Rating carbon projects is one thing. Seeing them is another.
There is an emerging mosaic of rating tools and blockchain solutions designed to provide buyers of carbon offsets more transparency around the integrity and ‘quality’ of an offset project. These tools are important to the market’s maturity and play a role in due diligence. However, offset buyers need to be careful about how they understand ‘quality’. There’s no substitute for on the ground due diligence. Being sure this is done on the projects you are purchasing is worth every dollar of value to your brand integrity.
What do we mean by offset quality?
There are over 13,000 carbon offset projects verified globally. Picking and choosing which projects to purchase offsets from is fast becoming a confusing maze for procurement and finance teams in corporates with credible climate targets. They are looking for one thing: ‘high quality offsets’ at a price they can afford.
However, there is often much confusion around what is a ‘quality’ offset.
To be verified as an offset, a project needs to undergo a series of independent audits and check-points to prove the project, among many other things is additional to what would be happening without carbon finance, and is generating permanent emissions removals or avoidance. In this sense, all carbon offset projects are a critical part of the global efforts behind reaching the Paris targets and bring a level of quality to the table.
However, there is a number of other considerations that are critical to assessing the non-carbon attributes of a project. This includes valuing the co-benefits (employment, culture, biodiversity), ensuring benefit flow down to communities and assessing the legal and ownership structure of the offset project proponents to ensure issues like modern slavery can be ruled-out.
How do emerging ratings tools help and hinder?
A suite of rating tools have emerged in the market and are starting to gain traction in client conversations. These tools are using commonly used approaches for rating organisations and stocks (think ‘AA credit ratings’) to make an assessment on the different elements of carbon projects. Similarly, blockchain solutions are emerging in the market as a way to improve transparency by putting the lifecycle of an offset onto a digital ledger.
Such tools are a nice desk-top level, quick assessment of some of the aspects of a project. They can provide a ‘quick glance’ view of a project’s location, additionality, and high-level mapping. In the case of blockchain, they can offer greater line-of-sight of an offset’s lifecycle.
However, none of these currently deliver a depth of information that provides the level of integrity assurance that corporate organisations should be looking for in their offsetting. For that, ground truthing is critical.
Stuart surveying land cleared for cattle grazing
Why on-ground due diligence is key to brand and market credibility?
In an era of the carbon market where integrity is king, making sure the level of due diligence on a carbon project goes beyond the desktop level to the ground is fundamental. It’s why at TEM we take the care to visit the projects within our portfolio to make sure what is audited and said to be happening on paper, is actually playing out on the ground.
Where this ground truthing is not possible, it’s important organisations selling the offsets make this clear. Recent restrictions around travel have in many cases made it virtually impossible to ground truth. In this case, it’s important to know what level of due diligence has been undertaken to provide the right assurances.
While tools like rating systems will be important complementary tools to this process, it’s not worth the brand credibility risk to save a few dollars by cutting corners on due diligence.
For more on our portfolio of offsets and our due diligence process, get in touch at https://www.tasmanenvironmental.com.au/contact-us/