Two Atlantic tropical disturbances to watch; Tropical Storm Moke brings rain to Hawaii

Nature & Climate Perspective

**Heightened tropical storm frequency creates severe physical climate risks for coastal and island carbon sequestration assets. **

• Tropical disturbance surges threaten terrestrial LULUCF assets and island biodiversity through severe wind throw, flooding, and topsoil erosion.
• Intensifying cyclonic activity poses direct reversal risks to coastal Blue Carbon ecosystems, risking the physical destruction of vegetative biomass and benthic sediment stores.
• Accelerating storm cycles disrupt ecological succession and long-term carbon flux baselines, undermining long-term environmental stability projections.

Market & Policy Outlook

**Rising storm-driven physical risks test ICVCM permanence requirements and necessitate increased capitalization of carbon crediting buffer pools. **

• Alignment with ICVCM Core Carbon Principles (CCPs) on Permanence requires carbon crediting registries to reassess reversal risk assessments and buffer pool adequacy for nature-based projects in hurricane belts.
• Secondary market pricing will increasingly reflect physical risk discounts, creating a divergence in liquidity between high-permanence technical removals and vulnerable nature-based credits.
• Corporate buyers with SBTi FLAG targets must account for heightened supply chain physical vulnerability and Scope 3 climate adaptation disclosures under IFRS S2 and CSRD frameworks.