Mental Health conditions among adults are on the rise across the country, which makes mental health screening more important than ever. Check out this helpful tool from Mental Health America that may help determine if you or a loved one are experiencing symptoms of a mental health condition. https://lnkd.in/g53j4Ut
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Integrating sustainability into core business is rapidly becoming a make-or-break issue as climate action becomes a priority for consumers, investors, and governments alike.
In the European Union, the approval of the Corporate Sustainability Reporting Directive (CSRD) is set to bring about a step change in corporate sustainability disclosures and performance assessment.
The CSRD, successor to the Non-Financial Reporting Directive (NFRD), presents a powerful lens through which companies must disclose their environmental and social impacts, assess their strategic and financial implications, and communicate their responses. The first set of CSRD standards includes two cross-cutting standards and ten topical standards that companies must report against according to a double materiality assessment.
This article focuses on the Climate Change topical standard of the CSRD, known as ESRS E1. Specifically, it explores the requirements for identifying and assessing climate change risks and opportunities and their integration into business resilience planning. It aims to support businesses’ first steps towards compliance with these aspects.
A focus on the impacts of climate change on the organisation
ESRS E1 on Climate Change aims to provide investors and wider stakeholders with an understanding of both how the disclosing company affects climate change and how climate change impacts the company itself. In recent years, many companies have made advancements in understanding and managing the impacts they have on climate change through greenhouse gas (GHG) accounting, (science-based) target setting (SBTs), and mitigation actions. However, fewer companies have assessed and disclosed how climate change will likely affect their operations and financial performance in the short, medium, and long term, making this a priority for companies seeking to comply with the CSRD.
ReferenceDisclosure RequirementESRS 2 – GOV 3 – E1Integration of sustainability related performance in incentive schemesESRS E1-1Transition plan for climate change mitigationESRS 2 – SBM 3 – E1Material impacts, risks and opportunities and their interaction with strategy and business modelESRS 2 – IRO 1 – E1Description of the processes to identify and assess material climate-related impacts, risks and opportunitiesESRS E1-2Policies related to climate change mitigation and adaptationESRS E1-3Actions and resources in relation to climate change policiesESRS E1-4Targets related to climate change mitigation and adaptationESRS E1-5Energy consumption and mixESRS E1-6Gross Scopes 1, 2, 3 and Total GHG emissionsESRS E1-7GHG removals and GHG mitigation projects financed through carbon creditsESRS E1-8Internal carbon pricingESRS E1-9Anticipated financial effects from material physical and transition risks and potential climate-related opportunities
ESRS E1 Disclosure requirements for climate change risks and opportunities, financial impacts, and responses
Scenario analysis as a key tool for identifying and assessing climate risks and opportunities
The first step when seeking to comply with ESRS E1’s risk-related disclosure requirements is to identify the material climate risks and opportunities for the business. Given the uncertainties in the evolution of global GHG emissions and their associated climate impacts across different time horizons, the CSRD, in line with the widely used and respected reporting framework from the TCFD (Task Force on Climate-related Financial Disclosures), requires climate-related risks and opportunities to be assessed using scenario analysis. In other words, climate risks and opportunities should be identified by taking a range of possible futures into account, including a ‘best case,’ a rapid, low-carbon transition where global warming is limited to 1.5°C, as well as a ‘worst case’, high physical impact scenario of +4°C warming by 2100.
+++
High physical impact, +4℃
Assumes very low political momentum and ambition, with little action on climate change mitigation.
Severe impacts of extreme weather events worldwide (e.g. flooding, heatwaves), shifting weather patterns, changing land suitabilityLimited climate policies / carbon pricing
Middle of the road, +2℃
Assumes the world does not rapidly shift from present day social, economic, and political trends. Progress is slow and greenhouse gas emissions do not level off until 2100.
Localized and severe impacts of extreme weather events (e.g. flooding, droughts, heatwaves)Moderately stringent climate policies / carbon pricing
Rapid transition, +1.5℃
Assumes large-scale political momentum and climate ambition to limit global warming to 1.5°C.
Stringent climate policies / carbon pricingRapid technological innovation to support the low-carbon transitionChanging consumer market demands
+++
Disclosure of physical and transition risks
Different climate change scenarios present different types of risks and opportunities. The CSRD classifies these into two main categories: physical risks and opportunities and transition risks and opportunities.
Physical risks are those associated with extreme weather events and long-term changes in weather patterns. While relevant to all scenarios, with effects already being felt today, these risks are most pronounced in a +4℃ warming scenario with limited mitigation action. In this scenario, companies face impacts from (e.g.) increased capital costs associated with asset damage from extreme weather events (e.g., hurricanes, flooding) and reduced revenues and profits due to declining worker productivity and health and safety due to extreme heat conditions.
On the other hand, transition risks and opportunities are those associated with transitioning into an economy that limits global warming, in the optimal scenario, to 1.5°C above pre-industrial levels. Given the stringent climate policies and carbon pricing needed to drive this shift towards a drastically decarbonising global economy, and the necessary transformation in technologies and markets, companies face various potential legal, technological, reputational, and market-related transition risks. However, the low-carbon transition also presents significant opportunities for resource optimisation, cost reduction, and innovation. Under ESRS E1, companies must identify and assess their material transition risks and opportunities, which may include risks from increased operating costs due to the imposition of carbon taxes and more stringent energy and fuel obligations, as well as opportunities arising from increased sales of low-carbon products and services that benefit from much higher customer demand.
A phased-in approach for financial impact quantification
ESRS E1 requires companies to identify and assess their material climate change risks and opportunities and quantify their anticipated financial impacts. Specifically, companies need to disclose how climate risks could affect their financial position, performance, and cash flows in different time frames. A significant level of detail is requested: ESRS E1-9 requires companies to disclose ‘significant amounts of the assets and net revenue at material physical or transition risk’ – and, conversely, potential cost-savings from climate mitigation and adaptation actions, as well as revenue from low-carbon products or services. In other words, the CSRD aims to provide investors and other stakeholders with much more information on how vulnerable a company is to climate change impacts or how it is set to benefit from supporting the low-carbon transition or global adaptation efforts.
Calculating the financial impacts of risks and opportunities is challenging because it entails a range of uncertainties relating to, among other things, climate scenarios and business strategy. It requires close collaboration between internal business units, value chain actors, and climate-change experts to understand how and to what extent climate-related hazards may impact the company’s assets, supply chain, profits, or costs.
Recognising these difficulties, the CSRD has established a phased-in approach to disclosing quantified impacts. Companies can disclose qualitative data for the first three years of CSRD reporting, so they may use this time to build up their climate scenario analysis and financial impact quantification to put a solid reporting base in place for their fourth disclosure.
Integration of climate risks and opportunities into business strategy and planning
Having identified, assessed, and quantified material climate-related risks and opportunities, ESRS-E1 requires companies to disclose their response to these aspects in the form of climate mitigation and climate adaptation policies and associated actions. Companies must also report their transition plan for climate change mitigation, assuming a 1.5°C pathway. In doing so, companies can demonstrate to investors that material climate risks are being managed and/or opportunities are set to be realised.
It is evident that, beyond being a disclosure regulation, the CSRD provides a valuable framework for future-proofing businesses and ensuring their longevity and relevance in the face of a delayed (and increasingly urgent) low-carbon transition. The climate risk disclosure requirements of ESRS E1 won’t be quick or easy to align with but will prompt important internal reflections on the role of business in a changing climate while providing investors and wider stakeholders with a much clearer picture of companies’ climate performance, both now and in the future.
Integrating sustainability into core business is rapidly becoming a make-or-break issue as climate action becomes a priority for consumers, investors, and governments alike.
In the European Union, the approval of the Corporate Sustainability Reporting Directive (CSRD) is set to bring about a step change in corporate sustainability disclosures and performance assessment.
The CSRD, successor to the Non-Financial Reporting Directive (NFRD), presents a powerful lens through which companies must disclose their environmental and social impacts, assess their strategic and financial implications, and communicate their responses. The first set of CSRD standards includes two cross-cutting standards and ten topical standards that companies must report against according to a double materiality assessment.
This article focuses on the Climate Change topical standard of the CSRD, known as ESRS E1. Specifically, it explores the requirements for identifying and assessing climate change risks and opportunities and their integration into business resilience planning. It aims to support businesses’ first steps towards compliance with these aspects.
A focus on the impacts of climate change on the organisation
ESRS E1 on Climate Change aims to provide investors and wider stakeholders with an understanding of both how the disclosing company affects climate change and how climate change impacts the company itself. In recent years, many companies have made advancements in understanding and managing the impacts they have on climate change through greenhouse gas (GHG) accounting, (science-based) target setting (SBTs), and mitigation actions. However, fewer companies have assessed and disclosed how climate change will likely affect their operations and financial performance in the short, medium, and long term, making this a priority for companies seeking to comply with the CSRD.
ReferenceDisclosure RequirementESRS 2 – GOV 3 – E1Integration of sustainability related performance in incentive schemesESRS E1-1Transition plan for climate change mitigationESRS 2 – SBM 3 – E1Material impacts, risks and opportunities and their interaction with strategy and business modelESRS 2 – IRO 1 – E1Description of the processes to identify and assess material climate-related impacts, risks and opportunitiesESRS E1-2Policies related to climate change mitigation and adaptationESRS E1-3Actions and resources in relation to climate change policiesESRS E1-4Targets related to climate change mitigation and adaptationESRS E1-5Energy consumption and mixESRS E1-6Gross Scopes 1, 2, 3 and Total GHG emissionsESRS E1-7GHG removals and GHG mitigation projects financed through carbon creditsESRS E1-8Internal carbon pricingESRS E1-9Anticipated financial effects from material physical and transition risks and potential climate-related opportunities
ESRS E1 Disclosure requirements for climate change risks and opportunities, financial impacts, and responses
Scenario analysis as a key tool for identifying and assessing climate risks and opportunities
The first step when seeking to comply with ESRS E1’s risk-related disclosure requirements is to identify the material climate risks and opportunities for the business. Given the uncertainties in the evolution of global GHG emissions and their associated climate impacts across different time horizons, the CSRD, in line with the widely used and respected reporting framework from the TCFD (Task Force on Climate-related Financial Disclosures), requires climate-related risks and opportunities to be assessed using scenario analysis. In other words, climate risks and opportunities should be identified by taking a range of possible futures into account, including a ‘best case,’ a rapid, low-carbon transition where global warming is limited to 1.5°C, as well as a ‘worst case’, high physical impact scenario of +4°C warming by 2100.
+++
High physical impact, +4℃
Assumes very low political momentum and ambition, with little action on climate change mitigation.
Severe impacts of extreme weather events worldwide (e.g. flooding, heatwaves), shifting weather patterns, changing land suitabilityLimited climate policies / carbon pricing
Middle of the road, +2℃
Assumes the world does not rapidly shift from present day social, economic, and political trends. Progress is slow and greenhouse gas emissions do not level off until 2100.
Localized and severe impacts of extreme weather events (e.g. flooding, droughts, heatwaves)Moderately stringent climate policies / carbon pricing
Rapid transition, +1.5℃
Assumes large-scale political momentum and climate ambition to limit global warming to 1.5°C.
Stringent climate policies / carbon pricingRapid technological innovation to support the low-carbon transitionChanging consumer market demands
+++
Disclosure of physical and transition risks
Different climate change scenarios present different types of risks and opportunities. The CSRD classifies these into two main categories: physical risks and opportunities and transition risks and opportunities.
Physical risks are those associated with extreme weather events and long-term changes in weather patterns. While relevant to all scenarios, with effects already being felt today, these risks are most pronounced in a +4℃ warming scenario with limited mitigation action. In this scenario, companies face impacts from (e.g.) increased capital costs associated with asset damage from extreme weather events (e.g., hurricanes, flooding) and reduced revenues and profits due to declining worker productivity and health and safety due to extreme heat conditions.
On the other hand, transition risks and opportunities are those associated with transitioning into an economy that limits global warming, in the optimal scenario, to 1.5°C above pre-industrial levels. Given the stringent climate policies and carbon pricing needed to drive this shift towards a drastically decarbonising global economy, and the necessary transformation in technologies and markets, companies face various potential legal, technological, reputational, and market-related transition risks. However, the low-carbon transition also presents significant opportunities for resource optimisation, cost reduction, and innovation. Under ESRS E1, companies must identify and assess their material transition risks and opportunities, which may include risks from increased operating costs due to the imposition of carbon taxes and more stringent energy and fuel obligations, as well as opportunities arising from increased sales of low-carbon products and services that benefit from much higher customer demand.
A phased-in approach for financial impact quantification
ESRS E1 requires companies to identify and assess their material climate change risks and opportunities and quantify their anticipated financial impacts. Specifically, companies need to disclose how climate risks could affect their financial position, performance, and cash flows in different time frames. A significant level of detail is requested: ESRS E1-9 requires companies to disclose ‘significant amounts of the assets and net revenue at material physical or transition risk’ – and, conversely, potential cost-savings from climate mitigation and adaptation actions, as well as revenue from low-carbon products or services. In other words, the CSRD aims to provide investors and other stakeholders with much more information on how vulnerable a company is to climate change impacts or how it is set to benefit from supporting the low-carbon transition or global adaptation efforts.
Calculating the financial impacts of risks and opportunities is challenging because it entails a range of uncertainties relating to, among other things, climate scenarios and business strategy. It requires close collaboration between internal business units, value chain actors, and climate-change experts to understand how and to what extent climate-related hazards may impact the company’s assets, supply chain, profits, or costs.
Recognising these difficulties, the CSRD has established a phased-in approach to disclosing quantified impacts. Companies can disclose qualitative data for the first three years of CSRD reporting, so they may use this time to build up their climate scenario analysis and financial impact quantification to put a solid reporting base in place for their fourth disclosure.
Integration of climate risks and opportunities into business strategy and planning
Having identified, assessed, and quantified material climate-related risks and opportunities, ESRS-E1 requires companies to disclose their response to these aspects in the form of climate mitigation and climate adaptation policies and associated actions. Companies must also report their transition plan for climate change mitigation, assuming a 1.5°C pathway. In doing so, companies can demonstrate to investors that material climate risks are being managed and/or opportunities are set to be realised.
It is evident that, beyond being a disclosure regulation, the CSRD provides a valuable framework for future-proofing businesses and ensuring their longevity and relevance in the face of a delayed (and increasingly urgent) low-carbon transition. The climate risk disclosure requirements of ESRS E1 won’t be quick or easy to align with but will prompt important internal reflections on the role of business in a changing climate while providing investors and wider stakeholders with a much clearer picture of companies’ climate performance, both now and in the future.
The Family Place, Texas’ leading provider of family violence services, celebrated its 27th Annual Texas Trailblazer Awards luncheon On October 10, where Mary Kay Inc. CEO Ryan Rogers was awarded the prestigious Texas Trailblazer Award. The event, held at the Hilton Anatole Dallas, recognized Rogers for his unwavering commitment to enriching women’s lives in Texas and around the world.
Ryan Rogers, the grandson of the iconic beauty brand founder Mary Kay Ash, has been instrumental in upholding and advancing the mission of the Mary Kay Ash Foundation. Since its inception in 1996, the foundation has donated over $92 million to causes that resonate deeply with the brand’s ethos – women’s cancer research and the fight against domestic violence. These funds have been pivotal in supporting women’s shelters, domestic violence service providers, and groundbreaking cancer research programs across the United States.
The luncheon, co-chaired by Lindsay Jacaman and Holly Krug, was emceed by NBC5 anchor Meredith Land. Actress Brooke Shields served as keynote speaker.
In addition to Rogers’ accolade, the event spotlighted other luminaries. Dallas Police Chief Eddie Garcia and State Representative Victoria Neave Criado were honored with the Legislative Impact Award for their instrumental role in the creation of Texas House Bill 5202. This transformative law, signed on June 11, establishes a violent offender database, a crucial tool in the fight against repeat violent offenses.
“Ryan Rogers’ dedication to combating domestic violence and fostering positive change is truly commendable,” said Family Place CEO Mimi Sterling. “His commitment to perpetuating a legacy of genuine community impact has empowered numerous domestic violence survivors to reclaim their lives with newfound strength and hope.”
Rogers now stands alongside past Texas Trailblazers Award luminaries such as former Congresswoman Eddie Bernice Johnson, Paige Flink, Gloria Campos, Charlotte Jones, Lynn McBee, and Dr. Michael Sorrell.
Under Rogers’ leadership, Mary Kay continues to champion causes that uplift and support women, staying true to his grandmother’s vision of enriching women’s lives everywhere.
The Family Place, Texas’ leading provider of family violence services, celebrated its 27th Annual Texas Trailblazer Awards luncheon On October 10, where Mary Kay Inc. CEO Ryan Rogers was awarded the prestigious Texas Trailblazer Award. The event, held at the Hilton Anatole Dallas, recognized Rogers for his unwavering commitment to enriching women’s lives in Texas and around the world.
Ryan Rogers, the grandson of the iconic beauty brand founder Mary Kay Ash, has been instrumental in upholding and advancing the mission of the Mary Kay Ash Foundation. Since its inception in 1996, the foundation has donated over $92 million to causes that resonate deeply with the brand’s ethos – women’s cancer research and the fight against domestic violence. These funds have been pivotal in supporting women’s shelters, domestic violence service providers, and groundbreaking cancer research programs across the United States.
The luncheon, co-chaired by Lindsay Jacaman and Holly Krug, was emceed by NBC5 anchor Meredith Land. Actress Brooke Shields served as keynote speaker.
In addition to Rogers’ accolade, the event spotlighted other luminaries. Dallas Police Chief Eddie Garcia and State Representative Victoria Neave Criado were honored with the Legislative Impact Award for their instrumental role in the creation of Texas House Bill 5202. This transformative law, signed on June 11, establishes a violent offender database, a crucial tool in the fight against repeat violent offenses.
“Ryan Rogers’ dedication to combating domestic violence and fostering positive change is truly commendable,” said Family Place CEO Mimi Sterling. “His commitment to perpetuating a legacy of genuine community impact has empowered numerous domestic violence survivors to reclaim their lives with newfound strength and hope.”
Rogers now stands alongside past Texas Trailblazers Award luminaries such as former Congresswoman Eddie Bernice Johnson, Paige Flink, Gloria Campos, Charlotte Jones, Lynn McBee, and Dr. Michael Sorrell.
Under Rogers’ leadership, Mary Kay continues to champion causes that uplift and support women, staying true to his grandmother’s vision of enriching women’s lives everywhere.
With the ever-increasing urgency to address the impacts of climate change and the recognition of the role forests play in sequestering atmospheric carbon, owning timberlands has taken on many new dimensions.
The list of emerging opportunities and related interest from potential counterparties for the land-based solutions offered by Rayonier’s forestlands are growing, and we are allocating meaningful resources towards advancing these opportunities. As we evaluate these value creation opportunities, we are also working closely with business developers, as well as local communities, to establish safeguards and promote best practices with respect to sustainable forestry and environmental stewardship.
While the range of land-based solutions is ever-evolving, they generally fall into the following broad categories: (1) alternative and/or additional land uses, such as solar farms, wind farms, or CCS; (2) opportunities to monetize the carbon sequestration in tree growth through compliance and voluntary carbon markets; (3) increased demand for wood fiber in bioenergy and biofuel applications; (4) increased demand for wood-based products, such as mass timber; and (5) environmental and biodiversity preservation and enhancement programs.
Alternative/Additional Land Uses
Growing demand for alternative energy (e.g., solar and wind) and carbon capture and storage solutions has translated to increased demand for lands that are suitable for such uses. Our land base, particularly in the U.S. South, contains a significant amount of acreage that may be suitable for these alternative, higher-value uses, and we currently have various projects either underway or under consideration on our lands. Generally, we do not undertake project development or direct investment in these projects, but rather look to enter into long-term lease/license arrangements with counterparties. We believe that the responsible use of our land can play a vital role in addressing the climate crisis, and we are excited to be at the forefront of this effort.
Specific examples of our recent activity in this area include:
Solar Development
During 2022, we executed our first solar lease project located in Polk County, Texas. The 600 acres we currently lease are part of a larger 2,800-acre project, which at completion will produce 200 megawatts of clean energy—enough to power over 30,000 homes and avoid emissions of approximately 250,000 metric tons of CO2 annually. More broadly, solar developers regularly express interest in our land, and as of year-end 2022, roughly 26,000 acres of our U.S. South ownership was under active agreements or options for potential solar development.
Carbon Capture and Storage
In early 2023, we entered into our first CCS lease. CCS technologies allow for the safe storage of carbon dioxide captured from industrial sources, such as power plants, in natural geologic formations deep underground with minimal impact to our timber operations, non-timber income, and other land-based solutions businesses.
Carbon Markets
Forest carbon offset markets have attracted significant attention in recent years, and we’ve gained considerable experience in this area through our New Zealand Timber segment. New Zealand operates a regulated carbon offset market known as the New Zealand Emissions Trading Scheme, in which registered forests established after 1989 generate carbon credits, or New Zealand Units (NZUs), after a forest has been established and while it grows. A portion of these NZUs are relinquished when the forest is harvested. Over time, unencumbered NZUs can be sold to GHG emitters, who are required to buy and retire NZUs to offset their GHG emissions. At year-end 2022, we had an inventory of 1.6 million unencumbered NZUs, from which we expect to sell units from time to time into the open market. In 2022, for example, we generated $20 million of NZU carbon credit sales.
Unlike New Zealand, the U.S. does not have a regulated carbon credit market and instead relies on the voluntary markets. Demand in the voluntary carbon market is projected to grow significantly in the coming years driven by corporate net-zero commitments and the corresponding need for negative emissions (i.e., carbon offsets) to meet these commitments. Given the current high cost and limited scalability of technology-based removals such as direct air capture, we believe that land-based removals/offsets will play an important role in the transition to a low-carbon economy.
Most U.S. forestry carbon offset projects are based on Improved Forest Management (IFM) standards, through which a timberland property is managed differently than in the past in order to generate carbon additionality. This might include extending rotation lengths, growing different species, or otherwise managing the land in a different manner. Carbon credits can also be generated from afforestation activity, where land that has been in alternative uses such as farming or grazing is converted into forests. The carbon additionality of afforestation projects is considered to be superior to that of IFM projects, so such credits are typically worth considerably more in carbon credit markets. Rayonier is currently working on both IFM and afforestation carbon credit projects in the U.S.
Fiber for Bioenergy/Biofuels
Bioenergy and biofuels will likely play an increasing role for many industries aiming to provide and/or source lower-carbon energy. To this end, we are seeing growing interest from potential counterparties looking to secure fiber for bioenergy and biofuel manufacturing facilities.
For example, there are currently a number of bioenergy with carbon capture and storage (BECCS) facilities under consideration in the U.S. South. BECCS facilities burn woody biomass for energy production, and then capture and store the emitted carbon—thereby creating a carbon negative cycle. These facilities could drive significantly increased demand for wood fiber within a proximate sourcing radius.
We are also seeing significant interest in woody biomass for sustainable aviation fuels. Air travel is currently a significant driver of GHG emissions. SAF blended with conventional jet fuel can be used in existing aircraft and result in fewer emissions. Demand for (and production of) SAF is projected to grow rapidly over the next several years, as many of the major airlines have made commitments to utilize an increasing mix of SAF in the future.
While some of these opportunities are still relatively nascent in their development, they reflect the increased future optionality and competition for wood fiber given the positive environmental attributes of timberlands.
Growing Use of Wood-Based Products
In conjunction with the shift toward a low carbon economy, we anticipate that the demand for wood-based building products and packaging will increase moving forward. Life cycle assessment studies have demonstrated the benefits of carbon storage in wood-based building products—that is, fewer greenhouse gas emissions (in construction and in use) as compared to other building materials, such as concrete and steel. Looking ahead, we are optimistic that wood-based construction will continue to grow through the broader use and acceptance of lumber and engineered wood products, such as mass timber. Specifically, we believe that increased demand for cross-laminated timber (CLT), which is a specific type of mass timber product, will be spurred by increased usage in the commercial construction market. We further believe that wood-based packaging will continue to gain favor as an environmentally friendly alternative to single-use plastics.
Environmental Preservation
Given the increased focus on environmental and biodiversity preservation, we expect the opportunities for Rayonier to offer solutions in this area (e.g., conservation easements and mitigation banking) will grow over time. We are actively providing conservation easement solutions and closely monitoring opportunities to provide biodiversity solutions in the future. To this end, we are evaluating opportunities to enhance the biodiversity provided by our land base through our sustainable forestry practices.
To learn more, view the full Rayonier 2022 Sustainability Report.
With the ever-increasing urgency to address the impacts of climate change and the recognition of the role forests play in sequestering atmospheric carbon, owning timberlands has taken on many new dimensions.
The list of emerging opportunities and related interest from potential counterparties for the land-based solutions offered by Rayonier’s forestlands are growing, and we are allocating meaningful resources towards advancing these opportunities. As we evaluate these value creation opportunities, we are also working closely with business developers, as well as local communities, to establish safeguards and promote best practices with respect to sustainable forestry and environmental stewardship.
While the range of land-based solutions is ever-evolving, they generally fall into the following broad categories: (1) alternative and/or additional land uses, such as solar farms, wind farms, or CCS; (2) opportunities to monetize the carbon sequestration in tree growth through compliance and voluntary carbon markets; (3) increased demand for wood fiber in bioenergy and biofuel applications; (4) increased demand for wood-based products, such as mass timber; and (5) environmental and biodiversity preservation and enhancement programs.
Alternative/Additional Land Uses
Growing demand for alternative energy (e.g., solar and wind) and carbon capture and storage solutions has translated to increased demand for lands that are suitable for such uses. Our land base, particularly in the U.S. South, contains a significant amount of acreage that may be suitable for these alternative, higher-value uses, and we currently have various projects either underway or under consideration on our lands. Generally, we do not undertake project development or direct investment in these projects, but rather look to enter into long-term lease/license arrangements with counterparties. We believe that the responsible use of our land can play a vital role in addressing the climate crisis, and we are excited to be at the forefront of this effort.
Specific examples of our recent activity in this area include:
Solar Development
During 2022, we executed our first solar lease project located in Polk County, Texas. The 600 acres we currently lease are part of a larger 2,800-acre project, which at completion will produce 200 megawatts of clean energy—enough to power over 30,000 homes and avoid emissions of approximately 250,000 metric tons of CO2 annually. More broadly, solar developers regularly express interest in our land, and as of year-end 2022, roughly 26,000 acres of our U.S. South ownership was under active agreements or options for potential solar development.
Carbon Capture and Storage
In early 2023, we entered into our first CCS lease. CCS technologies allow for the safe storage of carbon dioxide captured from industrial sources, such as power plants, in natural geologic formations deep underground with minimal impact to our timber operations, non-timber income, and other land-based solutions businesses.
Carbon Markets
Forest carbon offset markets have attracted significant attention in recent years, and we’ve gained considerable experience in this area through our New Zealand Timber segment. New Zealand operates a regulated carbon offset market known as the New Zealand Emissions Trading Scheme, in which registered forests established after 1989 generate carbon credits, or New Zealand Units (NZUs), after a forest has been established and while it grows. A portion of these NZUs are relinquished when the forest is harvested. Over time, unencumbered NZUs can be sold to GHG emitters, who are required to buy and retire NZUs to offset their GHG emissions. At year-end 2022, we had an inventory of 1.6 million unencumbered NZUs, from which we expect to sell units from time to time into the open market. In 2022, for example, we generated $20 million of NZU carbon credit sales.
Unlike New Zealand, the U.S. does not have a regulated carbon credit market and instead relies on the voluntary markets. Demand in the voluntary carbon market is projected to grow significantly in the coming years driven by corporate net-zero commitments and the corresponding need for negative emissions (i.e., carbon offsets) to meet these commitments. Given the current high cost and limited scalability of technology-based removals such as direct air capture, we believe that land-based removals/offsets will play an important role in the transition to a low-carbon economy.
Most U.S. forestry carbon offset projects are based on Improved Forest Management (IFM) standards, through which a timberland property is managed differently than in the past in order to generate carbon additionality. This might include extending rotation lengths, growing different species, or otherwise managing the land in a different manner. Carbon credits can also be generated from afforestation activity, where land that has been in alternative uses such as farming or grazing is converted into forests. The carbon additionality of afforestation projects is considered to be superior to that of IFM projects, so such credits are typically worth considerably more in carbon credit markets. Rayonier is currently working on both IFM and afforestation carbon credit projects in the U.S.
Fiber for Bioenergy/Biofuels
Bioenergy and biofuels will likely play an increasing role for many industries aiming to provide and/or source lower-carbon energy. To this end, we are seeing growing interest from potential counterparties looking to secure fiber for bioenergy and biofuel manufacturing facilities.
For example, there are currently a number of bioenergy with carbon capture and storage (BECCS) facilities under consideration in the U.S. South. BECCS facilities burn woody biomass for energy production, and then capture and store the emitted carbon—thereby creating a carbon negative cycle. These facilities could drive significantly increased demand for wood fiber within a proximate sourcing radius.
We are also seeing significant interest in woody biomass for sustainable aviation fuels. Air travel is currently a significant driver of GHG emissions. SAF blended with conventional jet fuel can be used in existing aircraft and result in fewer emissions. Demand for (and production of) SAF is projected to grow rapidly over the next several years, as many of the major airlines have made commitments to utilize an increasing mix of SAF in the future.
While some of these opportunities are still relatively nascent in their development, they reflect the increased future optionality and competition for wood fiber given the positive environmental attributes of timberlands.
Growing Use of Wood-Based Products
In conjunction with the shift toward a low carbon economy, we anticipate that the demand for wood-based building products and packaging will increase moving forward. Life cycle assessment studies have demonstrated the benefits of carbon storage in wood-based building products—that is, fewer greenhouse gas emissions (in construction and in use) as compared to other building materials, such as concrete and steel. Looking ahead, we are optimistic that wood-based construction will continue to grow through the broader use and acceptance of lumber and engineered wood products, such as mass timber. Specifically, we believe that increased demand for cross-laminated timber (CLT), which is a specific type of mass timber product, will be spurred by increased usage in the commercial construction market. We further believe that wood-based packaging will continue to gain favor as an environmentally friendly alternative to single-use plastics.
Environmental Preservation
Given the increased focus on environmental and biodiversity preservation, we expect the opportunities for Rayonier to offer solutions in this area (e.g., conservation easements and mitigation banking) will grow over time. We are actively providing conservation easement solutions and closely monitoring opportunities to provide biodiversity solutions in the future. To this end, we are evaluating opportunities to enhance the biodiversity provided by our land base through our sustainable forestry practices.
To learn more, view the full Rayonier 2022 Sustainability Report.
Are you familiar with our Back-to-M·A·C program? It’s more than just returning your empties; it’s a commitment to a greener future.
Did you know that most of our packaging can’t be recycled if tossed in your home’s bin? Here’s why:
Size Matters: Our packaging is often small, increasing the likelihood of it becoming lost during the recycling process.Complex Materials: Many of our packaging consist of mixed materials that require intricate and costly separation.Residue: Makeup containers frequently hold product residue, which complicates recycling.
That’s why, 33 years ago, we introduced Back-to-M·A·C! It’s a reliable way to divert our packaging from landfills, giving it a second life as new packaging or converting it into energy.
At M·A·C Cosmetics, we understand the urgency of protecting our planet. So, we made a tough but essential decision: we’ve shifted away from rewarding our consumers with a free lipstick when they return six empties. Why? Because we want to do more and create opportunities to support partners making strides in sustainability.
This year, we proudly unveiled our partnership with Plastics For Change, a trusted source of fair trade-verified recycled plastic. With this collaboration, Plastics for Change is set to collect over 550,000 pounds of plastic—equivalent to a staggering 12,500,000 plastic bottles—from the shores of India. And it doesn’t stop there! We’re also providing support to approximately 200 plastic collectors and their communities with a range of social services for an entire year.
As Plastics For Change Co-Founder and Chief Impact Officer Shifrah Jacobs said, “We’re delighted that M·A·C Cosmetics, a major influencer in the beauty industry, fully comprehends the significance of plastic recycling. It’s not just about investing in innovative technology; it’s also about investing in the inclusive development of the individuals behind the plastic collection, who are a vital part of the ecosystem. We’re excited about the transformative impact this partnership can have on empowering grassroots communities.”
Join us on this journey towards a more sustainable future by visiting here to learn more. And through our M·A·C Lovers program, we’ll continue to reward everyone for their unwavering loyalty!
Are you familiar with our Back-to-M·A·C program? It’s more than just returning your empties; it’s a commitment to a greener future.
Did you know that most of our packaging can’t be recycled if tossed in your home’s bin? Here’s why:
Size Matters: Our packaging is often small, increasing the likelihood of it becoming lost during the recycling process.Complex Materials: Many of our packaging consist of mixed materials that require intricate and costly separation.Residue: Makeup containers frequently hold product residue, which complicates recycling.
That’s why, 33 years ago, we introduced Back-to-M·A·C! It’s a reliable way to divert our packaging from landfills, giving it a second life as new packaging or converting it into energy.
At M·A·C Cosmetics, we understand the urgency of protecting our planet. So, we made a tough but essential decision: we’ve shifted away from rewarding our consumers with a free lipstick when they return six empties. Why? Because we want to do more and create opportunities to support partners making strides in sustainability.
This year, we proudly unveiled our partnership with Plastics For Change, a trusted source of fair trade-verified recycled plastic. With this collaboration, Plastics for Change is set to collect over 550,000 pounds of plastic—equivalent to a staggering 12,500,000 plastic bottles—from the shores of India. And it doesn’t stop there! We’re also providing support to approximately 200 plastic collectors and their communities with a range of social services for an entire year.
As Plastics For Change Co-Founder and Chief Impact Officer Shifrah Jacobs said, “We’re delighted that M·A·C Cosmetics, a major influencer in the beauty industry, fully comprehends the significance of plastic recycling. It’s not just about investing in innovative technology; it’s also about investing in the inclusive development of the individuals behind the plastic collection, who are a vital part of the ecosystem. We’re excited about the transformative impact this partnership can have on empowering grassroots communities.”
Join us on this journey towards a more sustainable future by visiting here to learn more. And through our M·A·C Lovers program, we’ll continue to reward everyone for their unwavering loyalty!
The SAC gathered over 500 in-person and virtual attendees, on September 26 2023 in Boston for its 2023 Annual Meeting to share insights and tangible examples of how our members are addressing the industry’s most urgent and systemic social and environmental challenges. Under the guiding theme of “Evolution for Impact,” the event featured enlightening keynotes, dynamic panel discussions, and groundbreaking collaborative announcements, that served as a testament to the expansive vision the SAC embodies.
In his blog post, Lee Green, Senior Director of Marketing and Communications at the SAC shares his reflections on the SAC 2023 Annual Meeting. Read his blog post titled United in Vision: Reflections on the SAC 2023 Annual Meeting.