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Sustainability labelling as a tool for reporting the sustainable development impacts of climate actions relevant to Article 6 of the Paris Agreement

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Abstract

The architecture of global carbon markets has changed significantly since the Paris Agreement and the 2030 Agenda for Sustainable Development Goals were both agreed in 2015. Voluntary, international cooperative approaches established in Article 6 of the Paris Agreement allow Parties to work together to achieve the targets set out in their respective Nationally Determined Contributions to limit global warming to an increase below 1.5–2 °C. In Article 6.4, a sustainable mitigation mechanism is established for which rules, modalities and procedures will be developed internationally considering the experience and lessons learned from existing mechanisms, such as the Clean Development Mechanism (CDM) and its Sustainable Development (SD) Tool. Historically the issue of making integrated assessments of sustainable development and mitigation actions has been politically and methodologically controversial for many reasons: developing countries fear that an international definition of SD will interfere with their sovereignty and therefore their ability to define their own development pathways; players in the carbon market fear that markets can only handle one objective, namely mitigation outcomes; and sustainable development is regarded as too complex and costly to be measured and quantified. In an effort to address these concerns, the article proposes a new methodology for the sustainability labelling of climate mitigation actions relevant to Article 6 approaches. The article draws on an application of the CDM SD tool to analyse 2098 Component Programme Activities that had entered the CDM Pipeline by January 2017. The article demonstrates that assessment of the sustainable development benefits of climate actions can be graded and labelled based on the analysis of qualitative data, which is less costly than applying a quantitative approach.

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Fig. 1
Fig. 2

Source: UNFCCC (2012), approved at CDM EB70: https://www.research.net/s/SD_tool_vers7

Fig. 3

Source: Adapted from Joumard and Nicolas (2010), Griggs et al. (2013) and Salling and Pryn (2015)

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Notes

  1. A project developer must indicate in the Project Design Document, what the expected input and/or output will be relative to the SD criteria and the method that will be used to measure the project’s performance.

  2. ROD defines approximate weights based on the assumption that valid weights can be calculated through direct rating.

Abbreviations

CDM:

Clean Development Mechanism

SD:

Sustainable Development

CPAs:

Component Programme Activities

NDCs:

Nationally Determined Contributions

SDGs:

Sustainable Development Goals

ITMOS:

International Transfer of Mitigation Outcomes

LOA:

Letter of Approval

CERs:

Certified Emission Reductions

POA:

Programme of Activities

COP:

Conference of the Parties

PDDs:

Project Design Documents

FCF:

Future Carbon Fund

MRV:

Monitored, Verified and Reported

ICAT:

Initiative for Climate Action Transparency

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Authors and Affiliations

  1. UNEP DTU Partnership, Department of Management Engineering, Technical University of Denmark, Marmorvej 51, 2100, Copenhagen, Denmark

    Karen Holm Olsen, Fatemeh Bakhtiari & Jørge Villy Fenhann

  2. Sustainable Development and Climate Change Department, Principal Climate Change Specialist (Future Carbon Fund), Asian Development Bank, Headquarters: 6 ADB Avenue, 1550, Mandaluyong City, Metro Manila, Philippines

    Virender Kumar Duggal

Authors
  1. Karen Holm Olsen
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  2. Fatemeh Bakhtiari
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  3. Virender Kumar Duggal
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  4. Jørge Villy Fenhann
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Correspondence to Fatemeh Bakhtiari.

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The authors declare that they have no conflict of interest. Views expressed in the article are those of the authors and do not reflect the views and policies of the Asian Development Bank (ADB) nor the UNEP DTU Partnership, to which the authors are affiliated.

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Olsen, K.H., Bakhtiari, F., Duggal, V.K. et al. Sustainability labelling as a tool for reporting the sustainable development impacts of climate actions relevant to Article 6 of the Paris Agreement. Int Environ Agreements 19, 225–251 (2019). https://doi.org/10.1007/s10784-018-09428-1

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