Indicators for the promotion of sustainable development in carbon market mechanisms : final report

This report assesses options for the effective implementation of sustainable development impact assessment, in the context of climate change mitigation mechanisms such as those of Article 6 of the Paris Agreement. Existing carbon crediting programmes were analysed to draw insights on the best approaches for sustainable development impact assessment and the use ofindicators.The requirements of sustainable development assessment cannot be generalised,but rather the appropriate complexity, rigour and granularity shoulddepend on the rationale of the programme with regards to the intended use of the assessment results and potential commodification of outcomes.More complex and rigorous approaches to sustainable development impact assessment may help to improve understanding of the project impact, but may also result in additional transaction coststhat could be unnecessary for some purposes.From the analysis of existing project-level indicators for sustainable development impact assessment, we derive lessonsand pragmatic solutionsfor the effective use of indicators and measures to decrease complexity and associated transaction costswhile safeguarding a reliable assessment of the sustainable impact of activities. This includes a discussion on the provision of flexibility in MRVapproaches, as well as the identification ofpotential links to internationally accepted benchmarks and accessible data sources, amongst other solutions.We set outa criteria based checklist for the formulation of objective and comparable indicators and assess whethe rexisting indicators can be optimized with regards to their specificity and the type of expression in their formulation.Lastly, we assess approaches for safeguarding against potential negative impacts, finding that stakeholder consultation and grievance mechanisms are essential to identify and respond to unforeseen negative impacts, and that pre-defined indicators are useful yet not alone sufficient towards that objective.