With COP26 behind us, a few things are clear:

• we've bent the curve on the most important graph of our time, but we're still coming up short (our climate scenario has moved from ~4°-6° to ~2.7° by 2100, still not on track to ~1.5°)

• we're still clinging onto climate pledges to signal change and motivate the masses, despite the fact that COP26, nor any other entity can enforce action (pretty remarkable progress considering the mixture of corporate interest and voluntary commitments that underscore these meetings)

• we're all screaming at our leaders to enforce restrictions on big oil and fossil fuels, especially at ambitious climate action events like COP26, yet actions from corporate leadership still incentivize their production (e.g. advertising or literally by attendance)

• more young people are demanding action and taking the stage ("system change, not climate change")

• and we're still not talking about carbon pricing or taxes

Talking is easy, walking is hard

To backtrack a bit to COP21, the Paris Agreement was created and in it, Article 6 was born. Arguably one of the least accessible and complex concepts, it was left unresolved in 2015 and came back to the front stage in COP26.

In short, Article 6 describes 3 mechanisms for voluntary cooperation towards global climate goals with 2 market-regulated mechanisms and 1 non-market framework. Put simply, it establishes a framework for incentivizing climate pledges through carbon credits, creates an international carbon market to trade credits between countries, and lastly sets a standard for climate aid where no trade is involved.

What I understand to be similar to California's cap-and-trade system relies on the free market to incentivize participating countries to cut emissions and "sell" the savings to heavier polluters. These programs feature increasingly strict caps that will eventually bring emissions to early-industrial levels, while allowing the market to self-regulate, providing heavier emitters with a buffer, so long as there are equivalent leaders in decarbonization.

And while this may seem to be a solid footing for future improvement, many believe it's too little, relies too heavily on voluntarism, and is vaguely open to loopholes.

He tells Carbon Brief that, while he does “genuinely believe that without a strong carbon price we won’t get much done”, he is concerned that a focus on pricing alone will distract from the “other regulations and policies that are required for deep decarbonisation”.

— Hector Pollitt, an economist at consultancy Cambridge Econometrics in an interview with Carbon Brief

I agree. And it seems like many of the people I've spoken with an opinion on the matter share the same sentiment.

The double-edged sword of Carbon Markets

Carbon markets are an opening for corporate enterprise and a distraction from real reduction strategies. In the last few months, I've learned of and compiled a growing list of carbon market APIs and marketplaces that are well-intentioned, but signal opportunities to keep business as usual.

Platforms like South Pole, Carbon Interface, Cloverly, Gold Standard, and now Pachama and Patch, with fresh funding from top-tier venture capitalist a16z, have made the task of corporate climate signaling a simpler reality through a few lines of code and endless opportunities to connect to the carbon markets.

Carbon credits are the easy solution that kicks the can down the road.

The real value behind CMAP, which counts Patch.io among its ranks, is the process of legitimizing carbon accounting, requiring detailed reporting and disclosures, and committing to actual climate targets from within the value chain.

Individuals trying to reduce their carbon footprint know this plea all too well:

We're asked to change our behaviors to curb our individual carbon footprint, from commuting and shopping, to eating and more. But when corporations are asked to do the same, the logical opportunity within reach is to purchase credits — to fund the companies doing the good, but disincentivize real reduction strategies.

Although carbon markets keep the pressure on the heaviest polluters, the systemic change we need can only happen in the leap between reporting to target setting. How can corporations make a concerted effort to proactively calculate their emissions (and commit to impactful goals) if not for annual or quarterly reporting and disclosures?

Despite some conversations I've had with some skeptics in climate finance, I'm hopeful for a future where environmental disclosures and reporting like TFCD are enforceable. By standardizing environmental reporting to carry the same weight from the SEC, corporations will feel financial and public pressures to enact plans to achieve the climate pledges they sign up for.

What's next for Beacon?

Beacon started as a platform to incentivize corporate accountability through accounting and public profiles. It evolved from accounting and offsets for technology corporations to SMBs with sustainability at the core, then to cities with climate action plans, and eventually to universities — where it stayed for several months before finding a place on the shelf. Beacon won’t be in the business of selling offsets.

In the meantime, I plan to learn more about the mixture of social and ethical forces that incentivize corporations to measure, report, and plan. What opportunities exist in targeting that provide leading sustainability corporations with the knowledge to pick the right vendors, suppliers, and opportunities for their reduction strategies?

This is still a learning opportunity. I hope to distill some of the findings from my interviews with academics, government workers, engineers, researchers, public utility workers, and private entities to uncover some best practices of accounting-fueled reduction plans.