Entering the Carbon Credit Business Through Mangrove Reforestation in Madagascar and Mozambique

The Global Carbon Credit Market

Carbon credits are credits that enable the trading of greenhouse gas reduction and absorption. In 2024, an estimated 290 million tons of carbon credits were created globally, with Africa contributing about 20%, or 59 million tons. Africa is expected to generate 2.4 billion tons*2 of carbon credits annually by 2030, with further market expansion also anticipated.

Business Overview

Sumitomo Corporation will expand its business by entering mangrove reforestation carbon credit generation initiatives in Africa, a region with growing economic potential and substantial mangrove forest resources.

Madagascar Project

In October 2023, Sumitomo Corporation and VNV signed a memorandum of understanding (MOU) to jointly explore global carbon credit opportunities. Madagascar Project is one of the collaborative ventures under this MOU. This initiative involves mangrove reforestation in Madagascar and will be implemented through a joint venture between VNV and Bondy. Bondy, a Malagasy impact-driven enterprise, plays a central role in field implementation, ecosystem restoration, and community engagement. Together with VNV and Bondy, Sumitomo Corporation ensures both local anchorage and international standards. Sumitomo Corporation will procure blue carbon credits by funding this mangrove reforestation project. The first phase aims to generate a total of 800,000 tons of carbon credits over 21 years, with Sumitomo Corporation responsible for sales to customers, primarily Japanese companies.

Mozambique Project

Sumitomo Corporation and Removall have established a joint venture dedicated to investing in carbon credit initiatives, with the Mozambique Project as its first investment. In its initial phase, the project is expected to generate approximately 2.5 million tons of blue carbon credits over a 40-year period, with the support and cooperation of the local community. Sumitomo Corporation and Removall will jointly manage the sale of a portion of the generated carbon credits to regional clients.

In the future, each project aims to expand its reforestation efforts to 40,000 hectares, targeting a total of 34 million tons of carbon credits (14 million tons from Madagascar and 20 million tons from Mozambique), making them initiatives on the largest scale in Africa.

Role of Mangrove Reforestation Carbon Credit Generation Projects

Mangroves absorb more CO₂ than tropical forests, effectively contributing to climate change mitigation. They are also essential for biodiversity conservation and provide critical benefits to local communities. However, among the approximately 5,400 currently registered major carbon credit projects*3, only a small number are mangrove-related carbon sequestration projects including co-benefits*4 such as biodiversity protection. Both initiatives in Madagascar and Mozambique, which are Sumitomo Corporation’s first carbon credit projects in Africa, will deliver such co-benefits. In addition to supporting the growing global market for decarbonization, these projects will also create employment opportunities for local communities involved in mangrove plantation, improve livelihoods and contribute to nature-positive efforts such as providing habitats for living creatures and water purification.

Sumitomo Corporation’s Carbon Credit Initiatives

Sumitomo Corporation is involved in several carbon credit initiatives in Japan, including CO₂ absorption and sequestration through marine ecosystems in the town of Hirono, Iwate Prefecture, and offering Leases Including Carbon Credits to offset CO₂ emissions using J-Credits*5 in collaboration with Sumitomo Mitsui Finance & Leasing. Since 2024, Sumitomo Corporation has been recognized as the Best Market Maker for its contribution to market formation under the Tokyo Stock Exchange’s Market Maker Mechanism for two consecutive years. Overseas, Sumitomo Corporation is currently working on mangrove plantation projects, aiming to create a total of 40 million tons of carbon credits across global projects, including Indonesia, Madagascar and Mozambique. This is equivalent to the total greenhouse gas emissions of approximately 15 million households in Tokyo, Saitama, Chiba, and Kanagawa for one year.*5 Sumitomo Corporation plans to leverage domestic and international experience in this area to further expand its business on a global scale.

*1 Carbon dioxide (CO₂) equivalent tons. One carbon credit is issued for every ton of CO₂ reduced or removed.
*2 Data from Africa Carbon Market Initiative Roadmap 2022, November publication:
seforall.org/system/files/2022-11/acmi_roadmap_report_2022.pdf(PDF/21000KB)
*3 Major carbon credit systems such as Verified Carbon Standard, Gold Standard, American Carbon Registry, Climate Action Reserve, Architecture for REDD+ Transactions, Plan Vivo, Global Carbon Council, Eco Registry, Puro Earth.
*4 The co-benefits value refers to multiple benefits across different sectors arising from a single policy, strategy or action plan.
*5 J-Credits are set based on the reduction of CO₂ and other emissions resulting from the introduction of energy-saving equipment and the use of renewable energy, as well as the amount of CO₂ and other emissions absorbed through appropriate forest management, as certified by the Japanese government’s J-Credit System.
*6 Data from
Current Estimates of CO₂ Emissions by Sector | Ministry of the Environment Local Government Action Plan Formulation and Implementation Support Site

VNV

Removall

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