Fairtrade Carbon Credits scheme announced

Some of Europe’s biggest businesses have committed to buying Fairtrade Carbon Credits, an initiative launched at the United Nations COP21 climate change conference in Paris.

Marks & Spencer and Deutsche Post DHL Group are among the businesses who have signed up to the scheme, which aims to support farmers (both individuals and co-operatives) and vulnerable rural communities in their fight against climate change.

Fairtrade Carbon Credits have been developed in partnership with the Gold Standard, experts on climate security and sustainable development.

The credits are generated through projects which are run under the Fairtrade Climate Standard. These are carbon projects with Fairtrade co-operatives and other community-based organisations in rural communities, and can include energy efficient schemes, such as clean cookstoves or energy saving lamps; renewable energy projects such as solar electricity or biogas; and reforestation or afforestation projects.

The Fairtrade Minimum Price for each credit goes back to the producer group to ensure that they can cover the costs of the project. The Fairtrade Premium, paid on top of the Minimum Price, goes to producers to invest in becoming more resilient to climate change.

Businesses must have a credible reduction plan in place to reduce their own emissions before they are able to purchase Fairtrade Carbon Credits to compensate for remaining emissions. Each credit represents one tonne of carbon dioxide that has been prevented from entering or has been removed from the atmosphere.

“Increasingly, consumers and shareholders are demanding that businesses reduce their carbon footprint and compensate for unavoidable emissions,” said Fairtrade International CEO Martin Hill. “At the same time, small-scale farmers and workers are among the most affected by climate change even though they have contributed the least to causing it. Extreme weather conditions, increasing plant diseases such as coffee rust, and lower yields are just some of the problems they face.”

Marion Verles, CEO of Gold Standard, explained how the credits were also beneficial for businesses: “This new scheme gives businesses added assurance that their investment in climate security directly supports those who need it most, while also contributing additional sustainable development impacts – from improved health to increased local income – that can be transformational for vulnerable communities.”

Oromia Coffee Farmers’ Union is among the first co-operatives to sign up. General manager Dessalegn Jena said: “If climate change continues at the rate it is currently going, we will struggle to grow coffee in Ethiopia. By selling Fairtrade Carbon Credits, farmers will be able to build their resilience.”

Marks & Spencer have committed to purchasing credits to fund new clean, efficient cook stoves for coffee producers in Ethiopia. Similarly, Dutch renewable energy company Eneco; Java Coffee Company; Belgian coffee roasters Beyers; and German honey producers Breitsamer have also confirmed they will be buying credits in 2016.

Andreas Kratz, Director of Standards at Fairtrade International, explained the pricing scheme: “Fairtrade doesn’t set the end price for the carbon credits, as this is determined by the carbon retailer who actually sells the credits (similar to how a supermarket decides the prices of its coffee on shelf). What we set are the Fairtrade Minimum Price and Premium for producers – this pricing mechanism is vital for the current voluntary carbon market, where credit prices are too low for projects to be sustainable. The Fairtrade Minimum Price aims to cover the average costs of setting up and running the project, and acts as an important safety net for carbon projects.”

• The COP21 conference continues until 11 December. You can follow our coverage of the event here.