The vantage point of high-integrity carbon credits for organisations


Josphat Mwamba explains the impact of Mikoko Pamoja, a community project started in 2014 that uses the sale of carbon credits to fund mangrove conservation on the Kenyan coast. FILE PHOTO | NMG

Generating and using carbon credits by organisations involves several essential steps and processes.

These steps include the certification of carbon offset projects, verification of carbon credits generated, local community contributions and investments, emissions measurement and assurance.

These steps help prevent greenwashing, ensure the benefits from these projects go to the intended beneficiaries, and provide a standardised approach for identifying and funding sustainability projects.

As a form of communication by organisations, reporting plays a vital role in stakeholder engagement. When done appropriately, organisations can build trust with stakeholders and position their brand and reputation favourably.

Organisations should practice reporting with an understanding of the expectations and demands of stakeholders as the intended consumers of the information provided.

Reporting has a vital role in strengthening carbon credits' integrity.

Organisations must prepare to lead with reporting in the absence of mandatory reporting regulations on carbon credits as regulators work to provide rules and principles.

Reporting builds trust and credibility for financial markets when done well. Lenders and providers of sustainable finance are keen to obtain information on the quality of carbon credits and carbon offset projects.

It enables lenders to assess the viability of an organisation's sustainability projects for climate change mitigation or adaptation.

Transparent reporting by organisations goes a long way to highlight the value creation in the entire carbon credit value chain.

This way, organisations can demonstrate credibly the support and investments made to local communities, the value to customers and the overall value created for their brand and reputation.

Adopting a transparent approach reduces transaction costs in areas such as environmental and social due diligence exercises.

Improving the integrity of carbon credits in Africa is one of the African Carbon Markets Initiative (ACMI) objectives, and reporting is a fundamental element towards achieving this goal.

Credible reporting would result in an overall increase in carbon credits as more resources and finance will be available for projects because investors would have the necessary information to make investment decisions.

Akinyemi Awodumila is a Partner at Deloitte East Africa. He is an author who writes and speaks widely on corporate reporting topics.