It is a rare moment of good news from the climate front lines. A British conservation trust, with backing from City donors, is today declaring a modest victory: mangrove forests along the coast of Southeast Asia are regenerating after decades of shrimp-farm devastation. The announcement comes with a whiff of financial vindication.
The trust's blue carbon credit scheme, launched in 2019, has traded nearly 2 million tonnes of CO2 offsets at an average price of £12 per tonne. Not exactly a windfall for the fund, but enough to sustain replanting operations. The sceptic in me notes that carbon credits remain a speculative asset.
The optimist notes that these mangroves are actually absorbing carbon. The net effect on the balance sheet? A qualified success.
The fund's chief executive called it 'a proof of concept for nature-based solutions that work'. Let us hope he is right. Mangroves, after all, are among the most efficient carbon sinks on earth.
They also protect coastlines from storm surges. So if the City can find a way to price that risk avoidance into a tradable instrument, we might just have a market that aligns profit with ecological repair. But I am not holding my breath.
The history of conservation finance is littered with good intentions and poor returns. Yet there is something different about this project. Perhaps it is the scale: 12,000 hectares restored across three countries, with local communities paid to guard the saplings.
Perhaps it is the oversight: quarterly audits by a Big Four firm. Whatever the reason, the fund has attracted £30 million from institutional investors, including a pension fund that usually only buys gilts. If mangroves can lure pension cash away from government bonds, then we are witnessing a genuine shift.
The question now is scalability. Can this be replicated in the Amazon, in the Congo Basin? The answer, as always, depends on the price.
Carbon must trade higher than the opportunity cost of deforestation. Today, it does not. But the mangroves are a start.
And in the world of green finance, a start is better than a spreadsheet full of promises.
