Forest carbon credits: Potential and opportunities for sustainable economic development

Forest carbon credits Potential and opportunities for sustainable economic development

Forest carbon credits are an important means to promote sustainable economic development and minimize negative impacts on the environment. Up to now, investing in forest carbon credits not only brings environmental benefits but also creates economic development opportunities.

In this article, we will introduce the research process and explore the potential of forest carbon credits, and highlight the opportunities it brings for sustainable economic development. Forest carbon credits are not only an environmental protection measure but also an important tool to build a responsible economy and consider sustainability in the development process.

Why are forest carbon credits a potential for sustainable development?

From the reality of how countries have implemented it, there are two main driving forces driving the deployment of forest carbon credits, bringing great potential for sustainable economic development: (1) Interest from the community and (2) Positive impact on business indicators.

According to the latest studies, public interest in products and services related to forest carbon credits is increasing. According to Deloitte (2022), more than 80% of customers show special interest in products and services created according to sustainable development models. In particular, about 39% of consumers show special interest in brands that integrate sustainable elements in the shopping process. Research also shows that 36% of consumers are willing to pay more to purchase products and services committed to sustainable development.

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On the business front, McKinsey (2021) reported that 83% of CEOs and business leaders appreciate the role of CSR-CSV in business strategy. This means that investing in sustainable development activities can bring higher value in terms of investment over the next 5 years. What is interesting is that CSR-CSV activities not only create future benefits but also have a positive influence on current financial indicators and brand indicators.

The above factors pose specific requirements for businesses operating in the field of forest carbon credits: (1) Implement CSR-CSV activities related to specific business activities; (2) Establish performance criteria (KPI) to evaluate the effectiveness of these activities; (3) Transparent reporting on the impact of CSR-CSV activities on the environment, society and economy.

For businesses operating in the field of forest carbon credits in Vietnam, implementing these activities not only helps prepare for sustainable development strategies within and outside the country but also enhances transparency of responsibility. society, supporting the process of cooperation with stakeholders such as supplier partners, business customers (B2B), consumers (B2C), investors and governments.

If you are interested in sustainable business practices, you can learn about carbon credits to apply to your business!

What effects do forest carbon credits bring?

It can be seen that both reports focus on issues of concern to stakeholders, including the environment, economy and society. These three areas are also the focus of the Triple Bottom Lines/ Triple Ps sustainable development model. This model is considered an important tool to evaluate the impact of business activities on the economy, social justice and environmental protection.

In the environmental field, both 4P’s and Vinamilk’s reports present the positive impacts of CSR activities and responsible use of natural resources. They focus on the application of technology, use of green energy, efficiency in water use, application of 3R solutions (reduce, reuse, recycle), control wastewater and waste, and maintain biodiversity protection during production and business processes.

On the social front , both reports emphasize improving working conditions, ensuring a safe and healthy working environment for employees. They focus on developing transparent training and advancement programs, facilitating participation in community activities, and helping employees balance work and life. In addition, both reports emphasize providing clear product information, responsible communication, transparency and honesty.

Regarding economics , both reports demonstrate the positive contributions of businesses to local, regional or national economic development. They focus on prioritizing the procurement and use of domestic supplies and human resources, contributing to local and national budgets. Furthermore, both reports address efforts to support local suppliers in expanding and implementing sustainable economic models.

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To determine the relevance of these activities to the United Nations’ 17 sustainable development goals (SDGs), Vinamilk and 4P’s have described in detail the criteria and goals they are implementing. Vinamilk, for example, links its goals to many SDGs such as eliminating poverty (SDG1), tackling hunger (SDG2), decent work and economic growth (SDG8), industry, innovation and development. infrastructure development (SDG9), and partnerships (SDG17). The 4P’s report, although not detailing each criterion according to each SDGs target, also demonstrates their relevance to many of the criteria and focuses proposed by the SDGs.

In summary, through the reports of both Vinamilk and 4P’s, we have a clear view of the positive effects of forest carbon credits on the environment, society and economy, and are closely linked to the world sustainable development goals.

Actions to reduce greenhouse gas emissions when developing forest carbon credits

Vinamilk is a specific example, one of the pioneering enterprises in Vietnam in developing forest carbon credits. Through implementing actions to reduce greenhouse gas emissions, Vinamilk has contributed to protecting forests and the environment, while creating a sustainable source of income for local people.

Vinamilk’s actions to reduce greenhouse gas emissions in developing forest carbon credits include:

  • Planting new forests: Vinamilk has planted more than 500 hectares of new forests in Tay Ninh, Quang Nam and Thanh Hoa. Planting new forests helps absorb carbon dioxide from the atmosphere, thereby reducing greenhouse gas emissions.
  • Protecting existing forests: Vinamilk has signed a cooperation agreement with non-governmental organizations to protect existing forests in localities where the business operates. Forest protection activities include: patrolling, controlling, replanting forests after being exploited,…
  • Using renewable energy: Vinamilk has used renewable energy such as solar energy, wind energy,… to produce electricity, thereby minimizing dependence on fossil fuels.

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Thanks to the above actions, Vinamilk has contributed significantly to reducing greenhouse gas emissions. Specifically, the business has reduced about 1.2 million tons of CO2 in 2022.

In addition, Vinamilk’s development of forest carbon credits also brings many benefits to local people. Activities of reforestation and forest protection have created jobs and income for people, and also helped raise local people’s awareness of environmental protection.

Challenges and risks when developing forest carbon credits

Forest carbon credits are an important tool in reducing greenhouse gas emissions and protecting forests. However, the development of forest carbon credits also faces a number of challenges and risks, including:

  • Difficulty in determining and measuring greenhouse gas emission reductions: Determining and measuring greenhouse gas emission reductions of forest carbon credit projects is a complex and expensive task. Forest carbon credit projects can include many different activities, such as reforestation, forest protection, sustainable forest management, etc. Each activity will have different ways to define and measure. measure the reduction in greenhouse gas emissions.
  • Risks to sustainability of projects: Forest carbon credit projects need to be implemented in a sustainable manner to ensure long-term effectiveness. However, forest carbon credit projects may encounter many risks, such as climate change, pests, forest fires, etc. These risks may cause projects to not achieve their reduction goals. greenhouse gas emissions.
  • Risk of fraud and exaggeration: Forest carbon credits are a new and potential market. Therefore, forest carbon credit projects may face risks of fraud and exaggeration. These projects may falsely declare the amount of greenhouse gas emission reductions to sell at higher prices.

To minimize the challenges and risks when developing forest carbon credits, there needs to be close coordination between relevant parties, including governments, businesses, NGOs, etc. All parties need to work together. Develop clear standards and regulations for determining and measuring greenhouse gas emissions reductions of forest carbon credit projects. In addition, it is necessary to strengthen monitoring and inspection of forest carbon credit projects to ensure transparency and sustainability.

So which businesses will forest carbon credits be suitable for?

Forest carbon credits are suitable for businesses with high greenhouse gas emissions, especially businesses in heavy industries such as energy, chemicals, manufacturing, etc. These businesses can use forest carbon credits to offset its greenhouse gas emissions, thereby meeting regulations on reducing greenhouse gas emissions.

In addition, forest carbon credits are also suitable for businesses that want to demonstrate their commitment to environmental protection and response to climate change. These businesses can use forest carbon credits to reduce their impact on the environment and enhance their brand image.

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Here are some examples of businesses suitable for forest carbon credits:

  • Energy production businesses such as thermal power plants, nuclear power plants, etc.
  • Chemical manufacturing enterprises such as fertilizer factories, cement factories, etc.
  • Enterprises producing steel, cement,…
  • Transport businesses by air, road, sea, etc.
  • Enterprises producing food, beverages, etc.

These businesses can participate in developing forest carbon credit projects, such as reforestation, forest protection, sustainable forest management, etc. These projects will help businesses reduce emissions. greenhouse gases and forest protection.

How will businesses participate in forest carbon credits?

Process to participate in forest carbon credits that businesses need to follow

The process to participate in forest carbon credits that businesses need to follow includes the following steps:

Step 1: Research and learn about forest carbon credits

Businesses need to learn about the concept, role, benefits, challenges, and risks of forest carbon credits. Businesses also need to learn about regulations and standards for developing forest carbon credits in Vietnam.

Step 2: Choose a suitable forest carbon credit project

Enterprises need to choose a forest carbon credit project that suits their needs and capabilities. Businesses need to consider factors such as: project type, project location, project scale, investment costs, project efficiency,…

Step 3: Find project development partners

Enterprises can develop their own forest carbon credit project or cooperate with other organizations and businesses to develop the project. If an enterprise develops its own project, it needs a team of experts and qualified human resources to implement the project.

Step 4: Implement the forest carbon credit project

Enterprises need to implement forest carbon credit projects according to plans and regulations. Businesses need to have a tracking and monitoring system to ensure the effectiveness and sustainability of the project.

Step 5: Measure and verify greenhouse gas emissions reductions

Businesses need to measure and verify the project’s greenhouse gas emission reductions. Businesses can hire professional organizations to do this work.

Step 6: Register and sell forest carbon credits

Businesses can register and sell forest carbon credits on forest carbon credit exchanges. Businesses need to learn about reputable and reasonably priced forest carbon credit exchanges.

Participating in forest carbon credits is an opportunity for businesses to reduce greenhouse gas emissions, protect forests and enhance brand image. However, businesses need to research carefully and prepare carefully before participating.

The above information provides a solid basis for businesses participating in forest carbon credits, helping them achieve their goals and commitments in the field of sustainable development.