As companies develop climate transition plans to achieve their net zero targets, it is in the financial interest of investors and banks to ensure that companies invest in carbon credits in a way that reduces the systemic risk of climate change and does not expose them to additional reputation or litigation risks. This guide is a resource for those in financial institutions evaluating the role of carbon credits in corporate climate strategies. It also provides guidance on how those credits can contribute to a just and equitable transition. This guidance is intended to provide critical questions for investors interested in evaluating and engaging portfolio companies on their corporate commitments and use of carbon credits. Similarly, banks can use this guidance to inform due diligence and engagements with their clients.
This guide aims to share best practices and compare existing standards for carbon projects. It is not intended to create a new standard for carbon projects or recommend new safeguards. Rather, it references social and environmental safeguards recommended by leading development and conservation organizations and the perspectives of Indigenous Peoples and local communities who were consulted in the report review process.