New Standards for Sustainability Impacts in the Carbon Market

In a comparative study, Christof Arens and Juliane Schell from the Global Climate Governance Research Unit at the Wuppertal Institute examined the extent to which the new Sustainable Development Tool (SD Tool) under Article 6.4 of the Paris Agreement sets a new benchmark for assessing the sustainability impacts of market-based climate protection measures.

The authors systematically compared the tool with voluntary carbon market standards and evaluated it using a points system. Their conclusion: the SD Tool leads the way in several key aspects, including the structured analysis of all potential positive and negative effects of the 17 sustainability goals. Previous standards have mostly been limited to damage prevention and side effects. Instead of predefined indicators, the SD Tool can now be used to develop project-related, measurable sustainability indicators based on national or regional data, thereby increasing project specificity.

In addition, the new tool includes comprehensive environmental and social risk assessments, closely integrates stakeholder consultations into planning and monitoring, utilizes the complaints mechanism of the entire Article 6.4 mechanism, and defines clear roles for validation and verification. With these innovations, the SD Tool marks a possible new standard for linking climate protection and sustainable development in international carbon markets.

In their outlook, the authors note that further improvements are possible through further development of the tool. In particular, they mention the expansion of sector-specific indicators, a user-friendly digital online tool and generally understandable training materials to facilitate access for new users.

The paper "The Article 6.4 Sustainable Development tool" is available for download free of charge in English at the following link.