcelorMittal sets 2050 group carbon emissions target of net zero’, press release, 30 September 2020, https://corporate.arcelormittal.com/media/press-releases/arcelormittal-… (accessed 30 Sep. 2020); ArcelorMittal (2019), ‘ArcelorMittal Europe sets target to cut carbon emissions by 30% by 2030, to contribute to the European Commission’s Green Deal’, press release, 13 December 2019, https://corporate.arcelormittal.com/media/news-articles/2019-dec-13-arcelormittal-europe-sets-target-to-cut-carbon-emissions-by-30-by-2030 (accessed 28 Sep. 2020) – Barrick Gold: Barrick Gold (2019), Sustainability Report 2019, https://s25.q4cdn.com/322814910/files/sustainability/Barrick-Sustainability-Report-2019.pdf (accessed 21 Sep. 2020) – BHP: BHP (2020), Climate Change Report 2020, https://www.bhp.com/-/media/documents/investors/annual-reports/2020/200910_bhpclimatechangereport2020.pdf (accessed 21 Sep. 2020) – First Quantum: First Quantum (2019), Environment, Safety and Social Data Report 2019, https://s24.q4cdn.com/821689673/files/doc_downloads/environmental-health-and-safety/2019-Environment-Safety-Social-Data-Report-Optimised.pdf (accessed 28 Sep. 2020) – Glencore: Glencore (2019), Sustainability Report 2019, https://www.glencore.com/dam/jcr:31236b6f-34a4-432a-b4b3-6fe133488bb8/2019-Glencore-Sustainability-Report-.pdf (accessed 23 Sep. 2020); Glencore (2020), ‘Glencore’s commitment to the transition to a low-carbon economy’, press release, 18 February 2020, https://www.glencore.com/media-and-insights/news/glencores-commitment-to-the-transition-to-a-low-carbon-economy (accessed 24 Sep. 2020); Grupo Prodeco (2018), ‘Prodeco Group Interested in the Purchase of Coal Certificates to Mitigate Climate Change’, http://www.grupoprodeco.com.co/es/sala-de-prensa/grupo-prodeco-informa/prodeco-group-interested-purchase-coal-certificates-mitigate-climate-change/ (accessed 29 Sep. 2020) – Newmont: Newmont (2019), 2019 Sustainability Report: Beyond the Mine, https://s24.q4cdn.com/382246808/files/doc_downloads/2019/sustainability/Newmont-2019-sustainability-report.pdf, (accessed 29 Sep. 2020); Newmont (2017), ‘Energy & Climate Change: Newmont’s Carbon Offset and Emissions Reduction Projects’, Newmont Blog, 16 November 2017, https://www.newmont.com/blog-stories/blog-stories-details/2017/Energy—Climate-Change-Newmonts-Carbon-Offset-and-Emissions-Reduction-Projects/default.aspx (accessed 29 Sep. 2020) – Rio Tinto: Rio Tinto (2019), 2019 Climate Change Report, https://www.riotinto.com/en/sustainability/climate-change (accessed 29 Sep. 2020) – RUSAL: RUSAL (2019), Reducing Impact for the Green Future: Sustainability Report 2019, https://rusal.ru/upload/iblock/140/14003c814dca975bcb2622ae35cb2cf0.pdf (accessed 29 Sep. 2020); Bloxsome, N. (2019), ‘RUSAL: Sustainable efforts’, Aluminium International Today, 1 April 2019, https://aluminiumtoday.com/news/rusal-sustainable-efforts (accessed 29 Sep. 2020) – Vale (2019), Sustainability Report 2019, http://www.vale.com/EN/investors/information-market/annual-reports/sustainability-reports/Sustainability%20Reports/Relatorio_sustentabilidade_vale_2019_alta_en.pdf (accessed 29 Sep. 2020).
Investing in forest protection and restoration
It is within this context that forest finance has emerged as a tool of climate policy in the mining sector, as well as in other carbon-intensive and heavy industrial sectors.30 Engagement in the United Nations Framework Convention on Climate Change (UNFCCC) REDD+ programme and other mechanisms that generate forest-based carbon credits can give the relevant companies access to voluntary carbon markets and, in some cases, mandatory carbon markets.31 Well-managed land-based and forest-based offsets may also deliver co-benefits for sustainable livelihoods, biodiversity and other UN Sustainable Development Goals (SDGs), support for which is central to the mining sector’s social licence to operate. However, the need for transparency is particularly great where forest carbon is concerned, given the long-term policy and financial support required to ensure the permanence of forest carbon assets, and the serious challenges associated with verifying the equivalence and permanence of forest carbon, particularly in settings where government capacity is weak. The limited supply of high-quality forest carbon projects has encouraged some companies to take a more active role in REDD+ and in the development of innovative forest finance mechanisms (see Box 1).
Investing in the protection of forests and in reforestation and afforestation is potentially one of the most cost-effective tools in emissions mitigation.32 Forests and other natural climate solutions could provide up to one-third of the emissions reductions required by 2030 to hold global warming well below 2ºC.33 Current investment in forests remains grossly inadequate to this task, accounting for around 2 per cent of all climate finance.34 The UNFCCC established the REDD+ programme in 2008, with the objective of encouraging private sector finance into forests by generating tradeable carbon credits.35 Progress on implementation has been slower than anticipated, and REDD+ remains almost wholly reliant on bilateral and multilateral donor funding.36 This is partly because forests have little value as conventional financial assets, with neither their varied contribution to livelihoods and economic development nor their value in carbon and biodiversity terms fully reflected in the price of forest assets. As a result, REDD+ and other forest finance mechanisms have effectively lacked a demand side, and many are now at risk of collapse.
At the same time, mainstream financial investors are seeking green investment opportunities. There is a fast-evolving ecosystem of sustainable finance mechanisms, designed to support green and environmental, social and governance (ESG) outcomes. The green bond market is now worth over $1 trillion, and is among the most prominent entry points for investors.37 It includes a growing number of sovereign green bonds that feature forests among their proceeds: Poland has issued three sovereign bonds since 2016 designed to support renewable energy, the country’s shift away from coal, and afforestation and national parks, among other areas; Nigeria became the first African country to issue a sovereign green bond in 2017, with proceeds earmarked for renewable energy and afforestation. Thematic forest finance mechanisms are also emerging, including the International Finance Corporation (IFC)’s Forests Bond, alongside other innovative forest finance concepts (see Box 1). So too are corporate ESG and green bonds within the mining and steel sectors: South Korean steelmaker POSCO issued the steel sector’s first ESG bond in mid-2019,38 and Swedish iron ore mining company LKAB launched its first green bond later in the same year.39
There may be opportunities for countries and companies to leverage emerging green and forest finance mechanisms to support forest-smart approaches to mining. At the same time, there remain serious questions about how to effectively value, protect and finance forests, and how best to measure the success of such mechanisms in advancing their stated goals. Key questions include (a) the financing mechanism and the appropriate mix of public and private finance; (b) the appropriate indicators of success for mitigating, compensatory and additional efforts; and (c) how to monitor and verify performance. Multilateral development banks (MDBs) and other issuers can play an important role here, developing and testing innovative finance mechanisms and their indicators of success, de-risking these mechanisms with concessional finance and guarantees, and providing countries and companies with technical assistance on the development of measurement, reporting and verification (MRV) systems.
Box 1: Forest bonds and innovative forest finance mechanisms
Finance 4 Forests (F4F) is a partnership and knowledge-sharing platform, founded by the NGO Conservation International, the mining company BHP and the law firm Baker McKenzie. F4F’s objective is to further private sector understanding of REDD+ and encourage market participation in forest finance.
Building upon the work of F4F, BHP worked with the IFC to develop the inaugural IFC Forests Bond, which generates carbon credits. The bond was designed to attract institutional finance and non-traditional blue-chip investors (i.e. carbon investors) by creating a mainstream forest finance product and providing a financial guarantee to de-risk it. The resulting product is an IFC-issued, triple A-rated, five-year bond with a 1.2 per cent interest rate. Investors have the option of taking the verified carbon units (VCUs) generated by the project and using them for compliance, selling them into the market, or cashing in the VCUs at a guaranteed $5 strike price, with BHP committing to buy them back. So far investors have cashed in their VCUs, reflecting their status as financial investors looking for a return, rather than carbon investors looking for offsets.
F4F has since developed several other forest finance ‘concepts’, including:
- A ‘Forests bond 2.0’. Building upon the original IFC Forests Bond, this initiative explores different ways of structuring the bond, with varying levels of risk and return for investors.
- Paris debt-for-climate swaps. This US government-backed, results-based payment model involves the release of debt in exchange for protecting forests (in effect, it is a reconfiguration of traditional debt-for-nature swaps, wherein indebted countries receive debt relief in return for investing some of the savings in REDD+ activities).
- Forests-for-climate investment funds. This concept involves a dedicated investment facility that aggregates and deploys investment capital towards the establishment and development of REDD+ projects and activities. Such vehicles have yet to attract private sector investment and remain primarily official development assistance (ODA) instruments.
- NDC forest bonds. Some governments are reportedly keen to develop ‘NDC bonds’, which could be structured like sovereign green bonds, with payments linked to the relevant country’s performance against its Nationally Determined Contribution (NDC). Forest protection would be achieved through REDD+, with finance raised via the NDC bond plus public–private partnerships.
- ‘Article 6’ transfers. This concept is named after Article 6 of the Paris Agreement, and would entail mitigation activity in one jurisdiction being transferred and counted in another jurisdiction through REDD+ or an internationally transferred mitigation obligation (ITMO). The process would require transfer and purchase agreements between the host (credit-generating) country, the support (credit-receiving) country and the private sector off-taker (in the support country). It remains unclear exactly how such instruments would work following the failure to reach an agreement around Article 6 of the Paris Agreement – which establishes the rules for international carbon trading – at the 25th UN Conference of the Parties (COP25) in Madrid in 2019.
Based on discussions at the research workshop ‘The Role of Innovative Technologies and Finance in Advancing Forest-Smart Mining’, held at Chatham House on 10 May 2019, and the white paper Finance 4 Forests (2019), Innovative Investment Mechanism Concepts to Finance Forests as a Climate Solution, Conservation International and Baker McKenzie.
The role of forest monitoring systems
As well as helping to channel finance to forests, engagement with REDD+ and other forest finance mechanisms may enhance forest information and monitoring systems and help strengthen forest governance. Robust systems for monitoring the forest and land-use sectors are critical tools for enabling governments to develop and implement effective climate strategies and leverage international finance for forests. As part of their wider forest and climate commitments, many countries are establishing forest MRV systems for REDD+ and other schemes, with bilateral support from Germany, Norway and the UK, among others, and multilateral support from UN-REDD and programmes such as the World Bank-managed Forest Carbon Partnership Facility (FCPF). REDD+ is a form of results-based finance, and to access it countries must establish the following: first, a national REDD+ strategy; second, a national forest monitoring system (NFMS) including satellite information, forest inventory, a forest information system and community monitoring; third, a safeguards information system (SIS); and fourth, a forest reference level (FRL) or forest reference emission level (FREL).
These data and systems could support more strategic approaches to mitigating the impacts of mining and other drivers of deforestation, as they could encourage landscape- or jurisdictional-level planning rather than management of forest impacts on a project-by-project basis. The convergence of mining, forest and carbon interests should in theory help to address issues – including the impact of mining on forests – that have traditionally fallen between silos. For example, where governments are tackling deforestation at multiple levels, there may be opportunities to incorporate the net residual impacts40 of mining and other economic drivers of deforestation into forest finance mechanisms such as REDD+, and to aggregate offsets that can protect large areas of forest. There may also be potential to combine higher-value carbon offsets and lower-value biodiversity offsets at the landscape level. In this context, REDD+ could help to incentivize climate mitigation efforts and the protection of biodiversity, and encourage the reclamation, rehabilitation and restoration of land where mining is under way.
The provision of a nationally recognized monitoring system for forest impacts may also help to enhance transparency and accountability for companies and other stakeholders, as well as facilitating their access to carbon markets. Effective MRV may help to support GHG accounting for the mining sector, and aid tracking of the direct and indirect forest impacts of mining investments (in terms of net loss/net gain of forest cover) and their associated GHG impacts. The vast quantities of data generated by REDD+ infrastructure may also be of great value to investors, consumers and civil society, especially in the context of growing engagement with the mining sector on its ESG performance. However, access to such data is currently inconsistent, with each country deciding its own disclosure arrangements. Donors and MDBs could support a more consistent approach here, helping countries overcome policy and practical barriers to data-sharing, as well as supporting the development of common standards and platforms that could make data more widely available, and of practical use to investors, consumers and civil society.
See New York Declaration on Forests (2020), ‘Goals’, https://forestdeclaration.org/ (accessed 30 May 2020).
See the Amsterdam Declaration, ‘Towards Eliminating Deforestation from Agricultural Commodity Chains with European Countries’, signed by Denmark, France, Germany, Italy, the Netherlands, Norway and the UK, https://ad-partnership.org/wp-content/uploads/2018/10/Amsterdam-Declaration-Deforestation-Palm-Oil-v2017-0612.pdf (accessed 23 Mar. 2020).
CDP (2020), ‘Our forests work’, https://www.cdp.net/en/forests#Mining (accessed 12 May 2020).
The Church of England Pensions Board (2020), ‘Investor Mining and Tailings Safety Initiative’, https://www.churchofengland.org/investor-mining-tailings-safety-initiative (accessed 30 May 2020).
Activist investors have raised climate change issues on the agendas at the annual general meetings of major mining companies. See Share Action (2018), ‘Shareholder revolt at Rio Tinto’s London AGM over “outright climate hypocrisy”’, press release, 11 April 2018, https://shareaction.org/shareholder-revolt-rio-tinto/ (accessed 12 May 2020); and Lewis, B. and Jessop, S. (2019), ‘Top-5 BHP investor Aberdeen Standard piles on climate pressure ahead of AGM’, Reuters, 9 October 2019, https://www.reuters.com/article/us-bhp-agm-church-of-england/top-five-bhp-investor-aberdeen-standard-piles-on-climate-pressure-ahead-of-agm-idUSKBN1WO1GJ (accessed 12 May 2020).
BHP became the first mining company to set scope 3 emissions targets in July 2019. See Hume, N. (2019), ‘BHP to set targets for reducing customers’ carbon emissions’, Financial Times, 23 July 2019, https://www.ft.com/content/90b8fdd0-ac87-11e9-8030-530adfa879c2 (accessed 23 Mar. 2020). Vale followed in December 2019, announcing scope 3 targets in shipping and steelmaking. See Hume, N. (2019), ‘Vale to set ‘Scope 3’ emission targets’, Financial Times, 2 December 2019, https://www.ft.com/content/00392aec-152c-11ea-8d73-6303645ac406 (accessed 12 May 2020).
COMET (the Coalition on Materials Emissions Transparency) is an alliance between MIT’s Sustainable Supply Chains initiative, the Columbia Center for Sustainable Investment, the Rocky Mountain Institute and the Colorado School of Mines. See https://rmi.org/our-work/industry-and-transportation/material-value-chains/comet (accessed 12 May 2020).
World Economic Forum (WEF) (2020), ‘World Economic Forum asks all Davos participants to set a net-zero climate target’, 17 January 2020, https://www.weforum.org/agenda/2020/01/davos-ceos-to-set-net-zero-target-2050-climate/ (accessed 12 May 2020).
These include the Gold Standard founded by WWF and other international NGOs in 2003, https://www.goldstandard.org/impact-quantification/carbon-markets (accessed 12 May 2020); and Verra, founded by the International Emissions Trading Association (IETA) and the WEF, along with its Verified Carbon Standard (VCS) Programme, https://verra.org/project/vcs-program/ (accessed 12 May 2020).
It should be noted that offsets are not currently allowed as a mechanism to meet science-based targets.
Companies included within the World Bank study on the impacts of large-scale mining on forests. See World Bank (2019), Making Mining Forest-Smart, Executive Summary Report, p. 34.
MFA data from World Bank (2019), Forest-Smart Mining: Identifying Factors Associated with the Impacts of Large-Scale Mining on Forests.
Emissions data and climate mitigation targets from latest company sustainability and/or climate reports. Emissions for Arcelor Mittal, Barrick and Rio Tinto for 2018, all others 2019 (covering scope 1 and 2).
Climate-related forest commitments, as described in company sustainability and/or climate reports, unless otherwise stated.
Interest is growing across carbon-intensive sectors. However, a clear distinction should be drawn between those who see offsets as a tool in their transition to a decarbonized business model and those who plan to invest in forests in order to support an unsustainable business model reliant on continued anthropogenic emissions. This paper focuses on the former.
New Zealand’s ETS is the only mandatory market that currently allows forest-based credits. There is, for example, ongoing debate about whether REDD+ credits should be allowed under California’s emissions trading mechanism. The EU, which has always excluded forest credits, has warned against this. See Fern 25 (2019), ‘Forest offsets: California on the brink of a serious mistake’, 8 May 2019, https://www.fern.org/news-resources/forest-offsets-california-on-the-brink-of-a-serious-mistake-973 (accessed 12 May 2020).
IPCC (2019), Special Report on Climate Change and Land, https://www.ipcc.ch/srccl-report-download-page/ (accessed 12 May 2020).
Griscom, B. W. et al. (2017), ‘Natural Climate Solutions’, PNAS, October 31, 2017 114 (44) 11645-11650; first published 16 October 2017, https://doi.org/10.1073/pnas.1710465114 (accessed 30 May 2020).
According to the Climate Policy Initiative, $7 billion was given to agriculture, forestry and land use in 2018, which was just under 2 per cent of total funding for climate mitigation. See Buchner, B., Clark, A., Falconer, A., Macquarie, R., Meattle, C., Tolentino, R. and Wetherbee, C. (2019), Global Landscape of Climate Finance 2019, London: Climate Policy Initiative, p. 30, https://climatepolicyinitiative.org/wp-content/uploads/2019/11/GLCF-2019.pdf (accessed 12 May 2020). The Finance for Forests report, from the NYDF Progress Assessment, finds that only 2 per cent of $167 billion in international development finance committed from 2010 to 2015 to reduce carbon emissions went to protecting and restoring forests. See Climate Focus (2017), Progress on the New York Declaration on Forests: Finance for Forests – Goals 8 and 9 Assessment Report, https://forestdeclaration.org/images/uploads/resource/2017_NYDF_Goal8-9-Assessment_Full.pdf (accessed 12 May 2020).
REDD+ stands for ‘reducing emissions from deforestation and forest degradation’. The mechanism emphasizes the role of conservation, sustainable management of forests and the enhancement of forest carbon stocks in developing countries.
For a summary of progress to date, see UN-REDD (2018), 10th Consolidated Annual Progress Report of the UN-REDD Programme Fund, https://www.unredd.net/documents/programme-progress-reports-785/2018-programme-progress-reports/17258-un-redd-consolidated-2018-annual-report.html?path=programme-progress-reports-785/2018-programme-progress-reports (accessed 12 May 2020).
Bloomberg (2020), ‘Record Month Shoots Green Bonds Past Trillion-Dollar Mark’, Bloomberg NEF, 5 October 2020, https://about.bnef.com/blog/record-month-shoots-green-bonds-past-trilli… (accessed 9 Oct. 2020).
Hu, T. (2019), ‘More metals, mining companies expected to issue ESG bonds’, S&P Global Market Intelligence, 23 July 2019, https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/52997113 (accessed 1 Aug. 2020).
Adeeb, M. (2019), ‘Swedish iron ore miner LKAB issues 1st green bond of 2B kronor’, S&P Global Market Intelligence, 29 November 2019, https://www.spglobal.com/marketintelligence/en/news-insights/trending/gqkbwwsvortb4ewdndjovg2 (accessed 1 Jun. 2020).
In other words, the remaining impacts after all other efforts to avoid and reduce forest loss and degradation.