Do carbon credit ratings punish nature? Here’s what our Chief Scientist has to say.

Protecting nature is essential to the wellbeing of people around the world. Ecosystems like intact forests are a source of food, water, and protection against natural disasters, and worldwide more than 1 billion people rely on nature as a source of income. Forests and land also absorb large amounts of carbon dioxide from the air, making them a valuable resource to combat climate change.

All this makes efforts to protect nature, like REDD, improved forest management, and reforestation projects, some of the most popular types of carbon credits. But these credits often have low scores from rating agencies like Calyx Global—the average forest and land project in our database has a C rating. Do these ratings mean we think nature credits are bad? Dr. Deborah Lawrence, Calyx Global’s Chief Scientist and Director of Nature-Based Ratings, weighs in.

So, Deborah—half of the forest and land ratings in Calyx Global’s database are in our lowest rating tier. Be honest: do you hate nature?

I’m insulted! I’ve spent my entire career fighting for forests and land systems. Protecting nature is critical to our planet and everyone on it. That’s precisely why it’s so important to get these projects right. The reality is that some of the early nature credits got a pass and were held to lower standards. Some of the first carbon credit methodologies had well-documented issues with baseline inflation, or allowed for problematic practices like plantation monocultures of commercial species. Credits developed under these methodologies score lower in our database because we have rigorous standards for evaluating the risk of over-crediting and non-permanence. 

The good news is, there are signs of improvement. New methodologies like Verra’s VM0048 should substantially diminish the risk of over-crediting in REDD projects. Across the forest and land sector, methodologies are being updated to reduce over-crediting. They are requiring a 40-year commitment to monitoring, reducing the risk of reversals. We see the improvement. Last year, we added 50% more nature-based projects with a BBB and above rating to our platform.

Half of tropical forests have been destroyed in the last century. Given the urgency to stem the tide, should we judge nature credits on a different scale from other carbon credits?

I get the sentiment, but the atmosphere doesn't care about our intentions—it sees what it sees. 

If a company uses any credit to compensate for (e.g., fossil fuel) emissions that will stay in the atmosphere for centuries, it should be of high integrity. Across the board, that integrity can come from conservative quantification and clear proof of additionality, and should meet minimum durability thresholds. Nature-based credits can be high integrity; it may be harder, but it is possible. 

However, that doesn’t mean you can’t factor in the benefits beyond carbon when thinking about buying carbon credits. Some organizations are building portfolios that combine credits with high GHG integrity and credits with high social and biodiversity impact. This is why we rate projects not just for carbon impact, but also for their contribution to Sustainable Development Goals and their potential for environmental and social risks.

So, can nature credits be impactful from a GHG perspective?

Of course! It’s all about design. We’ve rated a number of forest and land credits in our highest tier for quality. We have seen examples of highly rated Improved Forest Management, Afforestation and Reforestation, and Blue Carbon projects. These projects choose more conservative baselines and accounting procedures, whether the methodology requires it or not. And often they operate in areas that face ongoing forest loss or degradation. Altogether this means they are additional and have a fairly low risk of over-crediting—with a number of community benefits to boot. Some also commit to longer periods of monitoring, or have legal protections for long periods of time. We hope to see more projects like this emerge now that there are new and stronger methodologies out there. We actually have tools to help develop strong forest and land projects under a number of these methodologies already.

What would you say to someone who cares about protecting nature but doesn’t want to get accused of buying a low quality credit?

I’d say to be clear-eyed about what you’re buying and why. Are you looking for GHG integrity, social benefits, or both? To that end, don’t hide from the rating—embrace it as part of a sophisticated strategy. You can package together different types of credits to meet your goals. This is something we at Calyx help our clients do every day. 

It’s not a bad thing to choose to protect an at-risk tropical forest over other projects, but it is a bad thing to claim a low-integrity credit is a perfect carbon offset. You can use ratings to build a transparent and balanced portfolio, and ensure efforts to protect nature and the climate are in sync. 

Want to talk to Deborah or one of nature experts? Reach out.