Governing Voluntary Carbon Markets: Enhancing the ability of the TSVCM to contribute to climate goal

June 24, 2021

The Taskforce for Scaling the Voluntary Carbon Market (TSVCM) was established to create the conditions for the Voluntary Carbon Market to grow rapidly and so massively expand the flow of private finance to emissions reduction activities around the world and accelerate the transition to a Net Zero Economy. This is essential if we are to avoid the most dangerous potential climate change impacts and protect natural environments and the Taskforce is to be commended for the progress it has made to date.

As this process draws to its conclusion, we believe the Taskforce’s proposals can be strengthened by additions to the Mandate and Terms of Reference of the Governance Body. Our suggestions, described below, will help build trust in the Voluntary Carbon Market, strengthen its governance so it is best able to meet the challenges that lie ahead and so ensure that the work of the Taskforce achieves the success it deserves.

Voluntary carbon markets exist to deliver a public purpose, the net reduction of greenhouse gases (GHGs).

Voluntary carbon markets must meet specific governance challenges to achieve that purpose, related to their dynamic complexity and their dependence for success on upstream (credit buyer) and downstream (credit creator) behaviours and activities. This also includes anticipating an eventual transition into regulated and compliance regimes.

The TSVCM should build on its governance approach to ensure that it is fit for that purpose. This includes establishing accountability mechanisms that address the potential for leakage and excessive/obscuring intermediation, real-time feedback systems and means for connecting effectively to the “upstream” and “downstream” levels that will determine whether the ultimate purpose of carbon emission reduction is, indeed, achieved.

This proposal sets out how these recommendations can be taken forward without delaying the initiative by (a) making implementation commitments; (b) advancing executable elements in the short-term; (c) establishing a mandated governance design group, (d) incorporating proposals in board composition decisions, (e) conducting an annual governance assessment.

In addition, we believe that the Mandate of the Governing Body should explicitly include ensuring that the Voluntary Carbon Market meets its public purpose and that membership of both the Board of Directors and Expert Panel should include people with expertise in complex governance systems.

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