Sustainable investing-focused nonprofit organization Ceres and the Institutional Investors Group on Climate Change (IIGCC) announced today the release of The Role of Natural Climate Solutions in Corporate Climate Commitments: A Brief for Investors, a new tool aimed at guiding investors in their engagements with companies on the use of natural climate solutions to achieve their net zero climate commitments.

The use of carbon offset projects that counteract the release of greenhouse gases is expected to increase significantly over the next several years, as companies increasingly launch net zero ambitions, and turn to offsets as a bridge to their own absolute emissions reduction efforts, or to balance difficult to avoid emissions. Offset programs often take the form of natural climate solutions, such as forest protection or reforestation. The use of such projects can create challenges for investors attempting to assess company net zero plans, however, as the market often lacks proper tools to evaluate the projects, and the absence of detail in companies’ commitments presents difficulties in distinguishing legitimate climate action from greenwashing.

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According to Ceres, the new guide examines the appropriate use of natural climate solutions in corporate climate strategies, explores the investor’s perspective on the risks and opportunities associated with the use of natural climate solutions, and introduces key points of engagement for investors to guide company’s usage of natural climate solutions. The brief calls for disclosure on companies’ short-, medium-, and long-term targets that are aligned with a 1.5 C pathway along with a credible transition plan to achieve the targets, how much of the targets will be met through the use of carbon credits or carbon removals, the GHG crediting programs, suppliers, and projects from which they source carbon credits, and whether the carbon credit purchases are certified under a social and environmental standard.

Dr. Meryl Richards, Director of Research for Food and Forests at Ceres and lead author of the brief, said:

“Our new brief introduces investors to what we call the ‘missing middle ground’ in the debate over natural climate solutions and offsetting, helping them make sense of the effective and appropriate use of these solutions in corporate climate action plans. We hope to empower investors to help companies avoid actions that pose climate-related and reputational risks to their portfolios and instead, help them make investments that deliver on their projected promises to cut emissions.”

Click here to access the brief.