Greenfreezing and How We Begin to Thaw

As ESG investments and particularly the voluntary carbon market goes through growing pains and necessary changes, greenhushing unfortunately remains the industry standard. Companies continue to withhold or underreport their environmental efforts and positive impact for fear of being accused of greenwashing.

While greenhushing is frustrating, at least investment and action still happens behind the scenes. However, as attacks on ESG investments have ticked up this past year, a far worse trend is beginning to grow: greenfreezing.

Greenfreezing: Our Current Chilling Reality

Far more harmful than greenhushing, greenfreezing is when a company significantly slows or halts their climate action efforts or net zero strategies. This year, some companies across sectors have acknowledged they cannot meet their set greenhouse gas targets – a fair and important recalibration. But those companies are also finding it challenging to set new targets that replace the ones they missed. A recent example of this is Air New Zealand’s announcement that it would withdraw from the Science Based Targets initiative and remove its 2030 science-based carbon intensity reduction targets.

Additionally, in a movement long buoyed by collaboration and united fronts, companies are also stepping away from coalitions. Earlier this year, J.P. Morgan and State Street quit the Climate Action 100+, an investor-led climate initiative.

Companies point to slow progress toward clean technologies, the lack of effective rules and regulations, and uncertainty as reasons for why they cannot meet their climate goals. Carbon credits were intended as a helpful stopgap as companies and policymakers work to solve these long-term challenges. The ultimate goal would be to decarbonize and develop new technologies, and as we do those things, also invest in the original, and arguably most important, climate mitigation tool: nature.

Now, afraid of accusations of greenwashing, some companies have moved away from purchasing carbon credits and investing in natural climate solutions. This leaves companies with few good options for short-term climate action and the tempting, and dangerous possibility of continuing with business as usual.

This begs the question -- has criticism of the VCM achieved the opposite of our goal and instead relieved corporates from accountability?

Let’s be clear -- scrutiny and critique are incredibly important for the voluntary carbon market’s maturation and ultimate success. Effective scrutiny aims to hold corporates and carbon project developers alike accountable for the emissions they claim to reduce. And we’ve seen significant progress from this scrutiny. Critique has pushed carbon project developers to innovate towards higher integrity, with innovations like the matched dynamic baseline methodology as one of the market’s most recent success stories. Unfortunately, critique without balance can also make players feel like there’s no way to win. And when you’re set up to lose, why even bother playing the game?

In the climate fight, doing nothing is both the easiest choice and the one with the most dire consequences. It’s true that the voluntary carbon market needs more effective rules and regulation, but we cannot wait for a climate superhero to jump in and save the day. It depends on us all – project developers, policymakers, regulators, and corporations – to create a carbon market that works for people and the planet.

How to Thaw the Market

Thankfully, there are actions all of us can take right now and pathways to creating a more viable market.

First, all market actors should choose high integrity by making matched dynamic baselines the standard. AFF’s Family Forest Carbon Program was the first U.S. based project to use dynamic baselines, and other projects are increasingly incorporating them in their design. Moving forward, project developers should consistently use dynamic baselines wherever possible, and buyers should demand the incorporation of the dynamic baseline in the projects when making their investments.

Second, to ensure we can pay for the quality and integrity the market requires, buyers should change the way they finance projects, prioritizing upfront investment for the highest quality projects. In implementing and scaling the Family Forest Carbon Program, we at AFF have both seen the importance of high integrity and centering smallholders, and how it adds new challenges and costs. If buyers want access to high integrity and quality credits, they need to invest in all the steps that generate them, including measurement, monitoring, reporting, and verification, community outreach, and practice development and refinement.

This is why we created the American Forest Foundation Carbon Auction, first of its kind for a U.S. nature-based project. The Auction provides upfront financing to carbon projects while ensuring transparency through due diligence, all while streamlining the buying process. We hope this auction will make it easier for companies to achieve their goals while investing in the VCM.  

And finally, as an industry, let’s continue to demand improvement AND celebrate successes. While there are companies stepping away from this fight, there are also those stepping up. Symbiosis Coalition, a united effort by Google, Meta, Microsoft, and Salesforce, has announced their commitment to invest $20 million in high-integrity natural climate solutions. And there are leaders like The Integrity Council for the Voluntary Carbon Market leading the way on tangible standards for a more transparent and sustainable market. Like with any market, there will continue to be old ways of working that require adaptation and innovation. AFF’s own climate journey has been one of constant learning and reinvention, but the constant has been our steadfast belief in the importance and potential of family forests in the fight against climate change. The road ahead toward sustainable climate mitigation is not a straight or short one, but it’s one worth us investing in.