Carbon standard Social Carbon plans to release a methodology for ‘nature stewardship credits’ during the third quarter of this year at the latest, with the first pilots expected to launch in 2025, the company has told Carbon Pulse.

The hybrid biodiversity and social credit methodology, currently in its design phase, is being developed with conservation non-profit Natural State. Once the first draft is finalised, it will go through public consultation.

If some areas of projects aren’t suitable for carbon credits, project developers will prepare to generate nature stewardship credits from the land.

“We envision the implementation of the nature stewardship credit as being a phased approach,” Mike Davies, CEO of Social Carbon, told Carbon Pulse.

In the first pilot phase, likely to start next year, the company will trial the approach within areas of existing carbon projects less suitable for sequestering carbon, Davies said.

Glenn Morley, co-chair of Social Carbon, added: “We’re keen to get new methodologies into the field, but we want to do that in a controlled way. It’s really about making sure this works, getting the results, refining everything, and then moving forward with competence.”

A nature stewardship unit should represent one hectare of land sustainably managed for one year, with payments made at the end of each year. The credits seek to foster ecosystem restoration and conservation efforts while promoting sustainable livelihoods, Social Carbon said.

“We’re taking our co-benefit monitoring as our foundation. The whole structure is around sustainable livelihood. There are metrics to track biodiversity, natural capital and ecosystems, and social impacts to communities,” said Davies.

“The key thing we’re trying to figure out now is which metrics could be applicable for all project types, and which ones need to have some specific nuances so that they can be adapted to different activities.”

“A MODULAR ASSET”

Social Carbon was originally developed by Brazilian NGO Ecologica Institute in 2005, but is now managed by UK charity Social Carbon Foundation.

Launched as a co-benefit standard, it was used alongside Verra’s Verified Carbon Standard (VCS) and Gold Standard to measure the broader benefits of those projects from biodiversity and social impact perspectives.

In 2022, the decision was made to transition Social Carbon from a co-benefit framework to a full standard focusing also on carbon and nature-based solutions.

“We’ve embedded those co-benefits, and that co-benefit monitoring, which was the historical aspect of the standard, into the carbon standard itself,” Davies said.

“So every carbon project has to, by default, monitor those co-benefits, and deliver continuous improvement on those to be eligible for issuing the carbon credits.”

Social Carbon wants the nature stewardship credit methodology under development to be ultimately embedded into all eligible carbon projects, Davies said.

“Our aim is to create a modular asset within the carbon credit to increase the data and the robustness of the broader impacts of those projects.”

SUITABLE AREAS

The initial phase will focus on terrestrial habitats before expanding to marine environments, where implementing biodiversity credit projects is more challenging due to ownership and measurement issues.

While the methodology will be globally applicable, some areas could prove more suitable for generating nature stewardship credits than others.

“For example, areas where there’s not much risk of deforestation, but there’s a need to have access to finance to help maintain and continue the conservation efforts,” said Davies.

“Other good candidates could be existing grasslands that are not necessarily under threat. There’s not a significant opportunity for growth in carbon stocks, but there’s a need to sustainably manage them and have monitoring in place to protect them.”

According to Social Carbon, the initiative has sparked great interest among project developers, including large conservation organisations. Yet, uncertainty looms on the demand side.

“There is money out there, there’s capital looking for something in this area, but it’s reluctant to move forward until it sees something robust in place,” said Morley.

While attention to the voluntary biodiversity credit market has ramped up after the 2022 Kunming-Montreal Global Biodiversity Framework, which carved out a role for nature-based solutions to help bridge the biodiversity financing gap, most companies have not yet translated their interest into transactions.

Many carbon developers are watching the nascent biodiversity market but do not yet have the confidence to foray into it, with some stressing the need for more robust information on the reference price of biodiversity credits.

By Sergio Colombo – sergio@carbon-pulse.com

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