UK-based international banking group Standard Chartered announced today a new agreement with the government of the Brazilian State of Acre, with the bank acting as a seller of forest protection-based carbon credits on behalf of the state over the next five years.
Under the terms of the new agreement, Standard Chartered will act as the exclusive seller of the credits into the market, with the bank noting the potential for 5 million credits to come to market in 2026. The credits will take the form of jurisdictional forest carbon credits, which cover an entire jurisdiction – as opposed to project-based carbon credits – and are overseen by the government.
According to Standard Chartered, the carbon credits will help to protect forests in the State of Acre, which is located in the heart of the Amazon rainforest, from deforestation, by creating incentives for preserving standing forests.
Under a commitment by the government, 72% of the proceeds from the sale of the credits will be allocated to indigenous and local communities to fund activities including sustainable and low-emission livestock farming, the reforestation of secondary forests, the creation of clearings without deforestation and sustainable community-based tourism, while the remaining 28% will be used to finance project management and governance, including the effective management of the forests, monitoring and verification, and emergency responses to extreme weather events.
Mr. Amarisio Freitas, Secretary of the Treasury of the State of Acre, speaker and leader of the State’s Jurisdictional Carbon Project, said:
“This arrangement will bring economic and social benefits to the people of Acre, while protecting our natural resources and supporting the traditional communities and indigenous peoples of our state. The government has fought for a fair society by providing solutions for all its inhabitants, creating development mechanisms in the regions furthest from the capital without negatively impacting the ecosystem.”
Standard Chartered noted that the deal marks one of the first examples of a major international bank working with a sub-national government or state entity in this way to help support forest conservation, creating an approach that the bank said could help to establish a scalable model for jurisdiction-wide efforts to tackle deforestation and reduce emissions.
The banks added that the agreement will also support greater integrity in the voluntary carbon market, with the credits to be registered in the Architecture for the REDD+ (Reducing Emissions from Deforestation and Forest Degradation) Transactions (ART) registry, using its verified TREES methodology for the quantification, monitoring, reporting and verification of Greenhouse Gas emission reductions.
Marisa Drew, Chief Sustainability Officer, Standard Chartered, said:
“Without deploying new market mechanisms, standing forests are unlikely to be protected because the short-term economic incentive for deforestation nearly always outweighs the perceived value of these long-term natural assets in situ. We’re leveraging our global network and carbon market expertise to address this challenge directly, offering a means to help preserve standing forests that act as vital carbon sinks, and in turn help the communities that depend on them continue to realise the economic and social returns they provide.”
