Protecting the world's forests is one of the most urgent actions on the global climate agenda. That's because forests have a dual function: They absorb large amounts of carbon dioxide from the atmosphere, but they also become sources of greenhouse gas emissions when they are deforested or degraded.. To make this protection economically viable, countries have created, within the framework of Paris Agreement, a mechanism called REDD+, today one of the main global mechanisms of climate change mitigation.
In this article, we explain What is REDD+?, how it works in practice, your relationship with the carbon credit market and Why are companies and investors increasingly looking at this type of project?.
What is REDD+?
REDD+ is the acronym for “Reducing Emissions from Deforestation and Forest Degradation in Developing Countries“The "+" sign represents complementary activities that also protect the climate, such as sustainable forest management and the conservation and enhancement of forest carbon stocks.
In practice, The mechanism financially rewards countries that preserve their forests and reduce deforestation, preventing the release of greenhouse gases into the atmosphere.. By preventing threatened forest areas from being converted to other land uses, it is possible generate carbon credits that, when marketed, They make forest conservation more economically attractive., closing a cycle in which the resources raised are returned for the maintenance of the forest, for conservation actions and for the sustainable development of the territories.
How did REDD+ come about?
At COP19, it was adopted Warsaw Landmark, The framework established the technical and institutional criteria for implementing the mechanism: reference levels for forest emissions, national monitoring systems, and results reporting, always respecting socio-environmental safeguards. The framework also allowed developing countries to access payments for measurable, verifiable, and real results in reducing emissions, strengthening trust between countries of the North and South and attracting climate investments to the forest agenda.
How does a REDD+ project work in practice?
Before any implementation, the following are carried out. feasibility studies to assess whether a given area is eligible for a project REDD+. This analysis considers the extent of the preserved forest, the risk of deforestation in the regional context, the main drivers of pressure on the forest, and the strategies needed for its conservation.
Based on this diagnosis, strategies are defined that combine financial incentives to reduce deforestation in areas under pressure from land conversion, actions to reduce degradation in areas that have already lost ecological quality, and the promotion of sustainable development, generating environmental, social, and economic benefits for the territories involved. After monitoring and evaluating the effectiveness of these strategies, the avoided CO₂ emissions are calculated. And it is from this calculation that carbon credits are generated..
REDD+ and the carbon credit market
The REDD+ is directly connected to carbon marketEach ton of CO₂ avoided or removed can become a tradable credit, used by companies and governments to offset their own emissions. Those who emit less CO₂ than allowed can sell the surplus as credit; those who exceed the limits must purchase them. This dynamic creates real financial incentives to reduce emissions and stimulates projects such as reforestation, clean energy, and carbon capture technologies.
In Brazil, this market made concrete progress in November 2024 with the approval by the National Congress of Bill 182/2024, which establishes emission limits for different economic sectors and creates the SBCE (Brazilian Emissions Trading System) — responsible for regulating emissions from companies that exceed 10,000 tons of CO₂ per year. According to the consultancy... McKinsey, Brazil It holds 15% of the global potential for carbon capture through natural processes., potentially supplying almost half of the demand in a market expected to generate... US$ 50 billion by 2030.
The importance of socio-environmental safeguards
No REDD+ project is complete without robust socio-environmental safeguards. They were defined by the UNFCCC, in COP16, as a set of guidelines that all countries wishing to conduct mechanisms of REDD+ They need to be observed, always adapted to the national context. In Brazil, this debate advanced through a multi-sectoral arrangement between civil society organizations, social movements, companies, and research institutions, which resulted in its own set of principles and criteria, as well as specific guidelines for implementation. REDD+ in Indigenous Territories and Extractive Reserves.
These safeguards exist to to maximize the positive impacts of projects and reduce the socio-environmental risks and conflicts that may arise.,ensuring that forest conservation truly benefits those who live in and depend on the forest.
REDD+ results so far
According to UNFCCC, By the end of 2025, submissions of forest emission reference levels already covered approximately 1.7 billion hectares, more than 90% of the planet's tropical forests and more than 75% of forests in developing countries. In total, 67 developing countries reported REDD+ activities to the UN Secretariat on Climate Change., and 2Four of them have already reported a cumulative reduction of more than 14 billion tons of CO₂.,This is equivalent to about 2.5 times the net greenhouse gas emissions of the United States in 2022. Today, 21 countries are already eligible to seek results-based financing.
Who can invest in REDD+ projects?
Companies, institutions, and organizations seeking to offset their emissions and contribute to forest conservation can invest in REDD+ projects by purchasing carbon credits.. In addition to the voluntary market, these initiatives can also receive funding from governments and international programs focused on environmental protection and addressing climate change.
For forward-thinking leaders, investing in REDD+ is a way to connect decarbonization, environmental conservation, and business value creation.: recognition and management of the environmental impacts of operations, engagement of employees and stakeholders, strengthening of ESG indicators, competitive differentiation, brand reputation, and attraction of investors and strategic partners.
How to implement REDD+ mechanisms
Having well-defined legal and institutional frameworks for socio-environmental safeguards of REDD+ It is fundamental, But its effectiveness depends on concrete actions on the ground.. It is of interest to both the private and public sectors. To ensure that REDD+ projects are designed and conducted efficiently and effectively, including territorial development programs that strengthen the sustainable livelihoods of indigenous peoples and local communities, respecting their worldviews and values..
At Sitawi Finances for Good, Our role in carbon markets and REDD+ mechanisms is... translating these opportunities into real positive impacts for people and nature, working on the implementation of socio-environmental safeguards and the development of benefit-sharing funds. Complementing the developers and certifiers of projects of REDD+, We work to reduce deforestation, contribute to biodiversity conservation, and ensure respect for the rights of indigenous peoples and local communities.
Do you want to understand how your company can invest in REDD+ projects with real impact and solid safeguards? Talk to the Sitawi team Discover how we can support your decarbonization and forest conservation strategy.
