Sovereign-backed framework on corporates’ use of carbon credits launched
It aims to boost demand for high-integrity credits as a complement to direct emissions reductions
[SINGAPORE] Companies interested in voluntarily purchasing carbon credits to offset their emissions can now refer to a set of government-backed shared principles that aims to be consistent across jurisdictions.
This framework was launched on Tuesday (Nov 4) by a government-led coalition focusing on developing carbon markets on the sidelines of the United Nations climate change conference, otherwise known as COP30, in Brazil.
It aims to boost corporate demand for high-integrity carbon credits as a complement to direct emissions reductions.
Using carbon credits in addition to decarbonisation; ensuring rigorous quality standards; maintaining transparent reporting; as well as making accurate and substantiated claims on the amount of credits used as offsets are among the principles underlying this framework.
The coalition, led by the governments of Singapore, the UK and Kenya with France and Panama as founding members, said in a statement on Tuesday that these principles have achieved international alignment on the role of carbon credits and will inform national policies required to unlock private-sector investment in carbon markets.
“In endorsing the shared principles, each government commits to explore, develop and continue pursuing supportive policies or regulations aligned with the framework,” they said. “This could include stronger government recognition for companies that follow the shared principles.”
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The framework was developed following feedback from businesses that governments should provide consistent guidance across markets, and develop the right policies to incentivise participation in carbon markets in a way that enables businesses to manage their climate risk and boost their decarbonisation efforts.
“Developed with inputs from governments from around the world and informed by business leaders and market experts, the shared principles will provide companies with the clarity and confidence they need to purchase carbon credits as part of credible decarbonisation plans,” read the statement.
The coalition, which was formed in June on the sidelines of London Climate Action Week, aims to “drive climate-positive growth and accelerate the pace of emissions reductions worldwide by strengthening the incentives businesses need to invest in high-integrity carbon credits across carbon markets”.
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Besides the framework, the coalition also released an action plan – which has been developed on the premise that governments’ signals and incentives will drive corporate demand – so that the set of shared principles will lead to higher levels of investment into carbon markets.
The plan will guide their work till COP33.
The action plan includes expanding the coalition’s membership and supporting governments in adopting policies aligned with the framework.
It will also engage networks of corporate buyers to aggregate and scale demand, as well as collaborate with partners and initiatives to show the positive impacts when carbon credits are used responsibly.
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