October 6, 2022

Frameworks must accept carbon credits to catalyze a net zero transition.

if effective Carbon credits should be used as a solution within a company’s broad carbon reduction strategy. However, many companies are reluctant to use it. Quality concerns and fears claiming to be carbon neutral based on these May be seen as a green wash continues to increase in number.

There are also concerns about disclosure requirements for people buying and withdrawing loans. Especially about the lack of consistency or transparency about the type and amount of credit withdrawn. latest report As Bloomberg NEF proposes, only 1 in 5 Voluntary Carbon Market (VCM) buyers report self-finance purchases in 2021, making it difficult for outside stakeholders to assess the quality of the company’s net-zero strategy.

This summer has seen new mentoring initiatives. Many launched — from International Sustainability Standards Committee (ISSB) to Voluntary Carbon Market Integrity Initiative (VCMI) — It all focuses on how advisory is beginning to address these two challenges: quality, carbon credit, and exposure.

Improved reporting frameworks and exposure have the potential to spark real change. They can help overcome quality and transparency challenges that plagu the market. Build trust of the organization and vice versa Accelerate net change to zero But to do so effectively A few factors are needed.

If done right, the framework will raise standards for carbon offset reporting and disclosure.

First of all, these frameworks need to be flexible and provide an easy-to-understand and actionable approach. Many emerging frameworks, such as VCMI, take into account other existing frameworks such as: Scientific Goals Initiative (SBTi) for guidelines on setting an in-house carbon reduction target of 1.5°C, which could inadvertently result in the exclusion of some of the highest and hardest emitting sectors, such as oil and gas and transportation. The target method has not been developed or approved.

The second factor is language consistency. Carbon credits are still very new to many companies and are hampered by skepticism. The reporting framework must be consistent when it comes to how to use it. For example: Definitions of International Financial Reporting Standards Qualified Carbon Offset Credit refers to the Carbon Removal Credit only when the Elimination and Avoidance Credit is certified and available on the market.

Third, this also means moving away from the traditional binary approach of “good and bad” that some frameworks apply to carbon credits. This often suggests that deletion credits are better than avoiding them. At BeZero Carbon we found in our analysis From more than 250 rated projects where the risk of additions and other key factors such as durability, over-credit, and leakage will vary from project to project. Carbon credit efficiency cannot be reduced by project type alone. Both avoiding and removing credit play a role in an organization’s transformation roadmap.

If done right, the framework will raise standards for carbon offset reporting and disclosure. Carbon credit ratings play an auxiliary role in helping to improve standards and should be part of broader standardized carbon credit disclosure requirements for companies. Feedback circuit to estimate net zero transition The scoring and collaborative framework will improve corporate reporting on the quality of a broader climate strategy. including raising VCM disclosure standards.

Frameworks play an important role in helping companies Evaluate the quality of purchased carbon credits. Communicate how their compensation strategy fits their net zero plan. and effectively report on their transition plans. All this will help expand the market. Build trust of the organization And finally, help us drive the transition towards a low-carbon economy. The prize is substantial But if we get the correct details

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