London-headquartered Standard Chartered, in co-ordination with the government of the Brazilian of state of Acre, has agreed to sell high-integrity forest protection carbon credits over the next five years, in 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.

The credits – 5 million of which will potentially come to market in 2026 – will take the form of jurisdictional forest carbon credits. Unlike project-based forest carbon credits, jurisdictional credits cover an entire jurisdiction and are overseen by the government. The credits will help to protect Acre’s forests from deforestation.

The credits will be registered in the Architecture for the REDD+ Transactions ( ART ) registry, using The REDD+ Environmental Excellence Standard ( TREES ) methodology, which has been approved by the Integrity Council for the Voluntary Carbon Market.

The initiative will help to unlock capital to deliver economic, environmental and social benefits to the region and the communities of Acre, located in the heart of the Amazon rainforest. Acre has publicly committed that net funds generated to the state from the sale proceeds will be allocated through the following benefit sharing strategy:

• 72% will be allocated to indigenous and local communities. This capital will go towards activities including sustainable and low-emission livestock farming, the reforestation of secondary forests, the creation of clearings without deforestation and sustainable community-based tourism.
• 28% will be used to finance project management and governance. This includes the effective management of the forests, monitoring and verification of adherence to the TREES standard, and emergency responses to extreme weather events.

Standard Chartered will act as the exclusive seller of the credits into the market. This approach could help to establish a scalable model for jurisdiction-wide efforts to tackle deforestation and reduce emissions.

“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,” says Marisa Drew, the bank’s chief sustainability officer. “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.”

Amarisio Freitas, Acre’s treasury secretary and its Jurisdictional Carbon Project speaker and leader, adds: “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. It provides us an effective tool in the fight for sustainable economic development.”