Quality assurance in climate finance projects

Third-party assurance of corporate carbon footprinting (CCF) is gaining importance. This is great news for climate transparency. However, this is a new topic for carbon experts. Here is some basic terminology to understand the world of assurance. 1/ There are 3 types of assurance: Validation: assess a GHG statement about the outcome of future activities (e.g., avoided emissions of investments) Verification: assess a GHG statement involving historical data (e.g., as-is CCF) Certification: assurance (by a certification body) that a product / service / system meets the requirements of a standard (not possible for CCF) 2/ There are 2 levels of assurance: Limited assurance: third party has not found issues which causes them to believe the GHG inventory is wrong (i.e., negative assurance) Reasonable assurance: third-party states that the GHG inventory is fairly stated (i.e., positive assurance) 3/ Who needs to get assurance: Mandatory: CSRD-compliant companies should get a limited assurance verification on their CCF (and all other ESRS data points) Voluntary: for all non-CSRD companies, asssurance is voluntary and company can decide if they want limited or reasonable assurance 4/ Who can give assurance: Certification: only mandated certification bodies can certify on a specific standard (e.g., ISO certification bodies) CSRD limited assurance: financial auditors are mandated by legislation do give limited assurance on CSRD/ESRS 

Can we truly trust #carboncredit validation when auditors are paid by those they audit? #Carbonmarkets rely on third-party auditors to verify emission reductions - but the current model, where project developers hire and pay these auditors, creates a serious conflict of interest. Auditors must assess subjective factors like: (1) #Additionality - would the project have happened anyway? (2) #Leakage - are emissions simply shifting elsewhere? (3) #Permanence - will the impact truly last? These are complex, often qualitative judgments - and when an auditor’s paycheck depends on developer satisfaction, the risk of bias is real. 64% of Verra-certified auditors have been linked to projects with over-credited claims. It's time to rethink the system. (1) Create a global pool of independent auditors (2) Decouple verification from developer influence (3) Prioritize transparency and scientific rigor Credible carbon markets demand credible oversight. Without that, climate action loses trust - and impact. #CarbonMarkets #ClimateIntegrity #Sustainability #ClimateFinance #NetZero #CarbonCredits #ESG #Governance #Transparency #ClimateAction https://lnkd.in/dSNGncR9

Carbon credits rely on one thing: #TRUST. A carbon credit isn't a tangible product; it's a quantified claim. A promise that a certain amount of CO2 was removed or avoided. A carbon credit is, for the most part, just a #digital notification. A line in a registry. A polite claim that says, “Trust me, this tonne of CO2 has been taken care of.” And in some cases, we’re told this by the same entity that designed the project, paid for it, measured it, verified it, and is now trying to sell it. In emerging carbon markets, we are increasingly seeing conflicts of interest, where a single institution acts as project #funder, technical #validator, and credit #seller. When roles blur, trust collapses. Without independent checks, carbon markets risk becoming a climate finance echo chamber—self-certifying, opaque, and easily manipulated. The London School of Economics and Political Science (LSE) Grantham Institute’s report—“Corruption and Integrity Risks in Climate Solutions”—lays this out in clear terms. It identifies systemic #governance risks across mitigation finance, including: ❗ Lack of institutional separation in project pipelines, ❗ Weak regulatory oversight, ❗ Politicization of carbon methodologies, ❗ And opaque fund flows between public institutions and credit platforms. #Policymakers and credit issuers must act now to safeguard environmental and market integrity. This includes: ✅ Establishing firewalls between funders, certifiers, and brokers; ✅ Enforcing independent third-party verification and MRV; ✅ Prohibiting credit issuance for projects already funded via national mandates or NDCs unless corresponding adjustments are applied; ✅ Public disclosure of all co-funding sources and methodologies. The future of climate finance depends not only on carbon being removed but also on claims being #credible, #auditable, and #fair. I have attached a screenshot of a figure from the report as a reference. For those who are interested in delving deeper into the report, please find the link below. 📜 Corruption and Integrity Risks in Climate Solutions: https://lnkd.in/dyuCDySP #CarbonMarkets #ClimateFinance #Additionality #MRV #ICVCM #ESG #Greenwashing #Article6 #CarbonCredits #ConflictofInterest #PublicIntegrity #ClimateGovernance #TrustInMarkets #SustainabilityPolicy #EnvironmentalIntegrity #ClimateTransparency