Carbon ratings agency, BeZero Carbon, has published new research which indicates carbon credits could help fund critical global development targets – especially those which aline with at least one or more of the UN Sustainable Development Goals (SDG).
According to the research, the carbon credits market’s price is growing in the wake of socio-economic impacts of carbon projects. They are now commanding a higher price among buyers who want to work towards the UN Sustainable Development Goals.
Sebastien Cross, co-founder and chief innovation officer at BeZero Carbon, said: “It is enormously significant that carbon markets are learning how to effectively price the impact of credits beyond carbon. Global progress towards SDGs must be made by 2030, yet targets are currently veering off course.
“There is a growing role for carbon markets in stimulating finance to boost advancements towards SDG goals, as corporates are increasingly willing to purchase credits with SDG claims at a higher price. Demand for these credits evidently exists: buyers now want to know that the SDG claims attached to any credit they purchase are robust. Risk analytics on a credit’s associated SDG claims is a vital first step in this journey.”
Growing value
In 2023, credits with SDG claims fetched on average a 106 per cent price premium compared to credits without SDG claims. This figure stands at 31 per cent between January 2021 and August 2024. Consequently, this suggests that on average there’s a relationship between SDG claims and price over time.
This correlation between the ‘beyond carbon’ impacts of a carbon project and the price of its credits is heightened by carbon ratings. In fact, buyers pay over three times (342 per cent) more on average for high-rated credits (‘AA’) with SDG claims than those rated ‘C’ without SDG claims. The BeZero Carbon Rating assesses the quality of carbon credits on an eight-point scale ranging from ‘highest likelihood’ to ‘lowest likelihood’ of achieving a tonne of CO₂e avoided or removed.
This critical research on the interaction between SDGs and price in carbon markets comes as approximately half of all SDG targets are severely off-track. Consequently, progress towards achieving the United Nations’ SDGs by the 2030 deadline has stagnated.
However, the research warns that SDG claims vary in integrity, similar to carbon efficacy, illustrating the importance of due diligence for buyers. The absence of standardised SDG claim requirements across carbon credit accreditation bodies compounds this issue.
To address the need for clear information on project SDG claims and their quality, BeZero Carbon created the Beyond Carbon dashboard to highlight the SDGs a given carbon project claims, and the quality of those claims.
The post Demand for UN SDG Associated Carbon Credits is Growing – Buyers Want to Know Claims Are Real appeared first on The Fintech Times.
