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COP28 Presidency, GFANZ and VCMI Commit to Working with Businesses, and Other Stakeholders to Grow High-Integrity Demand in Voluntary Carbon Markets

New York, 20 September 2023 The COP28 Presidency, the Glasgow Financial Alliance for Net-Zero (GFANZ), and the Voluntary Carbon Markets Integrity Initiative (VCMI) convened a high-level roundtable of businesses, financial institutions, and standard setters on 19 September 2023, with the goal to build up high-integrity demand in voluntary carbon markets (VCMs). The event also featured the Integrity Council for the Voluntary Carbon Market (ICVCM), with whom VCMI collaborates closely.

The roundtable confirmed a shared resolve to continue to address the collective challenge of climate change. Participants emphasized the urgent need to build credibility and action in high-integrity VCMs – as one critical tool among others – to catalyze capital flows towards projects that deliver real benefits to the climate, people and nature. The roundtable addressed that high-integrity VCMs can – and must – form part of a credible path to net-zero, without compromising on the urgent imperative to reduce corporate value-chain emissions. It was emphasized that integrity in VCMs also relates to supporting local communities, the just transition and nature conservation, as well as carbon savings.

Participants outlined commitments and actions being taken within companies to decarbonize, and opportunities for additional use of carbon credits to increase financing for climate solutions. Participants recognized the need for clear, end-to-end standards for VCMs, from project development to end purchasers. Participants underscored the need to continue to strengthen alignment between standard-setters, and for clear communication to resolve concerns of fragmentation and demonstrate clear incentives for participation.

The roundtable also spoke to the importance of scaling the pipeline of high-quality carbon credits. Representatives from established buyers specifically flagged the significant due diligence burden placed on companies wanting to buy high quality credits, limited supply and highlighted the need for a widely accepted credibility standard such as that developed by ICVCM. It was also noted that transparency and pricing need to be strengthened. The roundtable confirmed the need to send a strong market signal on high-integrity demand in order to scale investment in the generation of high-quality carbon credits.

The COP28 Presidency, GFANZ, and VCMI welcome the commitment of roundtable participants to high-integrity use of carbon credits on their transition pathways to net-zero. We, as co-hosts, jointly commit to working with participants – and the wider ecosystem of businesses, financial institutions, standard setters, civil society, policymakers, and regulators – between UNGA and COP28, towards the following:

  1. Broad recognition of the critical role high-integrity VCMs can play in the net-zero transition. Participants in the roundtable strongly reaffirmed the critical role of VCMs in achieving high ambition company pathways to net-zero emissions. This means aligning with best practice which prioritizes decarbonization of own operations and using high quality emissions reductions and removals credits in addition to address remaining emissions. However, wider uncertainty on the place of VCMs in net-zero transitions risked disincentivizing purchases by a wider set of companies. As co-hosts, we commit to working to publicly reaffirm the role of carbon credits in the net-zero journey, and to engage the wider climate ecosystem in support of this goal.
  2. A clear, end-to-end integrity framework from supply to demand side for VCMs, that rewards credible use of high-quality credits. Participants raised the need for standard setters to communicate a clear, coherent vision of how carbon credits may be used in the net-zero journey, and for bulk purchases of high-integrity credits to be adequately recognized. The roundtable stressed the need to embed VCMI and ICVCM standards which have been developed through several years of careful work to guide, recognize and reward buyers that source high-quality credits. We, as co-hosts, will support stakeholders working to deliver and embed this end-to-end integrity framework by COP28.
  3. Clear and ambitious demand signals by COP28. Participants and co-hosts jointly articulated that time to address the climate crisis is rapidly running out, and that unlocking the significant potential of high-integrity VCMs is more urgent than ever. As the Chair noted, to give the clear demand signal we desperately need, we need large buyers to help cement emerging voluntary standards, publicly endorse VCMs as a critical tool for net-zero and commit to scaling up purchases. We, as co-hosts, commit to engaging end buyers and financiers of carbon credits – including, but not limited to attendees at this roundtable – between now and COP28, to encourage:
  • Making claims under VCMI, or articulating a commitment to do so publicly, on the COP28 stage.
  • Purchase commitments for ICVCM-CCP approved credits, or a clear timeline for doing so.

Together, we call on companies to act now so we can ensure that COP28 is a COP of Action on VCMs which reaffirms their role in a high-integrity path to net-zero.

H.E. Ambassador, Majid Al-Suwaidi, said: “As the world is off-course to deliver on its Paris Commitments, high-integrity VCMs can play a critical role – as one tool in the box – in accelerating transition finance to EMDEs, protecting nature, supporting accelerated coal phaseout, and catalyzing investment in new technologies.”

VCMI Co-Chair, Rachel Kyte, said: “VCMI is encouraged by the shared leadership and commitment demonstrated here today. We are in a race against time. Business as usual is not good enough and building high integrity carbon markets will form an integral part of countries’ plans for net zero and offer important support to corporate transition plans. With integrity we build trust and confidence, and with trust and confidence we build scale.”

GFANZ Executive Director for Public Policy, Alice Carr, said: “As this roundtable recognizes, we urgently need new sources of financing to address our most pressing climate mitigation priorities. Voluntary carbon markets can play a transformative role, by unlocking untapped capital for emerging markets and developing economies seeking financing to preserve nature or accelerate coal phaseout through high-integrity projects. We now need to coalesce around emerging standards which, alongside target setting and transition planning frameworks, can support a high ambition path to net-zero, where reductions of absolute emissions and compensation for ongoing emissions must happen in parallel, not in sequence.”