One dead and more than 500 injured as Typhoon Champi sweeps past Taiwan

Nature & Climate Perspective

**Typhoon Champi underscores severe physical reversal risks and ecological vulnerability for East Asian LULUCF and coastal Blue Carbon sequestration projects. **

• High-velocity wind gusts and intense precipitation severely impact coastal mangrove stands and terrestrial biomass, threatening baseline biodiversity metrics and marine habitat connectivity.
• Extensive windthrow and biomass degradation cause direct biotic carbon losses, challenging ICVCM Core Carbon Principles regarding permanence and testing the adequacy of pooled non-permanence risk buffers.
• Post-storm erosion, salinity shifts, and topsoil runoff destabilize long-term pedospheric carbon pools, complicating satellite-based MRV (measurement, reporting, and verification) regimes for environmental asset integrity.

Market & Policy Outlook

**Increased cyclone frequency and intensity in the Western Pacific introduce heightened financial impairment risks for Article 6. 4 crediting pipelines and corporate SBTi Scope 3 claims.**

• Insurance and regulatory frameworks are expected to tighten due diligence on ITMO-linked bilateral deals under Article 6.2 and 6.4, factoring elevated physical risk premiums into regional capital allocation.
• VCM liquidity for regional nature-based solutions may face downward pricing pressure unless issuances strictly demonstrate ICVCM-aligned catastrophic reversal coverage and robust buffer pooling.
• Corporate off-takers relying on local credits for Scope 3 emissions targets face intensified auditing scrutiny from the SBTi regarding unhedged reversal events and net-zero integrity.