UN Introduces Mandatory Safeguards for Carbon Credit Projects: Developers Must Assess and Minimize Social and Environmental Impacts

Developers of carbon credit projects will now have to undergo a rigorous risk assessment process to minimize any potential social or environmental impacts, as mandated by the UN’s new carbon market rules. This groundbreaking mechanism aims to prevent human rights violations and environmental harm caused by activities related to carbon credit projects, marking a significant milestone in the UN climate process.

The new rules, adopted by technical experts in Baku, Azerbaijan, require developers to identify and address any negative environmental and social impacts through a detailed risk assessment. Additionally, developers must demonstrate how their projects contribute to sustainable development goals, such as poverty alleviation and improved health, in addition to reducing greenhouse gas emissions.

Maria AlJishi, chair of the Supervisory Body overseeing the rules, emphasized the importance of these mandatory safeguards in ensuring that the UN carbon market promotes sustainable development without causing harm to people or the environment.

The introduction of the “Sustainable Development Tool” is a response to concerns raised about the negative impacts of previous carbon credit projects under the Clean Development Mechanism (CDM). The CDM faced criticism for social and environmental abuses, including toxic pollution from waste-to-energy facilities in India, forced relocations due to infrastructure projects in Panama, and land disputes in Uganda resulting from tree-planting initiatives.

The new risk assessment process will require project developers to evaluate potential risks in areas such as land and water, human rights, health, gender equality, and Indigenous Peoples. Developers must outline measures to avoid or mitigate negative impacts and establish monitoring procedures. External auditors will review the risk assessment and ensure proper consultation with local communities.

The rules will apply to both new projects under Article 6.4 and existing projects seeking to transition from the CDM to the new market. The Supervisory Body will review and update the safeguarding tool every 18 months to enhance its effectiveness based on feedback.

In addition to the risk assessment, developers must assess the impact of their projects on the UN’s Sustainable Development Goals and engage with local communities to share benefits. The approval of the Sustainable Development Tool sets the stage for the full implementation of the Article 6 carbon market at COP29 in November, a key priority for the Azerbaijani presidency.

The adoption of the tool and guidance for carbon credit methodologies and carbon removal activities represents a significant achievement in establishing a credible and robust carbon market. While some concerns have been raised about the adoption process, the Supervisory Body remains committed to evolving the carbon market to meet global climate goals.

Overall, the new rules and mechanisms introduced by the UN’s carbon market represent a major step towards ensuring that carbon credit projects contribute to sustainable development while minimizing social and environmental impacts.