In the beginning of 2021, Rabobank and Microsoft officially announced their decision to join forces to create an online marketplace for carbon trading. The Rabo Carbon Bank (“RCB”) was born .
Building on Rabobank’s origins as a farmers’ bank and Microsoft’s position as an IT leader, the Rabo Carbon Bank will be set up by both parties but will not be owned or supplied by Microsoft .
By leveraging Microsoft’s technical expertise in remote sensing, artificial intelligence, and machine learning, RCB aims to create a globally scalable and transparent solution for climate change while empowering local smallholders . RCB’s key proposition “Acorn” explicitly focuses on helping small producers in Africa. Using the knowledge of business partners and interviewing experts and around 50 smallholders, RCB learned that many problems of smallholders relate to land degradation and deforestation .
According to RCB, regenerative farming – and particularly agroforestry – is crucial in tackling degraded soil issues and low rainfall rates. Agroforestry plots, where trees and cover crops protect the soil from degradation and increase regional rainfall rates, can strengthen healthy microclimates. The carbon sequestrated through its trees and cover crops can be traded as carbon credit .
Acorn was created with the aim of “giving small farmers access to the carbon credit market”, said Strategy Lead Emma van de Ven. In an interview, Ms. Van de Ven stressed that “small farmers are the most affected by climate change. However, the money from the carbon credit market usually goes to big project developers because they can be certified and know, for example, how much carbon dioxide can be stored” .
Fig. 1: Old-growth agroforestry row at Sitio Semente (Brasilia, Brazil).
Rabo Carbon Bank will bring together the demand of international corporates who want to offset their residual carbon emissions and the supply of smallholders who have captured atmospheric CO₂ through their agroforestry plots and converted it into carbon credits. Rabo Carbon Bank’s objective is to offset 0.5 per cent of global CO₂ emissions released annually by 2025. To reach this target, about four billion trees must be planted by approximately 15 million smallholders worldwide .
Rabo Carbon Bank’s ability to scale up its operations strongly depends on finding an equitable business deal with farmers. It is also contingent on the degree of innovation required for reliable and cost-effective monitoring. Understanding whether the smallholder is genuinely interested in such a revised income model has been proved to be a critical step for potential scale-up.
To define the project requirements, the farmers’ needs, and a valuable collaboration offer for farmers, RCB currently runs ten pilot projects worldwide. They will also indicate the feasibility of RCB’s general objective, also considering the fact that the share of CO₂ emissions captured by land sinks – such as agroforestry plots – will be smaller in scenarios with higher cumulative CO₂ emissions .
At this stage, it is too early to provide meaningful results. Nonetheless, the interest of smallholders who want to participate and multinationals who want to invest in the project is high… on both sides .