![]() ![]() ![]() Using the “Scopes” lexicon of the GHG protocol, e-liability accounting captures allocated Scope 1 (direct) emissions, combined with upstream Scope 3 – other entities’ – emissions. Faculties at Harvard and Oxford have proposed such a system, it’s called e-liability accounting. The reporting entity combines its direct emissions with supply chain emissions and passes its emissions liability downstream. Now let’s imagine a world where firms account for GHG emissions, and discover how that foundational shift builds the backbone currently missing from the VCM.Ĭarbon accounting looks like cost accounting, but instead of passing costs, each product or service in a supply chain passes embodied carbon emissions from seller to buyer. While some net zero targets are codified in regulation at the national or state level, most of the net-zero story is taking place in the private sector, where actions are voluntary.įirms set targets, count their emissions and attempt to reduce emissions through the most efficient means possible (a core promise of the VCM). Reaching net zero (typically by 2050) is now the dominant organising principle for climate action. While the potential demand for offsets has changed dramatically, the idea that defining credit quality will unlock massive capital flows remains a mirage.Į-liability accounting captures allocated Scope 1 emissions together with upstream Scope 3 emissions. Today, 128 countries and 40% of Fortune 500 companies have set targets to achieve net-zero GHG emissions, with a whopping 88% of global emissions covered under a decarbonisation pledge. We strove to deliver high-quality credits, and invested significant resources to collaboratively build standards knowing our fledgling sector would be judged by its worst actors.īack then, our customers were primarily deep-green individuals and brands looking for ways to do their part to “restore the balance”. carbon offset retailers, nearly 20 years ago. I helped to build TerraPass, one of the first U.S. Those interested in driving investment in climate solutions at speed and scale should be asking: how can we move from a marginally effective voluntary regime to a viable market capable of making net zero add up? The answer starts with carbon accounting and follows the path of emissions liability management. The path to integrity is not through more precise definitions of credit quality, it is through more precise accounting. In my view, the ICVCM and its stakeholders are asking the wrong question. Many experts received the CCPs with a collective “meh”. With the release of its Core Carbon Principles, the highly respected members of the Integrity Council for the Voluntary Carbon Market (ICVCM) were striving for a resolution to what offset buyers and sellers see as the market’s biggest question: what credit-quality thresholds will mobilise finance? The VCM has been making headlines, with negative stories questioning credit quality and the use of proceeds (even talk show host John Oliver weighed-in). The VCM is a means by which companies and individuals can offset their climate pollution by paying a third party to reduce or remove greenhouse gas (GHG) emissions from the atmosphere. April 24 - In April, an independent council charged with giving integrity to carbon credits issued long-awaited principles intended to build trust and increase investment in the voluntary carbon market (VCM).
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