Carbon Investors: A Development Paradigm Optimizes Success

In the realm of Nature-Based Solutions (NbS) carbon projects, I’m still relatively green, having only started my journey in 2016. While I’ve successfully led and grown teams in implementing high-quality and globally-recognized carbon projects, particularly in Africa, this experience pales in comparison to my decades-long engagement across various sectors including renewable energy, human rights, democracy and good governance, sustainable development, humanitarian response, conservation, and environmental/climate change justice with different top international non-governmental organizations like Oxfam, Greenpeace, Amnesty International, and Conservation International.

That said, this diverse background is proving to be a significant advantage in my current role as Executive Vice President (EVP) Global Partnerships at Nature For Justice (N4J). Here, my job is to leverage these wide range of experiences to advise and guide investor partners on effectively ensuring the quality, longevity, and credibility of carbon projects. These projects not only yield competitive returns on investment, but also deliver tangible, meaningful, and measurable benefits to communities in line with the SDGs.

Commercial investors, who constitute the majority in the carbon project space, typically prefer straightforward transactions involving willing buyers and sellers — in this context, willing investors and landowners. However, complexity arises, particularly in the global south, where most of the land is held by individuals or communities. These fragmented land holdings are often individually too small to meet the scale required for large carbon projects, which ideally meet a minimum of tens to hundreds of thousands of acres – depending on project type, of course – and managed by a single entity. Consequently, aggregation becomes essential. For instance, one of the projects my team is facilitating (for a major carbon investor) entails consolidating roughly 300,000 acres of land in Narok County, Kenya, collectively owned by 7,200 individual smallholder farmers. This is the African context in which we, and so many other leading development agencies, are at home.
For a commercial investor, the prospect of engaging with and finding common ground among 7,200 individuals, let alone incorporating them into financial records, is (understandably) daunting.

This necessitates the aggregation of stakeholders into a communal entity, introducing yet another hurdle and more unfamiliar complexity for the conventional investor.

A dual reality emerges from the inherent disparities between individual investor interests (such as financial returns on investment), and communal interests (encompassing the enhancement of social services and infrastructure). These communal needs may span from vital healthcare and educational facilities to the construction of roads and bridges. Unlike straightforward cash transactions, addressing communal needs requires a departure from the norm for commercial investors, amplifying the perceived risk profile of the project. Consequently, many opt to withdraw their interest altogether.

Nevertheless, managing such scenarios is routine for developmental organizations, including NGOs and UN agencies, albeit with its numerous challenges.

My point here is clear: for commercial investors genuinely committed to success, they must shift their perspective on carbon projects. For commercial investors to succeed in carbon projects, they must embrace a dual perspective – recognizing both commercial and developmental aspects. This paradigm shift requires adjusting approaches and understanding that success entails more than tweaking financial models.

To put it bluntly, running a credible carbon project in the global south requires more than financial investment, it demands laying the groundwork for sustainable development. In this context, investors need to consider the value of “building bridges” with the communities on which these projects depend – figuratively and quite often, literally.

Author

  • Michael O'Brien-Onyeka

    N4J Executive VP - Global Partnerships: Michael brings a wealth of expertise and more than 25 years of experience to this position. Most recently, he was the Senior Vice President – Africa Field Division at Conservation International. In addition, Michael has held senior positions at Greenpeace Africa, Oxfam, the National Democratic Institute, the African Child Policy Forum, and Amnesty International.

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