Monitoring, Reporting & Verification (MRV): It’s not easy being green
3rd June 2011 by Madlen King
How do green investments outside of international systems and the CDM show that they are delivering?
Text from presentation given by Madlen King, Global Head of Climate Change and Sustainability LRQA, at Carbon Expo Barcelona, June 1-3 2011
The shape of international climate change policy post 2012 is being deliberated and debated in depth. After the climate-change talks at COP16 in Cancun and the more recent UN Climate Change Conference in Bangkok this year, levels of optimism are declining for an internationally agreed solution at COP17 in Durban.
As a result we are all seeing climate policy diversifying into a multi-track framework, with nations and regions developing their own internal or bi-lateral approaches, in a wide variety of guises, and the increasing development of voluntary schemes.
So how do such investments under these mechanisms show that they are delivering and how can investors be convinced? Well the answer is MRV.
Consumers International and Accountability conducted research in 2007 on ‘What Assures Consumers on Climate Change. They reported that 70% of consumers want climate change claims by businesses to be proven by independent third parties.
In more recent years we have seen the rapid growth in the Carbon Disclosure Project. The CDP represents investors in 71 trillion US dollars of assets and those investors want trust in the data reported and thus encourage verification.
70% of consumers and 71 trillion dollars can’t be wrong.
However establishing robust MRV it is not quite as simple as it sounds and I have just 4 points that I would like to make.
The first relates to Clarity – monitoring, reporting and ultimately verification is conducted for the end user of the report or claim being made, in most cases that end user is potentially insurers, consumers and investors. With these many different schemes and means of reporting the way in which the information is presented and the terms used are not always clear and are thus causing confusion in the market place and hence the end user is not always receiving the assurance that is intended. MRV must provide greater clarity.
The second relates to Consistency – One of the reasons for this lack of clarity and the resultant confusion is the inconsistency in rules, standards and approaches being applied across schemes. In relation to issues such as scope of content, levels of assurance provided, and materiality level applied for example a consistent approach to MRV is lacking.
This then leads on to my third point – Comparability – with an inconsistent approach to MRV the value of any return e.g. from credits generated, or the level of risk of potential investments can not be compared. Across trading schemes therefore emission reduction credits can not be fungible. In order to ensure comparability, MRV requires greater clarity and consistency
All of these issues ultimately are detrimentally affecting the level of trust in the data and information reported and thus in investments and potential returns. Robust, clear, consistent and comparable MRV can provide that trust. When coupled with the independence and impartiality of the verification that level of trust can be provided and the end users assured of the data and information reported, providing the MRV is clear, it is consistent and comparable.
The schemes that have lead the way in relation to MRV have taught the carbon market a great deal about defining the appropriate processes. The MRV methods applied for project-level emissions or reductions under the Clean Development Mechanism (CDM) or Joint Implementation (JI) — and at an organisational level under the EU Emissions Trading Scheme (EU ETS) — have generated a lot of consistent, accurate and transparent data.
But the market now needs to ensure that new schemes and general monitoring, reporting and verification approaches learn from those lessons to provide trust in green investments and the data and information around them.
Madlen King is the Global Head of Climate Change & Sustainability. She ensures the technical integrity of LRQA climate change and sustainability services and liaises with external bodies and governments on climate change. Within this role, Madlen is responsible for the service design, delivery and maintenance of accreditations for all GHG validation and verification schemes [...]