J.P. Morgan Asset Management recently announced that it has acquired Campbell Global LLC, a firm that manages 1.7 million acres of timberland on behalf of institutional investors. The deal gives the $2.5 trillion asset manager a foothold in the booming market for forest-carbon offsets, tradable assets that are created by paying landowners to not cut down trees so that they continue to sponge CO2 from the atmosphere. In a world where large companies are increasingly pressured to report on their carbon footprint, carbon offsets have become big business.

Many large companies have vowed to fight climate change, and a lot of those initiatives are accomplished by buying carbon offsets. However, some of those offsets may not actually represent a net carbon reduction because the trees in question were already being preserved. In the worst-case scenario, companies buy forest-carbon offsets instead of actually reducing their corporate emissions and claim to be protecting trees that were never actually under threat. The climate receives neither benefit.

At the heart of this greenwashing is an unlikely culprit: The Nature Conservancy (TNC), the world’s largest environmental group.

Founded in 1915 by a small band of ecologists seeking to preserve unspoiled lands in the US, TNC has become an environmental juggernaut involved in the conservation of more than 125 million acres in 70 countries. TNC’s 2019 revenue was $932 million, eclipsing the combined budgets of the next three largest environmental nonprofits. TNC has been active in Colorado for 55 years, where it is involved in preserving more than 1 million acres.

TNC recruits landowners and also enrolls its own properties in forestcarbon offset projects. The amount of carbon sequestration that would be lost if most of the property were logged is calculated, and each metric ton of “reduced” emissions is represented by a tradable financial instrument. Like a bond in reverse, the offset buyer makes payments over the life of the offset. That money flows to the landowner, and to TNC if they underwrote the project.

A distinction must be made between forest-carbon offsets and industrialcarbon offsets. The latter help emitters balance carbon emissions that exceed regulatory limits by purchasing credits from sellers who have a surplus because they’ve avoided some of the emissions for which they had a regulatory permit. A steel company that mothballs a mill might be a seller of industrial carbon offsets; a coal-fired electric plant that delays installing carbon capture gear might be a buyer.

Forest-carbon offsets provide corporations an inexpensive way to claim emissions reductions without actually changing the way they do business. Some of America’s best-known corporations buy forest-carbon offsets, including Disney, JPMorgan and BlackRock, the world’s largest asset manager.

Investigative reporting in 2020 by BloombergNEF, a clean energy research group, examined “hundreds of pages of documents underpinning these projects” and interviewed a half-dozen participating landowners. They concluded that TNC “is often preserving forested lands that don’t need defending.”

One example they described is an offset involving 2,380 acres in Pennsylvania owned by the Hawk Mountain Sanctuary Association (HMSA). Since 1930, the property has been preserved as a habitat for migratory birds. It attracts 60,000 annual visitors, generating $3 million in admission fees and membership revenue for HMSA.

According to the offset documentation published by TNC, aggressive harvesting of 89% of the trees at Hawk Mountain could “feasibly occur.” That characterization is difficult to reconcile with the facts. Under HMSA’s stewardship, the trees have been untouched for 86 years. Laurie Goodrich, HMSA’s conservation director, has stated that the organization has no intention of cutting trees. “We’d still be managing the land the same way,” without carbon payments, she stated.

Asked to comment on Hawk Mountain and similar examples, TNC explained that their projects conform to the rules of the American Carbon Registry. TNC also pointed out that Hawk Mountain was placed under a conservation easement, meaning that HMSA is now legally precluded from logging for 30 years. American Carbon Registry also defended their offset guidelines, saying that it is impossible to predict how lands will be managed in the future.

It’s hard to look at scenarios like Hawk Mountain without smelling a whiff of opportunism. The idea that, thanks to offset payments from corporations, tree massacres are being avoided on lands already preserved by TNC and other landowners doesn’t pencil.

Arguably, this greenwashing might be the lesser evil if it helps establish a market value for not harvesting trees. In that light, TNC’s efforts to get paid twice for each tract of forest it preserves (first from donations to fund the purchase, then from selling offsets) might seem more defensible. Still, for timber owners, it looks like an invitation to monetize your right to cut regardless of your appetite for harvesting. Cue the smart money – like JPMorgan – buying timber to play harvest arbitrage.