A new way to verify the real impacts of climate action in cities

A long-term vision is "enable the creation of a city-to-city carbon market, so that cities can start trading carbon emissions between themselves," says Gold Standard chief executive Marion Verles. (Gold Standard)

How can cities ensure that new actions being taken to mitigate climate change don’t negatively affect broader issues of equity?

Likewise, how does a multinational company prove that a sustainable urban development project it is investing in is having a significant local impact — and global ramifications?

This week, a new option is available to try to answer some of these questions. The Gold Standard, a Switzerland-based group created in 2003, on Monday published the new Standard for Sustainable Urban Development. It’s a rigorous framework that offers not only detailed guidance on how to plan for and structure such projects but also an ongoing certification process to ensure compliance and measure impact on the ground.

[See: Cities looking to ‘green banks’ to help fund sustainable infrastructure]

For the Gold Standard and partner groups, the new cities standard — part of a suite of certification frameworks the organization oversees — is an important step toward showing, through well-defined metrics, that climate action can go hand-in-hand with sustainable development. A key benefit, supporters say, is that the standard should help cities access global climate-related financing.

To understand more, Citiscope’s Carey L. Biron spoke with the Gold Standard’s chief executive, Marion Verles. This interview has been edited for length and clarity.

Carey L. Biron: So, what is the Gold Standard?

Marion Verles: We’re a Swiss foundation, a nonprofit organization. We operate as a standard and certification body. We were created back in 2003 by the World Wildlife Fund and a few other NGOs that were worried that the modalities developed under the UNFCCC climate negotiations for the creation of carbon markets weren’t robust enough from an environmental integrity and sustainable development perspective. So those organization created us as a higher-quality standard, and our core focus has been to deliver robust standard and certification for the issuance of carbon credits under the voluntary and the compliance markets.

When we started, we were being told by the UNFCCC negotiators, the private sector and other institutions that carbon markets were focusing on carbon and that sustainable development was a side issue. Ten years later, this is completely reversed: Sustainable development has gone from niche to mainstream in the carbon markets.

We have certified about 1,400 projects to date. We certify about 13 million tons of [carbon-dioxide reduction] every year, which represents about 20 to 25 percent of the market. Our aim is not to become the largest player in the market, but we want to raise the level of ambition by promoting better practices, always trying to link climate and sustainable development, to environmental integrity and sustainable development.

Q: What are some of the innovations that you introduced into this space?

A: One was what we called a sustainable development matrix. We require every Gold Standard project to demonstrate that they not only contribute to climate mitigation but also to other sustainable development impacts. When we started 10 years ago, the Sustainable Development Goals [SDGs] were not around, so we were basing our sustainable development matrix on the Millennium Development Goals. Another innovation is that we are making mandatory for every project to go through a stakeholder consultation.

[See: Make no mistake, momentum is growing to ‘localize’ climate finance]

“Today, about 2 percent of climate finance is channelled into urban projects. We hope that we can contribute to multiplying that number significantly.”

Now, we are launching the Gold Standard for the Global Goals, which is an integration of all the standards that we were managing in parallel so far, including the sustainable cities standard. All those standards are going to be integrated in one single platform, and that brings a number of benefits: If you’re an energy project, you no longer have to choose between the energy standard or the agriculture standard if, for example, you are an energy efficiency installation on a farm. And so that new standard is taking to a next level the quantification and certification of sustainable development impact.

One of the key innovations around that is the management of “trade-offs”. For example, agriculture uses water. If we implement a climate-smart agriculture program, the only impact that you’ll quantify is carbon, to what extent you’re reducing emissions or sequestering carbon. It isn’t required to look at the unintended negative water impact. We can no longer focus on one impact, like carbon or water; we need to really be able to paint the real picture of the impacts that an intervention actually delivers, both the negative ones and the positive ones. Our new standard will make it possible. We’re going to have common requirements for the management of trade-offs, but we’ll also have activity-specific requirements for trade-offs.

In a city context, for example, a city-level waste-management programme may happen to destroy jobs, or require managing of the informal sector that was previously involved in handling that waste. So you may be dealing with an unintended negative impact — and that would be covered and properly taken care of in the new standard.

Q: So the new cities standard is actually part of this new family of standards?

A: That’s right. The sustainable cities standard is going to be a context-specific set of guidelines for stakeholders that are interested in implementing interventions at a city scale, or at a significant scale within a city. One key aim is to enhance the design of the city intervention, recognizing some of the specificities that citywide interventions face. For example, the cities module would require a programme to go through two rounds of stakeholder consultation because of the variety of stakeholders that would typically be involved in a low-emission development programme at city level.  

We also provide an assessment of the management capacity of the lead organization implementing the programme.  This is for the investors that want to invest in those large-scale low-carbon sustainable development interventions but don’t necessarily have the due diligence tools in place or would like to rely on a third-party assessment of the strengths of the program.

Q: How does this process work?

“When we started, we were being told by everybody that carbon markets were focusing on carbon and that sustainable development was a side issue. Ten years later, this is completely reversed: Sustainable development has gone from niche to mainstream in the carbon markets.”

A: You could register with us and have only the programme certified at the design stage and use that as a tool to secure investors. Then, once the investment round is secure, the implementation of the programme starts, and then you go through a yearly or bi-yearly monitoring and verification process. At each verification, we would issue a statement saying, “These are the impacts that have actually been achieved now by the programme.”

[See: Initiative aims to make more green infrastructure projects ‘bankable’]

That certification of actual impact achieved can then help either the city or the programme owner to report to their investors or even to actually monetize some of the impacts. You could sell the tons of CO2 [reduction] in the voluntary [carbon] market. Or it could also enter into innovative types of financing structures, like impact bonds, whereby the city may tell you, “I’m going to fund your programme. For each household that has access to electricity, I’m going to give you that much.” And so once the impact is certified, you can unlock those payments.

Q: Who would you expect primarily to be using the cities standard?

A: Historically, the main users are, on one hand, those who are buying the [carbon] credits — corporates or governments. We have a number of governments that are committed to sourcing 100 percent of their credits from us — Luxembourg, for example. Likewise, any corporate that wants to source carbon for their carbon-neutrality purposes would buy some from us.

The organizations that are actually certified or that put forward projects for certification purposes would be of three broad categories.

One is NGOs that are implementing energy access or land-use programs in developing countries.  

We also have quite a number of private-sector organizations that have started investing in those programmes and are managing the carbon certification process, including quite a number of renewable energy investors and developers.But the standard can also be used by private-sector players that are seeking to see their positive contributions valued and rewarded by the local governments. For example, we’re working with large private sector firms like Suez Environment — they provide waste-management services, and they would like to be certified under the cities standard in order to be able to robustly report on the positive impacts that they are delivering.

The third type users will be the development finance institutions. For instance, we’re working with the World Bank to use the standard in Amman, in Jordan, and the standard will be a way to monitor, report and verify outcomes from the “green growth” plan that’s been designed and will be implemented in Amman.

Q: One of the key focuses of the new framework is also around getting global climate finance to the city level?

“We can no longer focus on one impact, like carbon or water — we need to really be able to paint the real picture of the impacts that an intervention actually delivers, both the negative ones and the positive ones. Our new standard will make it possible.”

A: Yeah, there’s quite a number of reasons climate finance and carbon finance in particular haven’t really delivered for cities. One reason is the complex institutional arrangements and the fact that implementing citywide programmes requires broad multi-stakeholder approaches. But I think another issue is really around the complex monitoring requirements arising from carbon methodologies that are not particularly feasible in a city context. The Gold Standard sustainable cities model overcomes those barriers by adapting monitoring requirements to what’s feasible in a cities context, by providing strong recommendations around management practices and also around stakeholder consultation to contribute to building capacity and being part of creating an enabling environment.

[See: Cities unveil time frame for ‘localizing’ climate finance]

I also think that’s a way to make cities “carbon-market ready”. One of the visions we have with the World Bank and our partners at the C40 Cities Climate Leadership Group is to enable the creation of a city-to-city carbon market, so that cities can start trading carbon emissions between themselves. That’s a long-term idea, of course, but that’s part of the work we’re doing.

Q: What are you hearing from local authorities?

A: I was talking to a lady from Bangkok, and she told me, “But you know, Marion, you are all interested in carbon and in climate, but for us on the ground what matters is access to basic services. It’s air pollution, traffic, jobs.” What is seen by developed countries, funders and others as a climate programme is, on the ground, positioned as a development programme — a programme that will deliver tangible benefits to the people living in the cities.

That’s why it’s critical to always keep sustainable development in mind, because this is what people care about. People don’t care about the concentration of greenhouse gases in the atmosphere. People want jobs, they want healthy lives, they want access to medical services, they want their kids to go to school, to work in safe environments. And unless we are able to demonstrate that climate investments also deliver on those objectives, then we will fail enormously.

Q: How does the Gold Standard fit into the big global accords that have been agreed to over the past couple of years, the SDGs and the Paris Agreement, and also the New Urban Agenda?

A: We really see ourselves as a pathway for implementation of those agendas. We really want to connect the dots between the climate agenda, the sustainable development agenda and the New Urban Agenda by promoting the fact that we don’t need three different frameworks or three different implementation approaches. Every single dollar or decision that is made should contribute in one way or another to the three agendas, and that that can only be done if you are looking at impact quantification from an integrated perspective.

[See: How the New Urban Agenda fits — and doesn’t — with global climate and anti-poverty agreements]

With the Paris Agreement and the SDGs, we have a global target: We know what to achieve by when at the global level, but the national-level targets are still being refined. With the Paris Agreement, we have the national level. Where we come in at Gold Standard is that we make the link between those national-level targets and what’s happening at city level or at project level. We make it possible for the impacts that are happening in a project to be rolled up into a city-level programme and have the aggregated picture of the impact at city level, and then further rolled up into the national level.

Q: What are the next steps, particularly around the cities module?

A: We are working on probably half a dozen pilots right now. Amman is one. There’s a few cities in India, in South America, as well. We are in discussions with cities in Mexico. We’re also planning phased updates to our family of standards, the first of which will take place toward the end of 2018.

Q: What are a few of the most important long-term goals that you would hope would come out of the cities programme?

A: Today, about 2 percent of climate finance is channelled into urban projects. We hope that we can contribute to multiplying that number significantly, really increasing the volume of funds going to low-emission programmes in cities — low-emission and also climate-resilient infrastructure. I think if we can also demonstrate, in an urban context, that climate action can go hand-in-hand with sustainable development and can contribute significantly to achieving the Sustainable Development Goals at the city level, I think it will be another great achievement.

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Carey is news editor for Citiscope.  Full bio

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