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Hartree Partners and SYSTEMIQ launch Vertree to accelerate investment in global carbon markets

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Vertree's response to the G7 Summitb in Carbis Bay, UK

All eyes have been on Carbis Bay for the last few days, as G7 leaders, alongside their counterparts from India,…

All eyes have been on Carbis Bay for the last few days, as G7 leaders, alongside their counterparts from India, South Korea, Australia and South Africa, met to discuss an unenviable programme of global challenges: COVID, the economic challenges from the pandemic, trade, security, values, and, of course, climate change.

The prominence of climate change discussions and commitments made in the communique are very welcome, and show that, on paper and in press conferences, the leaders of the world’s biggest economies understand what needs to be done.

We support, and are part of, the push to mobilise global capital markets, with governments committing to leverage different types of blended finance. The desire to establish a fair and efficient carbon pricing trajectory is also good news, but what it’ll mean in practice, especially with the volatility of carbon markets these last few months, is unclear – time will tell.

We are also encouraged by the commitments in the G7 Nature Compact to 2030 to increase finance for nature-based solutions through to 2025, as well as the push to ensure that nature is prominent in both policy and economic decision making.

This move, if followed through, chimes with our core belief that investment in nature is one simple step that all businesses and governments can take to achieve their climate ambitions. But the world must also learn lessons from history: endlessly throwing money at a problem is not always the answer. So, yes, mobilise finance and financiers, but demand from the outset that the values that must underpin these investments – integrity and transparency – are not sacrificed.

Vertree provides a vehicle for businesses to achieve many of these goals, through our ability to access capital markets, in our commitment to high integrity offsets and our ways of working. This latter point is encapsulated in what Taraneh Azad said when we launched:

“We created Vertree to provide nature-based solutions that the world can trust, with the highest possible standards of environmental and social integrity.

 Our ambition is to enable Vertree clients to trace funding all the way back to the forests and local communities that they’re investing in, ensuring Vertree projects are both transparent and impactful.”

Our optimism though, is tinged by a sense of Deja-vu. The $100 billion figure for climate assistance to developing nations looks like it will once again be a figure of speech. Despite nearly 25 mentions of finance in the Climate and Environment section of the communique, the document lacks detail on how it will be accessed or delivered.  Encouraging the World Bank Group and the other Multilateral Development Banks to do more to mobilise finance is promising, but again, what does this mean in practice?

As ever with these summits, the detail, actions, and rhetoric remain disconnected.

This is a time for action and not just words.

Where there is consensus, is that COP26 has taken on greater significance. All roads lead to Glasgow. We hope world leaders take the high road.

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Hartree Partners and SYSTEMIQ launch Vertree to accelerate investment in global carbon markets

Sustainability experts SYSTEMIQ and global energy and commodities firm Hartree Partners today announce the launch of Vertree Partners Limited, trading…

Sustainability experts SYSTEMIQ and global energy and commodities firm Hartree Partners today announce the launch of Vertree Partners Limited, trading as Vertree, a joint venture that enables organisations to accelerate and deliver ambitious climate commitments through nature-based solutions.

The launch follows news that corporate carbon-neutral pledges led to a record Voluntary Carbon Market (VCM) transaction volume in 2020, growing 6% year-on-year. According to the Taskforce for Scaling Voluntary Carbon Markets, the global VCM could reach between US $30bn and US $50bn in size by 2030.

Nature-based solutions are a crucial part of Voluntary Carbon Markets, harnessing the power of the planet’s natural resources to address the dual climate and biodiversity crises. Done well, nature-based solutions protect and restore vital habitats to increase biodiversity at the same time as reducing atmospheric greenhouse gas emissions by avoiding or removing them.

Land-use change ranks second only to the burning of fossil fuels as the biggest source of emissions that contribute to climate change. But investing in tropical rainforests to sequester and store carbon can have a significant beneficial climate impact; according to the Intergovernmental Panel on Climate Change, ‘‘reducing deforestation and forest degradation rates represents one of the most effective and robust options for climate change mitigation”.

Ariel Perez, Vertree’s Managing Director, said: “It is no longer sufficient to slow the rate of emissions the world produces; we also need to begin removing CO2 that already exists. Although the priority should be to abate emissions wherever possible, the range of technological solutions available today varies greatly, and achieving net zero will require some degree of carbon reductions and removals. Nature-based solutions are among the most scalable and effective ways to reduce emissions, protect and restore biodiversity, and to support the United Nations’ Sustainable Development Goals”.

However, the current supply of high-integrity nature-based solutions is insufficient to meet the commitments already made by a number of large organisations. McKinsey estimates that annual global demand for carbon offsets could reach between 1.5 to 2.0 gigatons of carbon dioxide (GtCO2) by 2030 and between 7 to 13 GtCO2 by 2050. According to their research, “the development of projects would have to ramp up at an unprecedented rate” to meet that demand, with issues such as a lack of financing leading to constrained supply.

“We are committed to catalysing significantly more long-term investment in nature-based solutions”, Perez continues, “but this must be done in a way that genuinely addresses global emissions while improving the livelihoods of local communities. Vertree’s expertise in carbon markets, along with over a decade of on-the-ground forest and landscape project experience that is embedded in the joint venture, enables us to adopt this long-term perspective.”

Vertree will further address concerns around the integrity of carbon offsets with market-leading insights and due diligence of both the projects it supports and the organisations it works with. All Vertree projects are verified and audited by third parties, including the Verified Carbon Standard; Architecture for REDD+ Transactions; Gold Standard; and Climate, Community, and Biodiversity Standard. Vertree will also use the Core Carbon Principles set out by the Taskforce on Scaling Voluntary Carbon Markets, which assess impacts on the climate, biodiversity, and local communities.

Taraneh Azad, SYSTEMIQ’s Partner and COO, said: “We created Vertree to provide nature-based solutions that the world can trust, with the highest possible standards of environmental and social integrity. Our ambition is to enable Vertree clients to trace funding all the way back to the forests and local communities that they’re investing in, ensuring Vertree projects are both transparent and impactful.”

Ahead of the UK’s Presidency of COP26 in November, the scaling and operation of Voluntary Carbon Markets has become a focus for policy makers and investors. The Taskforce on Scaling Voluntary Carbon Markets, led by Mark Carney, released its final report in January 2021, and the Voluntary Carbon Markets Integrity Initiative began consulting on guidance in March.

 

 

 

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Our stories from the Congo Basin and the Amazon

“Regenerative business models integrate the needs of society with the integrity of nature. They ensure that the natural sources of…

“Regenerative business models integrate the needs of society with the integrity of nature. They ensure that the natural sources of value on which society depends are renewed and increased, rather than depleted or maintained.”

A regenerative human culture is healthy, resilient and adaptable. It cares for the planet as this is the most effective way to create a thriving future for all of us. Morten has in the past decade been focused on mobilising finance, business skills and market access to the right entrepreneurs (often indigenous communities) across the tropical belt. These entrepreneurs have created economic value of protecting and restoring the most rich and threatened ecosystems we have on the planet and thereby integrate economic, social and environmental development.
Morten has led teams working in the basins of the Amazon, Congo and Indonesia as well as many other important ecosystems on land or in the ocean across the tropical belt supporting around 150 companies or institutions.

One example is in the western part of the Congo Basin, a community forest association on the border of the Dja Faunal Reserve – which is home to elephants, hippos and gorillas. Morten has seen cocoa production in West Africa, South-East Asia and Latin America, which often degenerates and destroys nature, but this location is different. The local communities include the Ba’aka people have used their knowledge of this is old-growth forest to intercrop cocoa and other agroforestry products as an economic buffer to the national park. This early stage of a regenerative business model however still needs more work in particular on improving the social development, and without further support for example from climate finance this amazing culture and landscape will not thrive.
Another interesting example is the ARSX, which is a network of indigenous seed collectors from Xingu stretching both the Brazilian Amazon forest and the Cerrado biomes. ARSX develops restoration products in particular to Brazilian agriculture corporates in order to comply with the forest regulation. They use a climate neutralisation approach that is called Muvuca, where recipes often consisting of more than 50 different native seeds have carefully been selected in order to regenerate forests in the specific location, where restoration is needed. This nature-based solution is a cheaper, more effective and yields greater social impact than other restoration techniques.

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