We are delighted to share with you our analysis of the COP21 outcomes in the context of our work.
For Gold Standard, the Paris Climate Accord provides a good starting point for shaping the transition to a low-carbon economy. It is also a strong affirmation of the need for our work to increase the volume and effectiveness of funding for climate security and to help communities around the world develop sustainably.
The big wins from our perspective were the inclusion and accountability of all countries to reduce emissions, a reference to 1.5° temperature rise, a 5-year review mechanism, achieving a balance of emissions by the second half of the century, and the provision of countries to use market mechanisms.
While many of the details are still being worked through, the agreement introduces some new concepts that have implications for our work. The text references (Art 6) ‘internationally transferred mitigation outcomes’ and establishes a future mechanism ‘to contribute to the mitigation of greenhouse gas emissions and support sustainable development’. This new mechanism shall aim to deliver an “overall mitigation in global emissions.” We believe this opens the door to innovations in market mechanisms and makes a transition towards net-mitigation frameworks possible. We welcome these references and will advocate with our partners for strong safeguards against double counting; eligibility criteria on additionality, environmental integrity, transparency; and the assurance of development benefits to meet the Sustainable Development Goals.
Science Based Targets
2015 marked a turning point in the fight against climate change as 195 parties signed the Paris Agreement and over 2,000 Non State Actors committed to the Paris Pledge. In a world where every country and thousands of Non State Actors take on a commitment to reduce greenhouse gas emissions and finance the transition to a low carbon economy, the concept of offsetting shows limitations. Gold Standard is leading new thinking on the use of emission reductions to achieve one’s target and ensure net mitigation at the global level. We are advocating for a transition away from the concept of offsetting, towards reporting against dual targets in line with the new mantra ‘reduce at home, finance abroad’. This new approach is set out in Gold Standard’s collaboration with Science Based Targets initiative.
This initiative established sector-based approaches to define the profile of emissions reductions needed for a company within their operations and supply chain to stay within 2° of warming. This year, we will establish a working group to determine a second science- based target to define the volume of emissions reductions that a company should finance outside its own sphere of influence. By reducing at home and financing abroad, the private sector has the potential to fill the significant gap left by the Nationally Determined Contributions committed in the Paris Accord. Further, by focusing on a financing claim rather than on the ownership of the emission reduction itself, the approach avoids the problems of double counting.
Finance and transparency
A key pillar of the Paris Accord is the call for transparency to maintain accountability and ensure that all funding is achieving what it’s meant to. This trend echoes the impetus set by Gold Standard’s Climate Finance Transparency Initiative, as we know that transparency must also be a key pillar of carbon markets as they evolve and work toward the ‘net mitigation’ objectives of the agreement. As mentioned in our previous communication, we are in the process of addressing the questions and concerns expressed during the public consultation phase, and are working to put forward a revised approach that will bolster the market. In parallel, we are also working on advocacy action to support a sustainable price on carbon.
“Balance of emissions and sinks”
The agreement sets out an equation to ensure that what is emitted will be absorbed by forests, lands and oceans. This underscores the need for holistic approaches to impact measurement like those developed in Gold Standard 3.0 that address and manage the complexity of landscapes and ecosystems. The Paris Accord also confirms the need for standardised, best practice approaches to results-based finance beyond carbon in particular for land use activities. In 2016, Gold Standard will initiate piloting activities for Gold Standard 3.0 with a focus on cookstoves and land use activities.
While the Paris text itself does not specify water, “Water is the highest priority for adaptation in countries’ Intended Nationally Determined Contributions (INDCs) and some 80% of financing released by the Adaptation Fund is for water-related projects,” according to a blog post by Mark Smith, IUCN Global Water Programme Director. It was also cited as one of the main global risks in the World Economic Forum’s Global Risk Report 2016. This is a key reason that our Water programme will be central to our work in Gold Standard 3.0. Water benefits will continue to be a featured impact that we measure – both as an asset in Water Benefit Certificates as well as in certified outcome statements.
“Aim for balance of mitigation and adaptation”
The Gold Standard vision statement specifies “climate security” because we embrace the growing focus on driving funding to adaptation as well as mitigation, also emphasised in the Paris text. Our work with the Fairtrade Climate Standard, officially launched at COP21, takes a first step toward ensuring climate finance flows to adaptation, and we will build on this in Gold Standard 3.0. We believe that adaptation efforts require Gold Standard’s holistic and inclusive approach even more urgently to ensure that the current momentum does not avoid the most challenging issues or leave behind the most vulnerable communities. We will ensure our local stakeholder engagement remains central to our activities, even as activities increase in scale.