A consortium of project developers, trading firms, and other stakeholders has announced the launch of a new watchdog organisation to police efforts by regulators and rating agencies, with the aim of bringing even more integrity and transparency to the voluntary carbon market (VCM).
The new entity, named the Self-Regulatory Organisation Regulating Organisation (SRORO), aims to turn the tables on independent regulatory bodies such as the US Commodity Futures Trading Commission (CFTC) and UK Financial Conduct Authority (FCA) by evaluating their efforts to oversee and regulate the VCM.
According to an Apr. 1 declaration signed by VCM companies including the Indulgence Offsetting Co. and Eco Evasion Experts, the SRORO’s mission is to “democratise the oversight of the carbon offsetting industry amid the increasing regulatory complexity and patchwork of watchdog organisations sticking their noses where they often are not welcome”.
The consortium also unveiled a division within the Swiss-headquartered SRORO tasked with scrutinising and grading the growing number of voluntary carbon rating agencies (CRAs) that are emerging.
“The Carbon Rating Agency Rating Agency (CRARA) will provide transparent, unbiased, and comprehensive ratings of those opportunistic entities seeking to assess and critique the the voluntary carbon market despite not being asked,” the declaration said.
The SRORO and CRARA have developed methodologies to assess the efficacy and integrity of SROs and CRAs, employing a “unique blend” of performance indicators that measure factors including impact, transparency, stakeholder engagement, and even the creativity of regulatory initiatives.
This approach, according to the founding firms, is designed to “encourage a race to the top, fostering a tradition of innovation and excellence among SROs and CRAs”.
The new watchdog will be funded through subscription fees paid by SROs and CRAs for the right to regulate or evaluate the VCM and its many participants, with seed capital provided through a gamified crowdfunding campaign targeting market enthusiasts.
Reaction from existing SROs and CRAs has been mixed, with some expressing scepticism about the initiative and others cautiously welcoming the scrutiny.
An interactive website is said to be in the works, which will feature a dynamic leaderboard of SRO and CRA rankings, complete with detailed, user-authored reviews and the ability to submit feedback directly to the agencies in question.
“We have grown weary of navigating the seemingly endless SRO and CRA labyrinth,” the founding companies said.
“In a market where transparency is king, we believe it’s time to shine a light on this fiefdom and the self-appointed rulers who wield the regulatory pens. After all, who watches the watchmen?”
Several market sources warned that the formation of the SRORO and CRARA add to an already intricate regulatory VCM landscape.
However, supporters of the initiative believe that by providing a meta-level of scrutiny, the SRORO and CRARA will actually streamline the process by guiding market participants towards the most reputable and popular regulators and raters.
One area of apparent consensus between proponents and critics is that the formation of the SRORO and CRARA underscores the importance of maintaining a critical, yet constructive, dialogue on the path to a more transparent and trustworthy VCM, while a few observers also pointed to the date of the declaration as an indication of the announcement’s veracity.
This is a parody news article that was published on April Fool’s Day 2024.
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