Common use of Carbon Clause in Contracts

Carbon. The Group has concluded that carbon stock estimates alone should not be the primary basis for defining or making decisions about HCS forest. Carbon stock measurements should be used to inform delineation of vegetation classes and a stratification output which can then be assessed for its ecological viability and livelihood values, as per the HCSA toolkit. The Group recognizes, however, that reliable carbon estimates are important for many other uses, including:  As a basis for enabling government engagement in discourse on HCS;  Translating HCSA vegetation strata into nationally relevant strata classifications;  Determining land use impacts on soil carbon;  Monitoring, reporting and verification;  Linking forest protection to national climate commitments; and  Securing finance for communities and conservation. For those reasons, the Group has agreed that the HCSA Toolkit should be revised to include a new chapter on carbon that clarifies the role of carbon in the methodology and provides clear guidance on the scope of its application:  All companies should aim to adopt carbon estimation, measurement and accounting procedures that: o Are consistent with and complement national approaches on forest and below- ground carbon measurement/accounting and help improve them; o Support national greenhouse gas emission reduction strategies and Nationally Determined Contribution commitments; o Are consistent with RSPO New Planting Procedures, RSPO criteria 7.8 and the Palm GHG tool o Can contribute to land use planning and decision making considerations and processes; and o Use transparent and comparable monitoring, reporting and verification systems.  Soil carbon in addition to that found in peatlands should be considered as part of land use decisions. Organic soils should be included as an important component of greenhouse gas calculations. A credible, practical, and science-based methodology is being sought. 5 The specific definition of “adjacent areas” in this context is yet to be finalized. However, Convergence Working Group participants agree that it should include achieving HCS and HCV conservation in collaboration with adjacent communities, concession holders and local governments.  Above-ground carbon stock measurement should be used to inform a stratification output which is ecologically and nationally relevant and can help translate HCSA stratification to nationally relevant strata.  Above-ground carbon stocks can be determined through the use of LiDAR or optical datasets in combination with biomass inventories.  Options among existing and new climate finance approaches that may be used for the purposes of community development, forest protection, rehabilitation/restoration and/or conservation should be explored, recognizing the concerns that many have with the possible negative implications including the transfer of carbon rights and trading between biotic and fossil carbon. We have agreed on the fundamental elements of a converged HCS methodology, but this approach must be implemented and there are several important outstanding issues that still need to be addressed. The agreed-upon next steps are as follows: 1. Implementation of Convergence Decisions Our decisions will be reflected in the revised HCSA Toolkit, which is currently being prepared and is expected to be completed by early 2017. Specifically:  The use of LiDAR, as an acceptable option for deriving biomass maps is included in the vegetation stratification section.  The role of carbon in the methodology is addressed in a new Chapter  Social requirements are also addressed, but as described above, will be further elaborated in the guidance on social requirements to be completed in 2017  The converged approach to decision-making in YRF will be reflected in the revised Toolkit’s Decision Tree Our decisions will be reflected in the policies and positions of the organizations endorsing this agreement and the revised HCSA toolkit will be implemented by the companies when it is finalized. 2. Resolution of Outstanding Issues

Carbon. The Group has concluded that carbon stock estimates alone should not be the primary basis for defining or making decisions about HCS forest. Carbon stock measurements should be used to inform delineation of vegetation classes and a stratification output which can then be assessed for its ecological viability and livelihood values, as per the HCSA toolkit. The Group recognizes, however, that reliable carbon estimates are important for many other uses, including:  • As a basis for enabling government engagement in discourse on HCS;  • Translating HCSA vegetation strata into nationally relevant strata classifications;  • Determining land use impacts on soil carbon;  • Monitoring, reporting and verification;  • Linking forest protection to national climate commitments; and  • Securing finance for communities and conservation. For those reasons, the Group has agreed that the HCSA Toolkit should be revised to include a new chapter on carbon that clarifies the role of carbon in the methodology and provides clear guidance on the scope of its application:  • All companies should aim to adopt carbon estimation, measurement and accounting procedures that: o Are consistent with and complement national approaches on forest and below- below-­‐‑ ground carbon measurement/accounting and help improve them; o Support national greenhouse gas emission reduction strategies and Nationally Determined Contribution commitments; o Are consistent with RSPO New Planting Procedures, RSPO criteria 7.8 and the Palm GHG tool o Can contribute to land use planning and decision making considerations and processes; and o Use transparent and comparable monitoring, reporting and verification systems.  • Soil carbon in addition to that found in peatlands should be considered as part of land use decisions. Organic soils should be included as an important component of greenhouse gas calculations. A credible, practical, and science-based science-­‐‑based methodology is being sought. 5 The specific definition of “adjacent areas” in this context is yet to be finalized. However, Convergence Working Group participants agree that it should include achieving HCS and HCV conservation in collaboration with adjacent communities, concession holders and local governments.  Above-ground • Above-­‐‑ground carbon stock measurement should be used to inform a stratification output which is ecologically and nationally relevant and can help translate HCSA stratification to nationally relevant strata.  Above-ground • Above-­‐‑ground carbon stocks can be determined through the use of LiDAR or optical datasets in combination with biomass inventories.  • Options among existing and new climate finance approaches that may be used for the purposes of community development, forest protection, rehabilitation/restoration and/or conservation should be explored, recognizing the concerns that many have with the possible negative implications including the transfer of carbon rights and trading between biotic and fossil carbon. We have agreed on the fundamental elements of a converged HCS methodology, but this approach must be implemented and there are several important outstanding issues that still need to be addressed. The agreed-upon agreed-­‐‑upon next steps are as follows: 1. Implementation of Convergence Decisions Our decisions will be reflected in the revised HCSA Toolkit, which is currently being prepared and is expected to be completed by early 2017. Specifically:  • The use of LiDAR, as an acceptable option for deriving biomass maps is included in the vegetation stratification section.  • The role of carbon in the methodology is addressed in a new Chapter  • Social requirements are also addressed, but as described above, will be further elaborated in the guidance on social requirements to be completed in 2017  • The converged approach to decision-making decision-­‐‑making in YRF will be reflected in the revised Toolkit’s Decision Tree Our decisions will be reflected in the policies and positions of the organizations endorsing this agreement and the revised HCSA toolkit will be implemented by the companies when it is finalized. 2. Resolution of Outstanding Issues

Carbon. The Group has concluded that carbon stock estimates alone should not be the primary basis for defining or making decisions about HCS forest. Carbon stock measurements should be used to inform delineation of vegetation classes and a stratification output which can then be assessed for its ecological viability and livelihood values, as per the HCSA toolkit. The Group recognizes, however, that reliable carbon estimates are important for many other uses, including:  • As a basis for enabling government engagement in discourse on HCS;  • Translating HCSA vegetation strata into nationally relevant strata classifications;  • Determining land use impacts on soil carbon;  • Monitoring, reporting and verification;  • Linking forest protection to national climate commitments; and  • Securing finance for communities and conservation. For those reasons, the Group has agreed that the HCSA Toolkit should be revised to include a new chapter on carbon that clarifies the role of carbon in the methodology and provides clear guidance on the scope of its application:  • All companies should aim to adopt carbon estimation, measurement and accounting procedures that: o Are consistent with and complement national approaches on forest and below- ground carbon measurement/accounting and help improve them; o Support national greenhouse gas emission reduction strategies and Nationally Determined Contribution commitments; o Are consistent with RSPO New Planting Procedures, RSPO criteria 7.8 and the Palm GHG tool o Can contribute to land use planning and decision making considerations and processes; and o Use transparent and comparable monitoring, reporting and verification systems.  • Soil carbon in addition to that found in peatlands should be considered as part of land use decisions. Organic soils should be included as an important component of greenhouse gas calculations. A credible, practical, and science-based methodology is being sought. 5 The specific definition of “adjacent areas” in this context is yet to be finalized. However, Convergence Working Group participants agree that it should include achieving HCS and HCV conservation in collaboration with adjacent communities, concession holders and local governments.  • Above-ground carbon stock measurement should be used to inform a stratification output which is ecologically and nationally relevant and can help translate HCSA stratification to nationally relevant strata.  • Above-ground carbon stocks can be determined through the use of LiDAR or optical datasets in combination with biomass inventories.  • Options among existing and new climate finance approaches that may be used for the purposes of community development, forest protection, rehabilitation/restoration and/or conservation should be explored, recognizing the concerns that many have with the possible negative implications including the transfer of carbon rights and trading between biotic and fossil carbon. We have agreed on the fundamental elements of a converged HCS methodology, but this approach must be implemented and there are several important outstanding issues that still need to be addressed. The agreed-upon next steps are as follows: 1. Implementation of Convergence Decisions Our decisions will be reflected in the revised HCSA Toolkit, which is currently being prepared and is expected to be completed by early 2017. Specifically:  • The use of LiDAR, as an acceptable option for deriving biomass maps is included in the vegetation stratification section.  • The role of carbon in the methodology is addressed in a new Chapter  • Social requirements are also addressed, but as described above, will be further elaborated in the guidance on social requirements to be completed in 2017  • The converged approach to decision-making in YRF will be reflected in the revised Toolkit’s Decision Tree Our decisions will be reflected in the policies and positions of the organizations endorsing this agreement and the revised HCSA toolkit will be implemented by the companies when it is finalized. 2. Resolution of Outstanding Issues