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Voluntary Carbon Markets

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Resilient LLP is pleased to announce that Who’s Who Legal (WWL) has recognized Lisa DeMarco, Senior Partner and CEO, as a “Global Elite Thought Leader” in Climate Change Law. She has been identified as leading in climate change law, particularly within the energy market, and described as “the lead climate change lawyer in Canada on any issue.” Resilient is also pleased to announce that it has been recognized as a leading voluntary carbon market specialist by Environmental Finance magazine. The Resilient Team including Jonathan McGillivray (Senior Associate), Daniel Vollmer (Associate), Nicholas Daube (Counsel), John Coyne, and Monika Pecnikova, was named the Runner-Up Best Global Law Firm in Environmental Finance’s 2022 Voluntary Carbon Market Rankings, following the results of its peer review survey. The rankings are the magazine’s annual poll of the market, in which market participants vote for the leading companies, service providers, and initiatives based on efficiency and speed of transaction; reliability; innovation; quality of service provided and influence on the market, not just the volume of transactions handled. “We are very pleased that our partners and clients have recognized our world-leading specialized climate and clean energy legal and advisory services,” said Lisa DeMarco. “We are grateful to have our clients’ trust as we support them in navigating the transition to a net-zero and climate-resilient future.” Resilient LLP is Canada’s only climate and clean energy boutique law firm and provides leading multi-jurisdictional legal advice in the areas of climate change, clean energy, and related Indigenous rights. Read more about our service offering on our website. Please cast your vote for Resilient LLP as Best Law Firm in Environmental Finance’s Annual Market Rankings 2022 by following this link (voting is open until Friday, October 28, 2022). We appreciate your support!

The Voluntary Carbon Markets Integrity Initiative (VCMI) last week launched a provisional Claims Code of Practice (the Claims CoP) to guide “credible, voluntary use of carbon credits and associated claims.” VCMI anticipates that the Claims CoP will: provide clear guidance to companies and other non-state actors on when they can credibly make voluntary use of carbon credits as part of their net zero commitments; and ensure the credibility of claims made by companies and other private non-state actors regarding this use of carbon credits. Broadly, the Claims CoP includes four steps: Meet the Prerequisites. Companies must make a public commitment to achieve science-aligned long-term net zero emissions no later than 2050 and meet other pre-requisites before making voluntary use of carbon credits (and making a VCMI claim). Identify Claim(s) to Make. Companies can make “enterprise-wide” claims (VCMI Gold (net zero), VCMI Silver, VCMI Bronze (only available until 2030)) or “brand-, product-, and service-level” claims. Purchase High-Quality Credits. All credits used as the basis for credible claims must be high quality and meet basic criteria (based on work of CORSIA and the IC-VCM). Report Transparently on the Use of Carbon Credits. Companies must report full information in publicly available annual corporate sustainability or similar reports to demonstrate that prerequisites and claim requirements have been met. Detailed information is available in the draft Claims CoP. Several companies are “road testing” the Claims CoP through Fall 2022. The VCMI is also collecting public feedback on the draft until August 12, 2022. For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@resilientllp.com.

The U.S. Commodity Futures Trading Commission (CFTC) has released a Request for Information seeking public comment on climate-related financial risk (the RFI). The CFTC notes that the RFI will inform its understanding and oversight of climate-related financial risk relevant to the derivatives markets, underlying commodities markets, registered entities, registrants, and other related market participants. This bulletin briefly summarizes the RFI. The RFI is seeking comments on questions posed by the CFTC around the following topic areas: data; scenario analysis and stress testing; risk management; disclosure; product innovation; voluntary carbon markets; digital assets; financially vulnerable communities; public-private partnership/engagement; and capacity and coordination. The CFTC indicated that it may use the responses and comments received through the RFI to inform potential future actions including the issuance of new or amended guidance, interpretations, policy statements, or regulations, or other potential action by the CFTC. All of the CFTC’s commissioners voted in favour of the RFI. However, Commissioner Mersinger, in a concurring statement included in the RFI, indicated that several of the questions in the RFI were beyond the jurisdiction of the CFTC. Commissioner Mersinger asserted that the CFTC does not regulate commodity markets and does not have statutory authority to create a registration framework for participants within voluntary carbon markets nor the authority to regulate digital assets or distributed ledger technology outside of activities related to derivatives. In addition, Commissioner Pham stated that the CFTC should seek to harmonize any climate risk management framework with existing prudential and other regulatory regimes for registrants already subject to such regimes. The RFI follows the CFTC’s first Voluntary Carbon Convening (the Convening) which discussed issues related to the supply and demand for high quality carbon offsets, including product standardization and the data necessary to support the integrity of carbon offsets’ greenhouse gas emission avoidance and claims.…

The Taskforce on Scaling Voluntary Carbon Markets (TSVCM) today launched its Phase II Report (the Report), setting out an accelerated roadmap to a scaled, high-integrity voluntary market for the trading of carbon credits. The TSVCM is a private sector-led initiative working to scale an effective and efficient voluntary carbon market (VCM) to meet the goals of the Paris Agreement. The TSVCM was launched by Mark Carney, UN Special Envoy for Climate and Finance and former governor of the Bank of Canada and the Bank England and is chaired by Bill Winter, Group Chief Executive, Standard Chartered (read our earlier bulletins on the TSVCM here and here). Resilient LLP’s Lisa DeMarco is a member of the Legal principles and contracts Working Group of the TSVCM and Resilient LLP is a proud signatory of the TSVCM endorsement letter. This bulletin briefly summarizes the Report’s key points:   Objectives and focus of the TSVCM. The Report indicates that the TSVCM’s primary focus is to raise public awareness of the climate and co-benefits of VCMs and engage with stakeholders to drive both demand and supply in these markets.   Governance. The Report summarizes the Terms of Reference of the new umbrella governance body, which will have a mandate to (i) mitigate climate change and accelerate the transition to net zero; (ii) establish Core Carbon Principles (CCP) eligibility guidelines and additional attributes, an assessment framework for standard setters, and eligibility principles for suppliers and validation and verification bodies (VVBs); (iii) oversee standard setting organizations adherence to the CCPs; (iv) coordinate the work of, and manage interlinkages between, governance bodies; and (v) serve as a steward for the VCM. In addition, the TSVCM is seeking recommendations on the following five topics ahead of establishing the new umbrella body: • Modalities and procedures for the Board of Directors; • Transparency mechanism; • Grievance mechanism; • Transversal…

CIBC, IItaú Unibanco (the largest bank in Latin America), National Australia Bank (Australia’s largest business bank), and NatWest Group (a leading banking and financial services group in the UK and Ireland) today announced the launching of Project Carbon (the Project), a carbon offset platform which will seek to increase transparency in the voluntary carbon markets. The Project aims to provide carbon offsets to clients of the four banks with clear and consistent pricing and standards and aligns with the Mark Carney led Taskforce on Scaling Voluntary Carbon Markets (TSVCM) (read our earlier bulletins on the TSVCM here and here). Key features of the Project: Represents the book of record for ownership of carbon credits; Allows owners of credits to clearly demonstrate possession, reducing risks of double counting and simplifying reporting; Supports price discovery through the posting of executed trade sizes and prices to the market; Promotes project investment through the transparent demonstration of market demand; Provides full traceability and linkage back to source of the credit; Assists Registries by facilitating the rapid scaling of client base; Takes care of post trade settlement, allowing all market participants including exchanges and marketplaces to offer additional value added services;  Aligned with the objectives of the TSVCM;  Pilot built on a private Ethereum platform developed with ConsenSys.  The Project seeks to increase the delivery of high-quality carbon offset projects, facilitate a liquid carbon credit marketplace, create a strong ecosystem to support offset markets, and develop tools to help manage climate-related risks. The Project is launching as a pilot in August. Institutions interested in advancing the objectives of the of TSVCM are invited to join the Project. For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@resilientllp.com.