SDG Impact Japan and sustainacraft partner to establish Japan's first investment fund for high-quality nature-based carbon credits
The 10-billion-yen Nature Commitment Fund aims to acquire 9 million tons of nature-based voluntary and JCM credits.
SDG Impact Japan (Headquarter: Chiyoda-ku, Tokyo, Co-CEO Mari Ogiso, hereafter "SIJ") and sustainacraft Co., Ltd. (Headquarter: Chiyoda-ku, Tokyo, Representative Director: Hiroshi Suetsugu, hereafter "sustainacraft") have agreed on working together to mobilize investment in high-quality nature-based carbon credits. The Nature Commitment Fund (hereafter referred to as "the Fund") will be operated by SIJ Climate LLC, a fully-owned subsidiary of SDG Impact Japan. The Fund aims to raise a total of 10 billion yen in 2024 to invest in carbon credit projects generating 9 million tons of CO2 emissions reduction.
Background and fund overview
Nature-based solution (NbS) projects are recognized as an essential component in achieving the <1.5˚ C global warming goal and preventing biodiversity loss. However, investment in such projects is still limited. Also, the demand for high-quality carbon credits that ensure sufficient measurement and monitoring of NbS projects has increased over the past few years.
The partnership aims to increase investment by Japanese companies and to promote a market ecosystem that supports high-quality nature-based projects. When identifying candidate projects for investment, the fund aims to choose only the projects meeting strict requirements on additionality, protection, credit generation , and expected returns using technologies and know-how proprietary developed.
As the regulatory landscape for greenhouse gas emissions evolves, increases in demand are predicted to cause a shortage of high-quality credits in the market. The strategy of the fund is to develop high-quality early-stage NbS projects and secure long-term carbon credit offtake, with investors receiving stable acquisition of credits or profits from credit price increases.
About SDG Impact Japan and sustainacraft
SDG Impact Japan is a sustainable investment platform based in Japan that invests in entrepreneurs and companies solving the world's hardest problems. Together with its strategic partners, SDG Impact Japan has established early-stage venture funds focused on promoting the circular economy, and sustainable agri- food tech solutions. We also advise on Japan's first outcome-focused ESG engagement fund for listed equities.
sustainacraft is made up of a diverse team of experts in sustainable finance and scientists with MS and PhD degrees in carbon cycle research, data science, causal inference, and forest science with a proven track record in carbon credit evaluation and due diligence support. Combining peer -reviewed scientific analysis methods with our in-house project database, we have developed a framework to quantitatively and qualitatively evaluate early-stage (ie, pre-issuance or pre-registration) nature-based carbon credit projects. In October 2023 our work was selected for the Japan Ministry of Economy, Trade and Industry Small Business Innovation Research Phase 3 grant under the title "Technology development for quantifying naturally derived carbon and biodiversity credits." We are also contributing to the development and assessment of biodiversity credits by combining remote sensing and causal inference techniques with environmental DNA and other in-situ data.
Comment from SDG Impact Japan: It is essential to mobilize private capital to Nature-based Solutions to tackle today's global environmental issues such as climate change mitigation and biodiversity. We believe carbon credits are one of the effective mechanisms to promote the flow of funds to NbS from the private sector by addressing the companies' demand to offset their CO2 emissions to achieve their net zero goals. Recently, the quality of the carbon credits from NbS sources has been in question. We hope to work with sustainacraft, which has in-depth knowledge and advanced technology to ensure the quality of NbS projects, create high-quality carbon credits.
Comment from sustainacraft: We are proud to work with SDG Impact Japan to accelerate the mobilization of resources for NbS to help address climate change. Achieving a net-zero and sustainable economy will require significant capital and will not be possible without contributions from the business sector . This fund will accelerate collaborations with overseas project developers and other market players while supporting our company's mission of promoting the circulation of funds for NbS projects.
Comments from carbon market players:
– Ricardo Blandy, Commercial Director at re.green
“It is very exciting to witness the creation of a fund by Japanese companies focusing on the Voluntary Carbon Market. As an ecological restoration developer in Brazil, we have firsthand knowledge of the magnitude of the challenge and the imperative for investments that prioritize high quality and integrity-driven projects.”
– Fabio Sakamoto, CEO Biomas
“We are excited to hear that a Japanese corporate-led carbon fund has been launched that focuses on voluntary carbon credits. We look forward to closely working with this fund to mobilize capital for high quality nature-based solutions across the globe.”
– Lars Kroijer, Founder and CEO at AlliedOffsets / Advisor for sustainacraft, Inc.
“The next decade has the potential to be an explosive and exciting time for the voluntary carbon markets, and I am thrilled to be joining the Sustainacraft team as an advisor to help them realise their ambitious vision.”
– Valerio Magliulo, CEO and Co-founder at Abatable
"Abatable congratulates Sustainacraft and SDG Impact Japan on the establishment of their new, impact-focused fund to scale innovative projects and deliver a sustainable future for people and planet. We're pleased to support the fund as a specialist sourcing partner, applying expert- led market intelligence and due diligence to help locate the initiatives that can unlock the fund’s contribution towards a nature-positive world.”
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