The United Nations has authorized protections for carbon markets to safeguard the environment and human rights.
The UN's new carbon market will feature a mandatory framework designed to prevent developers of carbon credit initiatives from violating human rights or causing environmental harm through their actions—marking a first for the UN climate framework.
Under the UN's newly established Article 6.4 carbon crediting system, project developers will be required to identify and address potential negative social and environmental consequences as part of a comprehensive risk assessment. This requirement comes from new regulations adopted by technical experts in Baku, Azerbaijan, on Thursday.
Additionally, developers will need to articulate how their initiatives contribute to sustainable development goals, such as eradicating poverty or enhancing health, alongside their primary aim of lowering greenhouse gas emissions.
Maria AlJishi, the chair of the Supervisory Body responsible for establishing the regulations, stated, "These new obligatory safeguards represent a significant advancement toward ensuring that the UN carbon market we are creating supports sustainable development without harming individuals or the environment."
Balancing Challenges
The risk mitigation strategies introduced through the "Sustainable Development Tool" aim to address widespread concerns regarding the damage caused by certain carbon credit initiatives globally. The previous UN carbon market, known as the Clean Development Mechanism (CDM), faced criticism for social and environmental violations associated with its registered projects. These included instances of toxic waste pollution from a waste-to-energy plant in India, forced relocations linked to infrastructure projects like a hydropower dam in Panama, and access denial to farmland for Ugandan villagers due to tree-planting schemes.
The CDM implemented a less-stringent voluntary safeguarding framework that received significant backlash from civil society groups. The approval of the new Sustainable Development Tool this week marks the conclusion of a two-year effort to finalize the regulations, which will operate alongside an appeals and grievance process that was approved earlier this year.
Kristin Qui, a member of the Supervisory Body who played a crucial role in developing the tool, described the process as "very challenging." She noted that "everyone was trying to find the right balance between ensuring the tool's usability while also maintaining as rigorous standards as possible."
Risk Assessment Requirements
According to the new regulations, project developers must complete an extensive questionnaire to evaluate the potential risks their activities could pose across 11 categories, including land and water use, human rights, health, gender equality, and the rights of Indigenous Peoples.
They will be required to outline how they intend to mitigate any negative consequences or, if unavoidable, the strategies they are employing to lessen them, along with monitoring processes for their implementation. External auditors will assess the risk evaluations, confirm proper community consultation, and judge the appropriateness of the proposed actions by the developers. These regulations will apply to both new projects initiated under Article 6.4 and to over a thousand existing projects seeking to transition from the CDM to the new market.
Isa Mulder, a policy specialist at Carbon Market Watch (CMW) who closely monitors Article 6 discussions, asserted that the tool "should greatly contribute to upholding rights and safeguarding both people and the environment." She acknowledged that while there is still potential for enhancements in certain areas, the mechanism could be "a really good start," provided it is utilized as intended.
The Supervisory Body will review and revise the safeguarding tool every 18 months, aiming to refine it based on input from involved parties. In addition to the risk assessments, the mechanism will necessitate that project developers evaluate the potential effects of their initiatives on national efforts to achieve the 17 Sustainable Development Goals, which the UN adopted in 2015 and aims to fulfill within this decade.
Qui emphasized that the tool will encourage project developers to more thoughtfully consider how they can share benefits with local communities. "It raises the question of how the project will contribute to sustainable development beyond merely avoiding harm and promotes high levels of engagement with Indigenous groups from the outset," she explained.
Pathway to Baku
The endorsement of the Sustainable Development Tool is regarded as a significant milestone toward fully operationalizing the Article 6 carbon market at COP29 in November—one of the primary objectives for the incoming Azerbaijani presidency of the discussions.
Mulder from CMW noted the tool's adoption is "very significant," as having a human rights protection framework in place is likely a prerequisite for many countries to even contemplate approving additional carbon market measures at COP.
Following prolonged and intense discussions that extended into Thursday morning, the Supervisory Body also agreed on guidelines for developing carbon-credit methodologies and carbon removal activities aimed at ensuring the credibility of emission reductions claimed by projects.
These fundamental components for establishing the Article 6.4 carbon crediting mechanism had previously proved to be major obstacles at the last two annual climate summits, where government negotiators rejected earlier versions of the documents. This led the Supervisory Body to adopt a different approach in Baku this week by approving these documents as "standards" instead of merely presenting recommendations for diplomats to negotiate at COP.
Jonathan Crook, a policy expert at CMW, interpreted this decision as "a risky take-it-or-leave-it strategy" intended to bypass intensive negotiations. "I believe this approach aims to ensure the texts won't be reopened for detailed edits at COP29," he stated.
Climate Home understands that governments will still retain the option to reject the body's "standards" in their entirety or request further amendments.
AlJishi, chair of the Supervisory Body, expressed in written comments that "the adoption of these standards signifies a substantial advancement in enabling a robust, flexible carbon market that can continue to develop." However, fellow body member Olga Gassan-zade voiced concerns regarding the process. "Personally, I have significant reservations about creating a UN mechanism that can effectively bypass UN governance," she wrote in a LinkedIn post, "but it seemed that the SBM [Supervisory Body Mechanism] as a whole was unwilling to risk not adopting the CMA recommendations for a third consecutive year."