Powering local weather motion: Unlocking voluntary carbon markets to drive impactful change – ICC

Businesses are central to the worldwide local weather response. With the dimensions and affect to speed up significant progress, they play a pivotal position in advancing the local weather transition. But ambition alone is just not sufficient. Achieving web zero requires efficient frameworks to channel funding into local weather options that ship actual influence. Voluntary carbon markets (VCMs) present a path ahead. They enable corporations, governments and people to buy verified carbon credit to offset or compensate for their very own greenhouse gasoline (GHG) emissions.

The ICC-commissioned Oxera report explores how governments and policymakers can construct on present progress to strengthen the integrity and performance of voluntary carbon markets. It units out 14 focused suggestions aimed toward mobilising non-public finance for local weather motion and creating the situations for companies to speculate credibly, confidently and at scale.

As the official UNFCCC Focal Point for Business and Industry, ICC will draw on these insights to tell dialogue with governments and negotiators at COP30.

Voluntary carbon markets have important potential to channel funding into emission discount and removing initiatives

When constructed on transparency, integrity and robust requirements, voluntary carbon markets provide a sensible approach for companies to go additional, sooner. They complement direct emissions cuts by supporting high-impact initiatives that shield forests, restore ecosystems and advance clear applied sciences. In doing so, they direct much-needed local weather finance to susceptible areas and communities whereas delivering wider social and environmental advantages.

Policy suggestions

To scale VCM integrity and mobilise non-public local weather finance, this report units out 14 focused suggestions organised throughout 5 themes, linked to clear authorities actions and complimented by case examine insights.

Theme 1: Strengthening supply-side high quality, transparency and integrity addresses the first problem undermining market confidence –uncertainty over whether or not credit signify real emissions reductions. By establishing clear authorities frameworks, clear registries, and credible oversight, these measures allow consumers to establish high-quality initiatives with confidence, decreasing greenwashing threat and rebuilding belief available in the market.

• Recommendation 1: Establish clear nationwide frameworks for mission authorisation consistent with Integrity Council for the Voluntary Carbon Market ideas to enhance mission high quality
• Recommendation 2: Endorse or set sturdy home requirements and registries aligned with ICVCM ideas to enhance credit score high quality.
• Recommendation 3: Promote open registries and knowledge transparency, together with disclosure of methodologies, monitoring outcomes, and retirement knowledge, to enhance understanding of high quality for companies
• Recommendation 4: Promote impartial verification and sturdy governance to stop conflicts of curiosity.
• Recommendation 5: Strengthen oversight of carbon-credit score and integrity businesses to enhance readability over scores for companies.

Theme 2: Supporting demand-side funding and integrity tackles how credit are used and claimed by companies. Clear authorities alerts on when and the way credit needs to be bought – built-in into nationwide local weather methods and aligned with finest follow – scale back uncertainty, counter greenwashing accusations and unlock company funding by clarifying acceptable use circumstances inside net-zero methods.

• Recommendation 6: Integrate VCMs into nationwide local weather methods to encourage VCM participation.
• Recommendation 7: Provide steering or mandates on applicable use of credit to scale back the danger of greenwashing.
• Recommendation 8: Clarify authorized and accounting remedy of credit, and their relation to NDCs and corresponding changes to advertise applicable utilization of credit

Theme 3: Improving monetary market infrastructure permits clear pricing and environment friendly buying and selling. Better post-trade transparency and proportionate regulation of intermediaries decrease transaction prices, enhance value discovery and assist the event of standardised contracts and derivatives – essential for enabling builders and consumers to handle threat successfully and to scale funding.

• Recommendation 9: Introduce measures to enhance post-trade transparency from exchanges and brokers to enhance value discovery, scale back uncertainty, and construct investor confidence in credit score valuation.
• Recommendation 10: Introduce light-touch, proportionate regulation of intermediaries and market infrastructure to assist truthful and environment friendly buying and selling

Theme 4: Establishing clear authorized and recourse frameworks offers the authorized certainty and cures wanted to draw capital. Independent dispute decision and focused insurance coverage shield each consumers and builders when initiatives underperform or credit are challenged, decreasing perceived threat and enabling assured, long-term participation.

• Recommendation 11: Establish or promote formal and impartial course of for dispute decision to supply consumers with certainty and confidence.
• Recommendation 12: Encourage market individuals to buy related insurance coverage for dangers which will have an effect on initiatives or credit resembling reversal threat or underperformance, to supply consumers and mission builders with certainty and encourage market participation.

Theme 5: Enabling interoperability with compliance markets prevents double counting and – as soon as high quality is assured – creates pathways for high-integrity voluntary credit to contribute towards compliance obligations. This unlocks further demand from regulated sectors, reduces market fragmentation, and channels finance on the scale wanted to shut the worldwide mitigation hole.

• Recommendation 13: Support efficient and equitable implementation of Article 6 to stop double counting and construct belief.
• Recommendation 14: Should VCMs attain a ample degree of high quality, allow better interoperability between compliance markets and VCMs to extend funding in VCMs .

2025 is a essential yr for the Paris Agreement. Ten years on, we have to rethink how we body the problem. And seeing challenges in another way is what enterprise and we’re all about. 

ICC is dedicated to securing what companies want on the upcoming local weather negotiations, COP30, in Belém, Brazil. Learn extra about our Opportunity of a Lifetime local weather marketing campaign and get entangled. 

*Disclaimer: The content material of this text could not mirror the official views of the International Chamber of Commerce. The opinions expressed are solely these of the authors and different contributors.  

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