From carbon to SDG credits: the crossing paths of climate action and sustainable development
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As COP 25 opens its doors in Madrid this week, I would like to highlight that climate summits are no longer only about the 13th Sustainable Development Goal (SDG): “climate action.” Rather, they most now encompass all of the United Nation’s global goals in order to be successful.
Climate change mitigation must be inclusive, or it won’t be. This is the main lesson learnt in 2019. From indigenous uprisings in Quito to the Gilets Jaunes movement in France, it is evident that people won’t accept to reduce their carbon footprint if this means digging the social divide even further. In Ecuador, the most vocal group rising up in protest are rural indigenous communities, and, in France, rural dwellers. In both cases, these groups rely on their cars or motorcycles to access essential goods and services that are more and more concentrated in cities. This implies that fuel is a non-negligible part of their budgets. Governments are very aware of this fact now, and have decided to pull off proposed fuel taxes or maintain fuel subsidies, at least in the short term. Popular dissatisfaction will also catalyze longer term trends, like the carbon market’s turn towards sustainability in its broader sense.
Climate change and sustainability have historically been dealt with as separate issues. Yet, since the launch of the 2030 Agenda and the Paris Agreement, they have been slowly converging. A concrete sphere that reflects this trend is the global carbon market, where the right to emit a ton of CO2 is traded. Carbon standards — both voluntary, and regulated — are increasingly including SDGs in their criteria matrix. Greenhouse gas (GHG) emissions reduction project sectors, such as renewables energies, waste management and reforestation, do overlap with SDGs, like sustainable cities and communities, or economic growth and decent work.
Recently created standards — such as SD Vista from Verra or the Gold Standard for the Global Goals — illustrate the growing importance of addressing the three pillars of sustainability while tackling climate change. Impact monetization is expanding its scope beyond carbon pricing.
For a carbon standard to include SDG indicators, the methodology to quantify them needs to be standardized across regions and in some case adapted to include cultural differences. SDGs performance indexes are often constructed in order to hold countries accountable to attain their targets. Similarly, projects developers in the carbon industry need to be hold accountable for their quantifiable impact on local communities and monetarily compensated for advancing the SDGs.
The challenge is compiling project-scale data in rural areas of developing countries, where there are often no prior governmental indicators. Once an appropriate methodology has been agreed upon, project-based SDG quantification can be the basis for the issuance of financial derivative, which are called sustainability or SDG credits, akin to carbon credits. SDG quantification is ultimately a tool to implement the principle of results-based finance.
These credits would also be a means to offset private sector’s footprint on a specific development component. For instance, if a company, even after implementing internal precautions to mitigate its impact on biodiversity, still affects a given species’s habitat, it could purchase SDG credits to fund projects protecting that endangered species elsewhere. The same principles used for climate change mitigation such as additionality and double counting should be applied in this case. This is useful for making SCR more quantifiable, accountable and less prone to green-washing.
SDG credits are just the top of the iceberg in terms of convergence between sustainable development and climate change mitigation. Without the former, the urgently needed inflection of green house gas emissions might stumble upon social unrest movements again and again, like what we’re seeing as this decade comes to a close.
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Andrés Melendro Blanco currently serves as a sustainability consultant at ALLCOT Group, where he is dedicated to aligning climate change mitigation projects with the UN's 17 SDG. He previously worked as a consultant for UN-Habitat and as an urban development analyst at ProBogotá, a think-tank dedicated to fostering Bogotá’s sustainability. He holds a bachelor’s degree cum laude in Political Science and a master’s degree in Urban Policy, both from Sciences Po Paris.