Investing in hard-to-measure climate solutions

We cannot tackle climate change without leveraging carbon markets and channeling funding into climate not-for-profits


Yan Swiderski, executive trustee and co-founder, Global Returns Project

Last October, former Bank of England governor Mark Carney asserted that the market for carbon offsets could eventually grow to £100bn every year. In essence, it all depended on COP26. Parties to the UNFCCC had long failed to clarify rules for trading carbon credits or ‘offsets’, allowing private markets to develop an uncertain reputation. Progress on rules for governments could open the door to greater reliability and growth in the private sphere.

To a certain extent, Glasgow delivered. Negotiators finally established rules for Article 6: the part of the Paris Agreement dealing with emissions trading. With demand on the rise as a result, voluntary credits stand poised to play another important role at the next climate conference.

On the road to COP27, however, it’s time to distinguish between two types of climate solutions and their implications for offsetting’s future. Carbon credits channel funding into easy-to-quantify solutions. But what about the hard-to-measure?

Certain highly effective climate solutions do not lend themselves to simple carbon calculations. These activities include suing polluters, empowering institutions to invest in nature-positive activities and protecting whales. The best not-for-profit organisations offer these crucial, hard-to-quantify climate solutions – solutions that often tackle systemic issues. Not-for-profits therefore provide a critical complement to offsetting that we cannot afford to ignore at COP27.

Offsets reward the easy to measure

Since the 2015 Paris Agreement, Parties to the UNFCCC have managed to largely ignore offsets themselves – or at least the rules that govern them. Until COP26, the rules around implementing Article 6 remained up in the air. Among other things, negotiators in Glasgow finally outlined a UN carbon market with clear standards for ‘real, measurable and long-term benefits’ that are ‘additional’.

This progress remains rooted in the actions of governments. But experts expect the standards set in Glasgow to resonate across global carbon markets, increasing confidence in offsetting activities.

VCMs are already on the rise in 2022, but the increased interest in carbon credits has brought little discussion of the kind of climate solutions they support. The truth is that carbon credits work best for easily quantified activities. And that means they direct funding and attention to easily quantified activities.

Tree planting as an offsetting activity helps illustrate this point. In reality, quantifying trees’ carbon sequestration is complicated. But simple and precise assertions about trees’ carbon storage capabilities abound. Driven by this assumption of easy quantification, offsetting has flocked to forestry. In 2021, forestry and land use carbon projects remained the most popular VCM category. Forestry is inarguably important, but offsetting’s success at funding this sector also indicates an inability to address others.

Some projects are harder to measure

In 2020, for example, years of litigation by the organisation ClientEarth culminated in an agreement to close Poland’s Belchatow coal plant: Europe’s single largest greenhouse gas emitter. But successfully suing polluters cannot be purchased as a carbon credit.

Last June, the organisation Global Canopy helped launch the Taskforce for Nature-related Financial Disclosures, a global initiative empowering organisations to report and act on evolving nature-related risks. Carbon markets cannot sell a global coalition for nature.

Meanwhile, the organisation Whale and Dolphin Conservation (WDC) leads international efforts to protect whales. A great whale helps sequester about 250 tonnes of CO2 each year over its lifetime. But carbon markets cannot sell a saved whale either.  

Not-for-profits like ClientEarth, Global Canopy and WDC deliver climate successes we cannot afford to ignore. Pairing such not-for-profits with the purchase of carbon credits ensures funding for the full spectrum of critical climate solutions. These three all appear in our portfolio of not-for-profits – the Global Returns Fund.

Options for incorporating not-for-profits into offsetting discussions abound, but what’s for certain is that hard-to-measure climate solutions matter. We cannot tackle climate change without leveraging carbon markets and channeling funding into climate not-for-profits. On the road to COP27, we can recommit to measuring the hard-to-measure – and incorporating these solutions into our offsetting strategies.

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