Look around you. How much wood is in your surroundings? The chair you’re sitting on, the desk you’re reading from, the frames that hold your photos, the bookshelves that hold those frames – maybe even the roof over your head. All these items that are easy to take for granted are forest products.  

The U.S. forest products industry employs approximately 950,000 people with a payroll of roughly $50 billion. The industry accounts for around 4% of the total U.S. manufacturing GDP, producing nearly $300 billion in products. Wood, just one type of forest product, is a renewable resource and sustainable material when it is harvested from responsibly managed forests. It is also a fundamental element of the U.S. economy.  

Owning 39% of all U.S. forests – approximately 290 million acres of land – family forest owners play a critical role in protecting the health and wellbeing of much of America’s working woodlands. Their ability to care for their trees through climate-smart forestry not only benefits the planet, but also provides companies that rely on forest products with a sustainably curated supply option. But implementing sustainable forest management practices can require high upfront costs and access to technical knowledge and support – two things that many private landowners do not have access to. So how do we meet the needs of these family forest owners while providing the U.S. market with sustainable wood products? 

Enter: the voluntary carbon market. The VCM brings financial and technical resources to private landowners to implement climate-smart forestry practices, while also providing incentives for companies who rely on forest products for their operations. One piece of the VCM puzzle is climate smart commodities. This article explores what climate smart commodities are, how we can use them to help mitigate climate change, and how they benefit family forest owners and the forests they care for.  

There is No Plan(et) B 

To truly meet the world’s 1.5-degree reduction goal by 2050, we need to activate all climate solutions now, including reducing emissions and activating all natural climate solutions currently available. Corporations and private actors must do everything they can to mitigate the carbon impacts from their activities. In addition to their commitment to reaching net zero goals through purchasing carbon credits, they also need to figure out how to decarbonize their business as much as possible.  

Providing mitigation at the scale we need by 2050 means finding ways to capture and store carbon both inside and outside of supply chains. Much of AFF’s work, primarily through the Family Forest Carbon Program (FFCP), has been focused on quantifying additional carbon benefit for the purposes of selling those claims as carbon credits to companies seeking to reach their net zero climate goals. Carbon credits used in this way are outside of the supply chain. 

Now, as we continue to see success in implementing our climate-smart forestry practices in landowners’ forests, we want to utilize these practices to incentivize companies to decarbonize inside their supply chains. Companies are already under increasing scrutiny from investors, who want to know that the companies they invest in will be financially sustainable in a world where the price of using fossil fuels will continue to rise steeply.  This scrutiny gives them a strong incentive to decarbonize their operations, reducing the emissions in their supply chains while at the same time supporting the carbon sinks – in this case, forests – that are the anchor of their businesses.  

But in the free market, to effectively incentivize decarbonization, corporations need specific, actionable mechanisms that enable 1) corporate investment in supply chains to be turned into measurable climate impact, and 2) corporations to report that impact to investors in a way that justifies their investment. That’s where climate smart commodities come in. 

What Are Climate Smart Commodities? 

Climate smart commodities (CSC) are any agricultural commodity (an entity that can be bought and sold) that is produced using agricultural (farming, ranching, or forestry) practices that reduce greenhouse gas emissions or capture and store carbon.  

The idea behind incorporating climate smart commodities into one’s business model is to be able to quantify the decarbonization of the company’s value chain. One way to quantify that is through a “value chain mitigation,” through which we quantify the positive climate impacts of very discreet investments in a company’s supply chain using many of the tools we use to create a carbon credit.   

For forest conservation organizations like AFF, the intervention we are quantifying is improved forest management practices implemented through our Family Forest Carbon Program.    

How does it all work?  

The infographic below shows how climate smart commodities fit into the decarbonization of a company’s value chain. We use improved forest management practices as the investment in this case.  

1. A company that uses forest products in its operations invests in programs like FFCP that provide family forest owners resources and tools to implement climate-smart forestry practices on lands within that company’s “woodbasket” – the area from which it sources forest products. 

2. With financial and technical support from FFCP, family forest owners implement climate-smart forestry practices on their lands. 

3. Additional carbon is captured and stored as a result of landowners implementing climate-smart forestry practices on their property. 

4. Landowners within the company’s “woodbasket” sell their sustainably harvested wood products to the company. Meanwhile, FFCP uses its dynamic baseline methodology to accurately measure the additional carbon captured as a result of the company's investment, ensuring we only give credit for improvements above “business as usual.”  

5. The company can then claim the positive impacts associated with the climate-smart forestry practices on the lands from which they procure its forest products. This represents efforts to decarbonize its value chain. 

6. Seeing the improvement of climate outcomes in a company’s business model, investors continue to provide more resources to sustain the company’s climate-smart behaviors in its value chain. 

7. Having been thus rewarded for its actions, the company invests even more in decarbonization efforts, restarting and deepening the next cycle.

CSC: Who Benefits? 

THE PLANET: Climate smart commodities are a mechanism to incentivize investment in climate-smart management practices that improve the health and wellbeing of our forests. The practices our FFCP practices implement not only help capture and store additional carbon, but also improve water quality, prevent erosion and pollution, improve biodiversity, and provide support for healthier wildlife.  

LANDOWNERS: In addition to improving the health of their forests, landowners also benefit from climate smart commodities by increasing the financial value of their trees, bolstering rural economies and sustaining generational wealth.  

FOREST PRODUCTS INDUSTRY: These companies can demonstrate to investors, customers, employees and other stakeholders through third-party monitoring and reporting, that they are improving the sequestration and storage of CO2 in forests and in sustainably forested wood products 

COMPANIES: Companies who directly or indirectly rely on forest products within their value chain benefit from using products that come from forests that are implementing climate-smart forest management practices because it decarbonizes their own value chain, and also incentivizes climate-interested customers to buy their products over their competitors’.  

CUSTOMERS: Customers have the choice to buy a number of products that are made with supplies that came from forests that implemented climate-smart practices.  

AFF’s Climate-Smart Commodities Grant 

Funding from donors like you, the reader of this magazine, helped us do the hard, scientific work to develop our Climate Smart Commodity theory from 2018-2021.  In 2022, because of the work you helped make possible.  AFF received $35 million in funding from the U.S. Department of Agriculture’s Partnerships for Climate-Smart Commodities to expand climate-smart forest products markets for family forest owners. The grant will fund Engaging Family Forests to Improve Climate-Smart Commodities (EFFICACI), an initiative developed by AFF and its partners The Nature Conservancy (TNC), Purdue University, Center for Heirs Property Preservation and Women Owning Woodlands.  EFFICACI is designed to leverage the Family Forest Carbon Program to expand and solidify the market for climate-smart timber commodities by: 

• Enhancing production of climate-smart forest products by engaging family forest owners across 13 states including Alabama, Georgia, Indiana, Kentucky, Maryland, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia and West Virginia 

• Supporting minority landowners, particularly in the South, through community outreach, resources, and legal education and services for historically underserved landowners 

• Developing a first-of-its-kind tracking system where third-party verified climate benefits are associated with wood products that come from participating properties that flow into supply chains 

• Combining the use of climate-smart Measuring, Monitoring, Reporting and Verifying (MMRV) techniques with systematic and innovative digital tools to streamline the landowner experience 

The initiative aims to engage 1,600 landowners with an estimated 162,000 acres of family forests within a five-year time frame. U.S. families and individuals care for the largest portion (39 percent) of our nation’s forests, and supply 50 percent of the wood fiber that flows into supply chains. Yet the majority of these owners are not actively engaged in sustainable or climate-smart forest practices, typically due to the historic high costs of planning and implementation. Less than 13 percent of landowners have met with a professional forester or have a long-term management plan, and less than 1 percent of the lands in carbon markets are small, family ownerships. This grant will help the Family Forest Carbon Program continue to bridge the gap between financial barriers and family-owned forests’ potential. The program works with family and individual landowners to manage their forests in ways that meaningfully increase the amount of carbon sequestered and stored, and partners with businesses who are working to confront climate change and achieve vital social, economic and environmental outcomes.