COMMENT: New claims for a new era of private sector carbon finance   

Published 13:26 on March 3, 2021  /  Last updated at 12:47 on December 19, 2023  /  Africa, Americas, Asia Pacific, Aviation/CORSIA, China, Climate Talks, Contributed Content, EMEA, International, Kyoto Mechanisms, Nature-based, Other APAC, Other Content, Paris Article 6, South & Central, Voluntary

The voluntary carbon market can build a common understanding for a new financing claim beyond offsetting that represents the same commitment of taking responsibility for unabated emissions by mitigating carbon beyond boundaries, writes Sarah Leugers of Gold Standard.

By Sarah Leugers, Director of Communications, Gold Standard

‘Carbon neutral’ as a prevailing corporate claim has helped bring us to today, when society increasingly expects companies to take responsibility for their climate impact. Companies are increasingly demonstrating that they want to do the right thing and make credible claims accordingly. And it goes without saying the project developers wish to sell assets that have integrity.

We’re now in a new policy era that means that credits used to offset and claim carbon neutrality must have corresponding adjustments to give certainty that the fundamental promise of carbon offsetting – that the atmosphere is no worse off – is fulfilled.

This is why Gold Standard is updating its rules for carbon offsetting claims to make sure that promise can be upheld. Our goal is not just to ensure environmental integrity, but also to protect both project developers and companies from reputational risk.

We recognise that securing corresponding adjustments could be bureaucratic and in some cases may be impossible. Some host countries may simply say no. Yet finance is still needed to reduce emissions where projects are not yet financially or technologically viable.

This leads to a new opportunity – to define a new claim that aligns with international climate policy and maintains public confidence.

A claim to simply have financed an emission reduction or removal does not require the complexity of navigating government bureaucracy, focusing rather on deploying high-impact climate solutions.

The WWF ‘Blueprint for Corporate Action on Climate and Nature’ already set the stage for this transition. They outline a clear mitigation pathway, with a focus on making a commitment to finance climate action beyond their boundaries.

Following the mitigation hierarchy in the WWF Blueprint, private sector finance can be deployed using the same rigorous requirements of today’s carbon markets: additionality, accurate baseline setting, robust methodologies, independent verification, transparent and traceable transactions and … no double claiming.

Of course this requires a shift in thinking. We appreciate that this isn’t a flip of a switch – also that markets, frameworks and companies have been built around ‘carbon neutrality’ and ‘offsetting’, mobilising much-needed climate action, and that this could understandably be seen as a threat. But the real threat comes if carbon market participants find themselves under fire for making potentially false promises, even if unintentionally.

But evolution is possible. Reflect back to just seven years ago: No one had ever heard of a ‘science based’ emission reduction target. Today, Science Based Targets are the benchmark for credible climate strategies.

We can build a common understanding for a new financing claim that represents the same commitment of taking responsibility for unabated emissions by mitigating carbon beyond boundaries.

In this way, we can also avoid the accusations of greenwashing that have plagued the carbon market and companies who have voluntarily taken responsibility for their unabated emissions. We can position the voluntary carbon market as a strong instrument to catalyse even more impact in the future and better recognise the companies that are taking robust climate action.

Sarah Leugers is the Director of Communications and has authored thought leadership pieces on the voluntary carbon market, including Corporate Climate Stewardship Guidelines and Defining a corporate climate finance commitment with CDP and WWF, which set a path for alternative claims in the voluntary carbon market.