Carbon ratings agency BeZero Carbon today launches the BeZero Carbon Portfolio Rating — an industry-first carbon credit portfolio rating framework.
The portfolio rating assesses the likelihood that a given basket of carbon credits achieves one tonne of CO₂e reduced or removed for each portfolio credit issued.
A rating is assigned on the same eight-point scale as the BeZero Carbon Rating — ranging from ‘AAA’, representing the highest likelihood of carbon avoidance or removal, to ‘D’, the lowest likelihood.
The framework has robust credit eligibility guardrails in place, ensuring rated portfolios are used to drive higher standards of risk management in the carbon market. Portfolios containing credits rated ‘C’ and ‘D’ or with significant additionality risks are ineligible for a rating.
The portfolio rating methodology launched today is the first of its kind for the carbon market, with the first ratings using this methodology expected to be assigned shortly. The portfolio rating enables buyers to make credible, risk-adjusted claims using a composition of carbon credits.
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Every carbon credit carries inherent risks, as no two carbon credits are equal and quality varies significantly across projects. Leveraging portfolios is a key innovation required to scale the carbon market, as a portfolio approach encourages market participants to diversify their purchases.
Portfolios for the carbon market are expected to grow in popularity over time as a way to manage the risk of participating in carbon markets. Ratings provide end-buyers with greater confidence in the use of carbon credits in their net zero strategies and will in time accelerate investment in quality carbon credits.
Headline ratings for over 460 individual carbon projects worldwide are hosted free to all on the BeZero Carbon Markets platform.
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Sebastien Cross, Co-founder and Chief Innovation Officer at BeZero Carbon, said: “Investors and corporates all over the world are increasingly looking to incorporate carbon credits into their net-zero strategies in a credible way.”
“BeZero has always been at the forefront of pioneering new products to help businesses truly understand carbon credits, and support them to procure projects that will deliver genuine climate impact — the BeZero Carbon Portfolio Rating is an expansion of this work. Mirroring the portfolio ratings of financial markets which have helped investors diversify and balance risk for decades, the portfolio rating is an essential step forward to mature the carbon market and enable this essential sector to grow and scale.”
