It has been a challenging couple of years but, as I point out in The Australian today, we are now amidst an important shift of the role of carbon markets as best practice on disclosure and transition plans matures.
The past month has been significant for the release of important guidance from the Science-Based Targets Initiative (SBTi), alongside revised offsetting principles from Oxford University. These developments follow projections that the voluntary carbon market value could double over two years to $3 billion by the end of 2024, while global compliance markets generate over $100 billion in revenue. The challenge is to align these investments to Net Zero commitments by countries and companies and then to boost them through high integrity frameworks.
The SBTi guidance encourages companies to make investments in beyond value chain mitigation. As a complement to investments in direct decarbonisation, which remains a priority for SBTi, it reinforces that beyond value chain mitigation investments are necessary in the pursuit of a Net Zero and ultimately negative emissions economies.
The updated Oxford Principles for Net Zero Aligned Carbon Offsetting highlight the critical role of durable, high integrity carbon removals alongside on-site emissions reductions for net zero ambition. These two reports reiterate the substantial gap between current mitigation commitments, and the level of mitigation required for net zero, while also demonstrating a clear shift for carbon markets from offsetting emissions to accelerating the transition towards Net Zero.
The launch of these two reports, and increasing focus on corporate disclosure, requirements coincided with the launch of our revised Member and Sponsorship Policy – accessible here – which will come into effect mid next year.
The Policy marks an important milestone in the delivery of CMI’s 2025 Strategic Plan, which further defined CMI’s role in supporting our members to make urgent and credible climate strategies and transformative investments.
To be eligible for full membership, the Policy will require organisations emitting over 100,000 tonnes of Scope 1 CO2-e, or with a revenue of over $5 million per annum, to publicly disclose transition plans which demonstrate alignment and engagement with emerging best practice frameworks, such as the International Standard Organisation’s Net Zero Guidelines. Alignment with looming mandatory corporate climate disclosure requirements, on which we recently made a submission to Treasury earlier in the month, is intended to ease implementation of The Policy. Companies still on the journey with transition planning remain very welcome to participate in working groups and forums by invitation, but are limited from participation in CMI governance.
As this best-practice landscape becomes increasingly well defined, carbon markets and pricing are re-emerging as key tools in driving net zero. Equally, these tools provide unique streams of revenue into Indigenous and regional communities, as was showcased at the recent Indigenous Carbon Industry Network’s North Australia Savanna Fire Forum, which CMI was proud to attend and support. There it was evident that with the right governance frameworks and clear guidelines around integrity and consent, carbon credits can provide regional & Indigenous environmental, economic and social benefits which further strengthen the social licence of the Net Zero transition.
CMI will continue supporting companies manage the opportunities and risks in the Net Zero transition and, as you can see below, is actively engaging in Net Zero policy development and implementation processes.
John Connor
CEO
Carbon Market Institute
