Data provider MSCI has designed a new tool to enable buyers, investors and developers of carbon credits to better assess the quality and integrity of carbon projects. MSCI Carbon Ratings will assess over 4,000 projects in the global carbon credit market, providing comprehensive, independent and investment-grade analysis of the associated integrity and risks involved in each of them. Projects will be assessed against six criteria and 50 sub-criteria broadly categorised under emissions impact and implementation integrity, across themes such as climate, environment, society, legal and ethical risks – which includes financial crimes, fraud and sanctions. “Carbon markets are critical to accelerating decarbonisation and meeting net zero goals, but only 5% of projects on the market are considered to be of very high integrity,” said Guy Turner, Head of MSCI Carbon Markets. “Lack of confidence in the quality and integrity of projects is causing some buyers, investors and developers to hesitate.” The rules-based methodology will leverage MSCI’s experience setting industry standards for climate investing, with projects awarded a rating on a scale from AAA to CCC. Projects rated AAA will have both a high likelihood of achieving one tonne of emissions impact per credit, while supporting positive social and/or environmental outcomes and upholding legal and ethical standards. “MSCI Carbon Project Ratings give clients the confidence to stake their strategies, capital and reputations on carbon credits while allowing them to compare credits across the entire market, mitigate risks from investment decisions, and fulfil disclosure requirements,” said Turner.
