Standard Chartered is set to play an active role in selling carbon credits generated by the Brazilian state of Acre, a move aimed at protecting the Amazon rainforest and directing vital funds to indigenous communities within the region. This initiative represents a pioneering example of a major global bank collaborating directly with a local government to facilitate forest conservation through carbon finance.

A New Model in Sustainable Finance

Traditionally, carbon credits are sold by project developers through brokers or trading platforms, with banks primarily providing financing or trading services. Standard Chartered is breaking new ground by taking on a more hands-on role, committing to market up to five million jurisdictional carbon credits over a five-year span starting in 2026. The bank views this as an opportunity to innovate in sustainability financing, especially in areas where conventional financial mechanisms have struggled to channel capital effectively.

Marisa Drew, Chief Sustainability Officer at Standard Chartered, highlighted the novelty of this approach, explaining that many traditional financial models do not adequately address the capital needs in sustainability projects, prompting the bank’s proactive stance on innovation.

Acre’s Carbon Credit Program Details

The credits, overseen by Acre’s government, are classified as avoidance credits, meaning they represent efforts to prevent deforestation rather than new carbon capture through reforestation. Acre hopes to raise approximately $150 million to support its forest protection initiatives.

While avoidance credits tend to have a lower market value, projects like Acre’s are essential in maintaining existing forests, which is a central theme in global climate discussions especially with COP climate talks scheduled to take place in Brazil later this year.

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Allister Furey, CEO of Sylvera, a carbon data company, pointed out that deforestation and land use contribute about 20% of global emissions and emphasized forest protection as one of the most cost-effective ways to combat climate change.

Supporting Local Communities and Sustainable Land Use

A substantial 72% of proceeds from the carbon credit sales will be funneled directly to indigenous and local communities, with the remainder allocated for project administration. Key priorities include promoting sustainable agricultural practices designed to prevent further forest loss.

Acre, a remote state in western Brazil bordering Peru and Bolivia, is entirely covered by the Amazon rainforest and home to just over 800,000 inhabitants. Amarisio Freitas, Acre’s Treasury Secretary, expressed confidence that this partnership will bring social and economic benefits to the state’s residents while preserving natural resources and supporting traditional indigenous populations. He praised Acre’s commitment to fostering equitable growth without damaging its vital ecosystems.

Challenges and Progress in Forestry Carbon Markets

Forestry carbon markets have faced setbacks in recent years due to failures in some projects across countries like Indonesia, Zimbabwe, and Kenya, which eroded trust in the credibility of carbon offsets. In response, new standards have emerged to enhance integrity, with a focus on protecting indigenous rights and ensuring that carbon reductions are real and verifiable.

The Integrity Council for the Voluntary Carbon Market (ICVCM) has introduced Core Carbon Principles to recognize projects that meet higher integrity benchmarks. Amy Merrill, CEO of ICVCM, welcomed Standard Chartered’s involvement, saying it reflects growing confidence in the market for credits that comply with these stringent standards.

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Standard Chartered’s Strategic Role and Outlook

Standard Chartered aims to lead in the carbon credit space by supporting projects it deems credible and helping to create market liquidity, encouraging buyers to invest in high-quality credits. Drew acknowledged the challenge of assigning monetary value to natural capital, stating that the current lack of effective pricing contributes to ongoing environmental degradation. The bank’s active participation seeks to address this gap.

Allister Furey added that, with new net-zero financial standards being developed by initiatives like the Science Based Targets initiative (SBTi), banks increasingly require revenue streams outside of fossil fuels, making carbon projects vital for their growth. Though Standard Chartered’s net-zero goals have yet to receive SBTi validation, these types of projects may represent a significant future growth area.

Furey concluded by stressing the urgency for financial institutions to scale their involvement in sustainability solutions quickly, noting that projects like Acre’s could become pivotal in expanding the market for nature-based carbon credits.

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