The true colors of the green economy: from Rio+20 to rainforest credits

In the autumn of 2011, with the Rio+20 summit eight months away, a sharp argument was running through Latin American civil society. The summit's headline theme was to be the "green economy". Governments and UN agencies presented it as a way to steer investment into clean energy, sustainable farming and forest protection. Its critics, among them writers associated with ETC Group, read it differently: as a plan to turn nature's functions into tradable services, open new frontiers for finance, and hand the gains to whoever already dominated the markets.

Thirteen years later the argument can be checked against the record. The phrase itself barely survived. The ideas underneath it did very well.

What "green economy" meant in 2011

The term had a specific pedigree. The UN Environment Programme launched a Green Economy Initiative in 2008, pitched a "Global Green New Deal" as a response to the financial crisis, and in February 2011 published a long report, Towards a Green Economy, arguing that shifting a modest share of global output into green sectors would pay for itself in growth and jobs.

Running alongside it was The Economics of Ecosystems and Biodiversity, or TEEB, a study launched in 2007 at a meeting of G8+5 environment ministers and led by Pavan Sukhdev, a banker on secondment from Deutsche Bank. TEEB's case was that nature is wrecked because its services are free, and that making their value visible in accounts, prices and policy would protect them.

Brazil, the host, pushed to put the green economy at the center of the summit. Other developing countries were wary, fearing it would become an excuse for green trade barriers or new aid conditions. The road to Rio+20 was bumpy accordingly, and the June 2012 outcome document, The Future We Want, called the green economy one of several tools for sustainable development, hedged with assurances that it should not be a rigid set of rules or a disguised restriction on trade.

The critics' case rested on three observations:

• Payments for ecosystem services, and REDD, the forest-carbon scheme then taking shape under the UN climate convention, required someone to own and sell what had been shared or unpriced.
• The "green" technologies on offer, from biomass refining to synthetic biology, were patented and held by a few firms. The technology transfer fights in the climate talks had already shown how little appetite their owners had for sharing.
• A market framing would favor whoever already had capital, data and lawyers.

What it turned into

"Green economy" faded from official use within a few years. In its place came a family of terms that did similar work with better branding.

Natural capital accounting. In 2012 the UN Statistical Commission adopted the System of Environmental-Economic Accounting (SEEA) Central Framework as an international statistical standard, and in 2021 it adopted SEEA Ecosystem Accounting. The World Bank's WAVES partnership, launched in 2010, helped countries build such accounts. In 2021 the UK Treasury published the Dasgupta Review, which treated nature explicitly as an asset on the national balance sheet. Accounting is not selling, and many of the statisticians involved would bristle at the comparison. But once a forest has a value in a ledger, someone will ask who can buy it.

Corporate disclosure. The Taskforce on Nature-related Financial Disclosures released its recommendations in September 2023, modelled on its climate equivalent. The Kunming-Montreal Global Biodiversity Framework, agreed in December 2022, asks governments to require large companies to disclose their nature-related risks and impacts (Target 15), and lists "biodiversity offsets and credits" among the innovative schemes that can help close the funding gap (Target 19).

Nature-based solutions. The UN Environment Assembly adopted a formal definition in March 2022. The idea is sensible: restore mangroves, protect peat, let forests regrow. In practice the phrase became the umbrella under which forest carbon credits were sold to companies chasing net-zero claims.

Credits, carbon and otherwise. REDD became REDD+, and avoided-deforestation projects grew into one of the largest sources of credits on the voluntary carbon market. Biodiversity credits followed. England made biodiversity net gain mandatory for most new developments from February 2024, creating a regulated market in habitat units, and the UK and France backed an international advisory panel on biodiversity credits launched in 2023. At COP29 in Baku in November 2024, governments finally settled the rules for carbon trading under Article 6 of the Paris Agreement, including a UN-supervised crediting mechanism.

At the edges, finance pushed further still. In 2023 the New York Stock Exchange proposed listing a new class of "natural asset companies" that would hold rights to the ecosystem services of specified lands. Facing opposition, it withdrew the proposal in January 2024.

2023: the year the credits were audited

The hardest test of the idea came from journalists and scientists rather than activists. In January 2023 an investigation by The Guardian, Die Zeit and the nonprofit newsroom SourceMaterial, drawing on several academic studies, concluded that the great majority of rainforest offset credits certified by Verra, the largest standard on the voluntary market, were unlikely to represent real emission reductions. Verra disputed the analysis. Its chief executive stepped down that May, and later in the year Verra released a new, consolidated methodology for REDD projects with tighter baselines.

In August 2023 a peer-reviewed study in Science, led by Thales West, examined a set of REDD+ projects across several countries. Most had not significantly reduced deforestation, and the baselines used to calculate their credits tended to overstate the threat the forests faced. The problem behind both findings is the counterfactual. A credit pays for deforestation that supposedly would have happened otherwise, and nobody can observe the otherwise.

Later that year the Kariba REDD+ project in Zimbabwe, one of the best-known forest offset projects anywhere, came under heavy scrutiny over its baseline and over where its revenues went. Its developer, the Swiss company South Pole, ended its role in the project.

The 2011 critique had warned that avoided deforestation would reward claims about destruction that might never have happened. That was polemic then. By the end of 2023 it was not far from the conclusion of the peer-reviewed literature.

Integrity schemes multiplied in response. The Integrity Council for the Voluntary Carbon Market, set up by market participants, began approving methodologies against its Core Carbon Principles in 2024. Whether labels rebuild trust in a product whose core problem is unobservable is still an open question.

Who captures the value

The market framing promised that money would flow to the people who protect nature. Follow a single forest credit from the trees to a corporate sustainability report and it passes through a lot of hands:

1. The land and the people on it. Indigenous peoples, local communities or a state agency hold or claim the forest. Their rights are often contested, and their share of revenue is set by contract, not by any public formula.
2. The project developer. Usually a specialist firm that designs the project, pays for the baseline studies and takes a substantial cut, often in return for carrying the up-front cost.
3. The standard and registry. The standard writes the methodology; the registry issues and tracks credits and charges fees on them. A handful of standards dominate the voluntary market.
4. Validators and verifiers. Auditing firms paid, in most cases, by the projects they audit.
5. Brokers, traders and exchanges. Intermediaries that buy credits in bulk and resell them, sometimes several times over.
6. Ratings agencies. A newer layer selling assessments of credit quality to buyers and investors.
7. The buyer. A company that retires the credit, claims the reduction and banks the reputational value that justified the purchase.

There is no reliable public figure for how much of a credit's final price reaches the first link. Several host governments, Zimbabwe and Kenya among them, moved in 2023 to claim a share of credit revenues or to require benefit-sharing with communities, which says something about how the money had been flowing until then.

Notice the shape. The forest is local, scattered and hard to measure. The links that capture value are few, concentrated and close to finance. That is the structure the 2011 critics predicted, and it rhymes with what happens in other concentrated agricultural chains: the bottleneck earns the margin.

Where it stands at the end of 2024

None of this means nature should go unvalued or that every credit is worthless. Some projects deliver. Some communities have negotiated good terms. Well-designed public payments for forest protection can work, and natural-capital accounts kept by statistics offices rather than traders can expose losses that GDP hides.

But the core of the 2011 warning has aged better than its many detractors expected: markets in nature expanded faster than the rights of the people living in it, and value pooled where capital and expertise already sat. The vocabulary moved from green economy to natural capital to nature-positive. The questions stayed the same. Who is selling, who is buying, and who signed off on the counterfactual?