How we assess projects 

We gather all types of information when assessing a proposed project investment, including publicly available data, geospatial data and analysis, and data and models from the project developer. We also hold question and answer sessions with the developer and its implementation team, combined with site inspections. 

All this information is assessed against our requirements, and if at any stage the project fails to meet our criteria, we will not proceed with the investment. 

• 1.Additionality: The project and its outcomes are made possible by climate finance and would not have happened otherwise

  In general, a project is considered additional when the benefits delivered would not have otherwise happened, but for the finance received and activities enabled by the project. So, it must go beyond business-as-usual and deliver a net positive benefit.
  
  For example, in the case of GHG reductions, if carbon credits are awarded to abatement that would have happened regardless of the project/investment, overall emissions would continue to rise without an equivalent cut elsewhere. In that case, the project delivers no real carbon emissions avoidance or reduction.
  
  We seek to ensure our activities are consistent with additionality principles in 3 ways:

  • Technical: Carbon benefits are a result of the project activities (and would not otherwise have occurred). For instance, where communities would typically need to cut down trees for firewood, the project provides clean cookstoves to reduce that forest destruction. The stoves are powered by renewable biomass pellets made from materials such as agricultural waste, invasive tree species, and trees planted specifically for this purpose. In this case, the protection of the forest would not have happened without the distribution and use of the clean cookstoves.
  • Financial: The project would not have happened without funding from the sale of carbon credits. In this case, to follow the example above, the cookstoves would not have been supplied without funding from carbon credit revenues, and the forest would have continued to be cut down for firewood.
  • Regulatory: Project activities are separate from compliance-related impact mitigation requirements. For example, where the mine license or existing environmental management plan requires us to carry out land rehabilitation activities or secure biodiversity offsets, these would not be part of a nature-based solutions project.

  To assess a project’s additionality, we use the latest VCS Additionality Tools. These help us to ensure that the carbon project and all complementary activities represent sufficient enhancements in financial flows, as well as environmental and social practices to demonstrate improvement from a business-as-usual scenario.

  We ask questions such as:

  • Are the project outcomes dependent on climate finance?
  • Is the relevant counterfactual information/data readily available and defensible?
  • Will our investment in the project/region be well-received as additional, i.e. are our operations delivering on commitments to manage climate and biodiversity impacts of our operations?

• 2. Quantification: The project can generate real carbon reductions and/or removals, supported by robust accounting practices

  GHG emissions reduction and removals should be quantifiable using standardised methods, measurement tools and approaches - including adjustments for uncertainty and leakage. All carbon benefits from the projects we invest in and develop are measured against a credible emissions baseline and using robust carbon accounting methodologies, to ensure that our claims represent real carbon benefits. We continually monitor updates to these methodologies and adapt our own approach accordingly.
  
  We review all project baselines with our nature solutions carbon advisers to ensure that the number of verified and issued carbon credits is conservative and not over or underestimated. We also work to ensure that the project design and carbon accounting methodologies do not allow double-counting scenarios (e.g. instances where the benefit of a single Greenhouse Gas Emission Reduction Unit is used or claimed more than once).
  
  In addition, we're working with governments and other stakeholders to ‘nest’ all our REDD+ projects within jurisdictional programs. Nesting is a REDD+ carbon project design technique intended to reduce the risk of double-claiming. Within each jurisdiction, it harmonises land-use activities implemented at different scales, integrates the accounting frameworks for all the REDD+ carbon projects, and enforces comparable environmental safeguards.
  
  We use pilot projects to test whether our project activities result in meaningful carbon avoidance or removals, and these are quantified using robust methods appropriate to the project type.

  For public accountability and transparency, all quantification methods and techniques will be publicly available in project documents on reputable carbon registries.

  We ask questions such as:

  • Does the project use or comply with the most recent internationally accepted, or accepted compliance market methodology?*
  • Is the methodology appropriate for the type of project?
  • Based on the project’s status of registration/issuance, is the modelling approach and data appropriate for conservative verified emissions reductions yield?
  • Is the project baseline data conservative?
  • Is there sufficient geospatial evidence to support the methodology used and the accounting claims?
  • Is there appropriate and geographically-relevant ground-truthing in place to test and validate any models?
  • Does the carbon developer have a good project track record?

• 3. Permanence: The project can deliver permanent carbon reductions and/or removals, and reversal risks are realistic and well-managed

  The permanence of a carbon project refers to the physical longevity and integrity of its carbon storage.
  
  To ensure that carbon credits generated by projects represent permanent reduction and removal, we take precautionary measures throughout the project cycle to understand what is typical, achievable or feasible for given project types and activities, and what efforts are made to avoid or mitigate the associated risks of reversal events.
  
  Where projects carry a risk of reversibility, safeguards and mechanisms are put in place to prevent and/or compensate for such losses should they occur e.g. insurance, credit buffer pools and ton-year accounting.

  We ask questions such as:

  • If addressing degradation, is the project design based on a theory of change that addresses the root causes to secure lasting land use change and permanence?
  • Are there appropriate controls in place to avoid leakage and reversals over time?
  • Does the project have the appropriate buffers in place?
  • Does the project have a secure and resilient funding model for its lifetime?

• 4. Governance, social and ecological safeguards: The project takes an integrated approach to protecting and/or restoring nature, while supporting community livelihoods and respecting human rights

  We seek to ensure that our projects don’t result in negative unintended consequences for people, communities, their heritage or natural ecosystems:

  • Developer’s community approach and benefits sharing are fair and transparent.
  • Indigenous Peoples and local communities play an integral role in co-design, development and ownership of projects. Engagement is inclusive and based on principles of Free, Prior Informed Consent (FPIC).
  • Projects don't replace intact ecosystems.
  • Integrated, regenerative landscape stewardship approaches (water, biodiversity, ecosystem services) are prioritised.
  • Projects and partners have good governance practices and procedures.
  • Projects have the support of relevant government and other jurisdictional structures following engagement.
  • Projects meet our environment and community and social performancestandards as relevant to project type and have Climate, Community and Biodiversity (CCB) certification or equivalent.

  Social safeguards

  We ask questions such as:

  Human rights safeguards

  • Is the project /are the partners committed to respecting human rights?
  • Have there been any reported violations of human rights connected to the project/partner and/or any of its directors or management team?
  • Is there evidence of how the project has incorporated human rights due diligence into its systems and processes?

  FPIC-based approaches 

  • Where Indigenous Peoples groups are impacted, has the project demonstrated sufficient involvement of Indigenous Peoples' in the project?
  • Has the project demonstrated its alignment with the principles of FPIC?

  Cultural heritage and livelihoods 

  • Has care been taken to ensure that the rights to, usage of and access to lands and waters, and the associated ecosystem goods and services, are acknowledged and respected?
  • When addressing degradation caused by natural resource use, has care been taken to secure alternative livelihoods, using human rights-based approaches? 

  Grievance mechanism

  • Does the project have a well-defined and effective feedback and grievance mechanism, developed in collaboration with affected communities?

  Community involvement and decision-making

  • Does the project follow internationally accepted stakeholder engagement and co-design practices to ensure the views of rightsholders, and marginalised and minority groups are taken into consideration?
  • Does the project include decision-making processes that ensure that the rights and interests of all participating and affected stakeholders are documented and responded to?
  • If the project extends beyond cultural or jurisdictional boundaries, have efforts been made to establish mechanisms to enable joint decision-making?

  Benefit sharing*

  • Has the project established a fair, equitable and transparent benefit sharing framework?

  Ecological safeguards

  We ask questions such as:

  Biodiversity protection

  • Does the project protect the integrity of ecosystems, e.g. restoration work is only conducted on degraded/deforested lands and does not replace other natural ecosystems?

  Invasive species

  • Does the project intend to introduce potentially invasive species to the project area? Has a context-specific risk and impact assessment been conducted and are there reliable, appropriate controls in place?

  Governance

  We ask questions such as:

  Safeguard monitoring

  • Does a mechanism exist to monitor the project throughout its lifecycle:
    1. To periodically assess and rectify the application of safeguards and trade-off limits.
    2. To evaluate activity progress.
    3. Against a framework of iterative learning for adaptive management?

  Stakeholders

  • Are investors, communities, beneficiaries and other parties involved in the project well-documented?*
  • Have affected stakeholders been identified and involved in relevant activities?

  Risk and opportunities assessment

  • Does the project development and design include a risk and opportunity assessment?
    • Have the risks been appropriately addressed? Is there a process to track the adequate management of these risks?
    • Have unintended social or environmental consequences been assessed and accounted for?
    • Are risks and opportunities periodically assessed during the project?
    • Has the project acknowledged the potential trade-offs of the project and do these inform appropriate safeguards and mitigations?

• 5. Sustainable development and nature positive outcomes: The project supports multi-decade sustainability outcomes and a diverse project pipeline for Rio Tinto

  As part of our purpose to invest in and develop projects that bring positive outcomes for people and nature, we look for aspects that support multi-decade project sustainability.

  We design our projects to advance measurable sustainability objectives such as water stewardship, soil health, waste reduction and biodiversity protection, and community benefits such as job creation and public health improvement.
  
  If the developer cannot provide evidence that the requirements set out in this criteria are in place or confirms they are not, or that they are not of a sufficient standard – provided the basics are in place, there have been no serious or irreversible breaches, and the developer is willing to collaborate to improve the project integrity – we’re willing to consider support of further development and improvement to achieve international expectations. If not, we do not proceed.
  
  In addition, projects are assessed for their role in the Rio Tinto Nature Solutions pipeline to include:

  1. A variety of methodologies representing avoidance, reduction and removals.
  2. The protection and restoration of a diversity of ecosystems.
  3. Support for the resilience of a wide range of communities’ land uses.

  Integrated land use management*

  We ask questions such as:

  • Does the project take into account other initiatives taking place in the landscape and how it might align/enhance/support these?
  • Does the project take local land use or other planning tools into account, whether already in existence or in plan/development as part of a government framework?
  • Has an integrated landscape planning approach been used? Does it focus on stewardship and identifying potential sustainable management, protection or restoration projects to build ecosystem integrity?
  • Does the project design take an integrated approach in identifying and assessing the socio-economic and ecological challenges and opportunities?
  • Is the project valued in terms of integrated metrics that consider climate, social and environmental outcomes rather than performance (eg number of trees planted)?
  • Has an integrated planning and design approach been used to consider environmental risks and outcomes beyond biodiversity (such as water and ecosystem services)?
  • Does the project take an integrated/systemic view of challenges faced by different groups to find a balanced solution that does not place the challenges/claims of one group above another (eg pastoralists vs farmers)?

  Sustainable positive outcomes for people*

  We ask questions such as:

  • Does the project bring long-term additional socio-economic and climate resilience benefits to communities, or conservation/restoration ecosystem benefits?
  • Is the project opportunistic or does it represent bona-fide efforts to address socio-economic challenges through the development of carbon credits?
  • Are socio-economic and ecological opportunities balanced appropriately for sustainable outcomes? Does the project track a set of indicators/metrics linked to these outcomes?
  • Is the project designed to become economically viable/self-sufficient over time?
  • Have alternatives to the project been assessed against the benefits they might bring to communities?

  Contribution to a nature positive future*

  We ask questions such as:

  • Is the project opportunistic or does it represent bona-fide efforts to address environmental challenges by adding value to nature through the development of carbon credits?
  • Does the project bring long-term additional conservation/restoration ecosystem benefits?
  • Does the nature-based solution contribute to relevant national targets associated with the Sustainable Development Goals (SDGs) and the Kunming-Montreal Global Biodiversity Framework?
  • Based on the risks faced in the region, does the project target an important conservation or restoration priority?
  • Does the project consider opportunities to rebuild or maintain ecosystem connectivity as part of its outcomes?
  • Are biodiversity outcomes tracked and assessed as part of an adaptive management program?
  • Are biodiversity metrics set upfront in relation to project goals and baselines/starting conditions?

Meeting our regulatory obligations 

We operate in many jurisdictions that have implemented carbon pricing regulations that cover our Scope 1 emissions. These include Australia, Canada, California, the EU and New Zealand where approximately 83% of our Scope 1 emissions or 64% of our total emissions are covered by these regulations.

Australia

We have significant emissions in Australia, and are required to comply with the Safeguard Mechanism. Our Australian Carbon Credit Unit (ACCU) sourcing strategy currently focuses on three preferred methods, due to their combined potential for carbon sequestration and emissions avoidance, with the wider benefits they can bring for communities and nature repair: savanna fire management, human-induced regeneration (HIR) and environmental planning (EP) projects.

We seek to:

• Partner for the long term with Indigenous project developers. These projects can bring multiple benefits in addition to fire management and nature repair, with carbon finance reinvested into the communities to support training, employment and enhanced connection to Country. For example, near our operations in the Northern Territory we are supporting Arnhem Land Fire Abatement, an Aboriginal-created, owned and operated not-for-profit carbon business. Closer to our operations in Far North Queensland, we are supporting several projects, including the Aurukun Savanna Burning Project and the Oriners & Sefton Savanna Burning Project.
• Continuously strengthen ourdue diligence process. We use a range of geospatial tools and approaches to assess the design and performance of HIR and EP projects, including satellite imagery analysis and land cover classification. This enables us to assess the integrity of projects by monitoring, verifying and quantifying vegetation growth and land cover changes over time. Our site visits and engagement with developers give us additional information to support these assessments.
• Invest in project development to reduce our overall reliance on spot transactions, move ACCU costs closer to the cost of development and have greater oversight of the integrity of projects. This includes investing in carbon developers, such asAustralian Integrated Carbon (in which we have a 14.15% interest) and theSilva Carbon Origination Fund, one of the first in Australia to provide investors with access to large-scale, high-quality carbon credits from land reforestation projects integrated with sustainable agriculture.

Other countries

Canadian Provinces have implemented different carbon pricing regulations, including the British Columbia Output-Based Pricing System and the Quebec Cap-and-Trade System which is linked with California’s. In the California-Quebec system, offsets may be used for compliance purposes (limited to a fixed percentage of the allowances allocated to each installation).

Our aluminium smelters in Iceland and New Zealand are covered by Emissions Trading Systems. Offsets are not eligible for compliance use under these carbon pricing regulations.

We will update our carbon credit sourcing strategy as compliance regulation and Rio Tinto’s abatement trajectory advance.

How we work with our partners 

We believe that local partners, including non-governmental organisations (NGOs), communities and their representatives, have the knowledge and experience of what works best in their context. They hold the best solutions, and their involvement is key to the long-term resilience of projects. Some of these local partners are connected to leading international organisations able to support the responsible scaling of activities.

Our NGO partners includeBirdLife International,Asity Madagascar,Aves Argentinas, BirdLife South Africa, Peace Parks Foundation,Sayari Earth Foundation,Wildlife Conservation Society, andWILDTRUST. 

We are also members of organisations such as theNatural Climate Solutions Alliance, to learn and share our knowledge with other businesses, NGOs and solution providers who share our commitment to high-integrity nature-based solutions.

The many shapes of nature solutions  

Nature solutions can only be effective when they are suited to the local environment and co-designed and implemented with local communities. What works well in one place may produce negative outcomes elsewhere, so nature solutions can take a variety of different shapes and combinations to best support people and nature.  

Covering actions from across nature conservation, natural resource management, and the agricultural sector, nature solutions tend to focus on protection, conservation, management, and restoration. Within these areas, nature solutions can cover the management of agricultural areas, forests and other land uses.  

Most nature solutions are critical investments not just as part of climate action – with positive impacts on GHG emissions and/or carbon sequestration – but also to address nature loss and the resilience of communities globally, deriving multiple co-benefits that address a variety of global Sustainable Development Goals.  

The different types of nature solutions projects are: 

• Protection and/or conservation 

  Changes generating carbon benefits (from/to)

  What is happening on the ground

  Unprotected to protected forest  Logged forest to protected forest Unprotected wetlands (including mangroves) to protected and/or managed wetlands

  Establishing or expanding measures of protection for natural or semi-natural ecosystems for the purposes of conserving and/or regulating ecosystem services, and preventing the loss of natural landscapes and resources.   Actions in this space are focused on preventing the conversion of forest or grasslands into tilled croplands and other greenhouse gas-intensive land uses.    Land or resource use is either fully restricted, significantly regulated or managed by project implementation partners, with the support of local governments, cooperatives and other local community organisations.    Project areas include protected areas, parks and Indigenous land.

  
  

• Restoration 

  Changes generating carbon benefits (from/to)

  What is happening on the ground

  Poor or no vegetative cover to established, increased, or restored vegetative cover through the planting, sowing, or human-assisted natural regeneration of woody vegetation.

  Re-establishing and enhancing ecosystems to return them to natural or semi-natural states for the purposes of conserving/regulating ecosystem services and expanding the spatial extent of natural landscapes that have been lost due to previous human activity.   Includes actions to create a new ecosystem where one no longer exists or enhance natural ecosystems.      Project activities include reforestation and afforestation.

  
  

• Land use management 

  Forest and other land use management
  Conventional logging during timber harvest to reduced impact logging   Scheduled timber harvesting to no timber harvesting  Uncontrolled fires to controlled fires   Conventional tree cutting cycle in timber plantations to extended cutting cycle	Actions directed at managing existing natural or semi-natural ecosystems or created ecosystems, to conserve/regulate ecosystem services and natural landscapes and/or provide sustained natural resources for use.   In the context of nature solutions, management actions can avoid GHG emissions or enhance carbon sinks on working lands. These activities also restore carbon stocks in existing production lands.    Project activities include forest and grassland management, sustainable/climate-smart forestry and agroforestry.
  Agricultural management
  Continuously flooded rice fields to intermittent flooding   High fertiliser application rate to optimum fertiliser application   Deep tillage to minimum/no tillage Overgrazing to controlled/rotational grazing	Enhancing agricultural systems to increase food security, enhance adaptive capacity of farmers to the impacts of climate change, and mitigate climate change where possible.    Focused on the use of climate-smart agriculture approaches which address climate or weather-related risk, while improving food security in the short and long-term.   Project activities include conservation agriculture, nutrient and soil health management, improved rice cultivation, agroforestry, silvopastoralism, livestock and grazing management, and manure management.   These activities also provide benefits of productivity, resilience, greenhouse gas reductions/removals and must be socially and culturally appropriate for the host communities.   Actions in this space also improve enabling conditions e.g. infrastructure development and sustainable livelihoods.

  
  

The life cycle of a nature solutions project 

From when we first identify a potential project, through to feasibility studies, identifying the right partners, engaging with all stakeholders, and eventually retiring carbon credits, there are several steps we follow to ensure that we help develop high-integrity projects that deliver positive outcomes for people, nature and climate. This typically takes many years, with the pace set by engagements with communities and the registration and verification processes. When we invest in existing projects, these are reviewed and verified through a due diligence process based on the aspects below and relative to local context.

• The steps involved in nature solutions projects

  Project Cycle Stage	Action Required	Parties Involved	Expected Outcome
  Identify potential projects	Define criteria for selecting project areas and activities e.g. location, integrity, sectoral scope and impact	Rio Tinto	List of potential project areas/locations that align with Rio Tinto’s geographic footprint and other criteria (see above)
  Feasibility study	Contract carbon consultancy   Explore carbon project scenarios  Explore applicable financial models  Estimate carbon potential	Carbon consultancies  Rio Tinto	Select project activities and define accounting boundaries that meet Rio Tinto criteria Estimated ex-ante net carbon yields i.e. the net balance from all greenhouse gases expressed in CO2 equivalent that will be emitted or sequestered due to project implementation as compared to a business-as-usual scenario  (these estimates are calculated before project implementation to assess the carbon potential of a project)  Outline project costs  Select viable financial model Recommendations on carbon standards and methodologies  Decision to implement carbon project  Recommendations on verifying SDG outcomes and other co-benefits along with the carbon removals
  On-board implementation partners	Contract carbon developer  Contract Monitoring, Reporting and Verification (MRV) partners	Rio Tinto	Rio Tinto invests in carbon project design  Rio Tinto invests in carbon development and management
  Implementation planning	Complete FPIC-based studies   Complete local stakeholder consultations   Sign carbon ownership agreements with communities/landowners/carbon developers Sign Emissions Reduction Purchase Agreement	Rio Tinto   Carbon developer   MRV partners   Community representative   Local governments   Private landowners	Implementation schedule   Define project baselines  Describe monitoring plan to track and report the GHG emission reductions and other data relevant to the project  Piloting  Establish carbon project start date   Define verifiable co-benefits  Select project proponent (this could be either Rio Tinto, carbon developer, MRV partners, or local governments depending on specific project circumstances)   Begin project implementation on the ground
  Choose carbon programs/standard	Engage with carbon standards  Create account(s) with carbon registries	Carbon standards   Rio Tinto  Carbon developer   MRV partners	Select appropriate carbon program
  Apply carbon methodologies	Choose and apply an approved methodology that fits the project activities	Carbon standards   Rio Tinto  Carbon developer   MRV partners	Ensure the methodology’s applicability conditions are appropriate to the project location, activities, technologies and other specific circumstances  Select and apply framework to robustly measure and verify SDG outcomes of project beyond carbon removal  Recalculate ex-ante carbon benefit estimates
  Describe and list project	Project proponents must compile project description documents to demonstrate that the project meets all the requirements of both the carbon program and the applied methodology Submit project documents to carbon standard requesting project listing	Carbon standards   Rio Tinto  Carbon developer   MRV partners	List project on carbon registry  Complete carbon registry public consultation
  Validate project	Contract a validation/verification body (VVB) to review and validate the project description documents   Review comments from carbon registry public consultation and VVB’s project validation process  Submit validation report and other project documents to carbon standard and request project registration	Carbon standards   Rio Tinto  Carbon developer   MRV partners  VVB	Address all corresponding VVB findings   Address all stakeholder concerns published from registry public consultation   VVB provides validation report for estimated carbon and/or other co-benefits    Address all findings from registration review by carbon standard  Register project
  Monitor project implementation	Follow monitoring plan and record implementation activities and outcomes  Collect in-field data  Update carbon models   Document emission reductions/removals in a monitoring report	Rio Tinto  Carbon developer   VVB   Community representative   Local governments   Private landowners	Measured ex-post carbon yields   Measured SDGs and other co-benefits outcomes   Monitoring report compiled by MRV partners
  Verify project benefits	Contract a VVB to verify measured emission reductions/removals and/or other project co-benefits   Submit monitoring report and other project documents to VVB for verification review   Submit verification report and other project documents to carbon standard and request project verification	Carbon standards   Rio Tinto  Carbon developer   MRV partners   VVB	Conduct VVB project site visit   Address all corresponding VVB’s findings   VVB provides verification report for measured carbon and/or other co-benefits    Address all findings from verification review by carbon standard   Verified project impacts
  Issue and Retire Verified Carbon Units (VCUs)/ Voluntary Emission Reductions (VERs)	Request VCU/VERs issuance from carbon registry   Request VCU/VERs retirement carbon registry   Pay issuance and retirement fees   Request VCU/VERs labelling	Rio Tinto  Carbon developer   MRV partners   Carbon standards	Labelled VCUs issued into Rio Tinto or project proponent’s carbon registry account  Rio Tinto retires VCUs and/or other assets associated with the project for contribution claims

  
  

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