What Emerged from Brazil? New Global Coalition Aims to Shape Carbon Cap & Trade

Corporate leaders in the United States should be aware of an important development coming out of the recent COP 30 climate meetings in Brazil. This news may have slipped under the radar.

While the U.S. federal government systematically throttles back sustainability initiatives and guts established ESG rules and regulations, a coalition of other sovereign nations is moving on an opposite track,  pressing the accelerator on carbon accounting, pricing, cap and trade, climate action investing, and related issues.

News to note: The Open Coalition on Compliance Carbon Markets is busily charting a course towards the future, and this will impact many U.S. companies both the near- and longer-term.

This is a new, voluntary collaboration among nations aiming to harmonize approaches to carbon cap-and-trade, share expertise, drive investment in low-carbon economic development, balance growth with the transition to a lower-carbon economy, avoid fragmentation among carbon markets, and link carbon markets.

For today’s U.S. government, limiting carbon emissions, imposing related taxation, and establishing carbon pricing schemes may not be front-of-mind issues (and therefore perhaps not pressing issues for some U.S. corporations), U.S. companies operating in other jurisdictions might be subject to a carbon tax now in the near future.

Cap-and-trade is a hot issue for both developed and developing nations, making the action coming out of the recent COP important for corporate boards and management to understand.

The new coalition of nations is going to work on “aligning and strengthening national carbon pricing systems,” and will address such issues as:

• carbon taxes and pricing (“cap & trade”) programs
• climate action investing
• developing common accounting standards for climate
• ensuring the integrity of carbon offset mechanisms
• defining best practices in MRV (monitoring, reporting, and verification of climate data
• monitoring
• rules for use of high-integrity credits
• alignment and interoperability of regulated carbon markets
• meeting countries’ Nationally Determined Contributions (NDCs)
• corporate reporting

The Open Coalition on Compliance Carbon Markets is positioning itself as an important part of a broader ecosystem of global initiatives formed in recent years to strengthen cooperation on carbon pricing.

The coalition currently has the following sovereign members: Andorra, Armenia, Brazil, Canada, Chile, China, France, Germany, Guinea, Mexico, Monaco, New Zealand, Norway, Rwanda, Singapore, the United Kingdom, and Zambia, as well as the expressed support of the European Union (with 27 member states).

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An important element of the initiative is that leading U.S. universities are involved as think tanks and navigators. 

Among the advisors to the coalition and shapers of the concept: Harvard University and the Massachusetts Institute of Technology (MIT), through their joint Global Climate Policy Program (GCPP), which aims to “drive innovation in global climate policy around the world.”

The business schools of the two universities will participate in various ways, as will the Salata Institute for Climate and Sustainability at Harvard through financial support.

While the initial consensus after COP 30 may have been that no dramatic developments emerged (as with the landmark COP 21 meetings in Paris), the collaboration among nation-states in this new coalition could have powerful impacts on corporations headquartered and/or operating in North America, Europe, Asia, and Africa – virtually all around the globe.

Companies preparing now for the coming of carbon cap and trade and related disclosure and reporting will be better positioned for expected developments as the coalition members embark on their work.

G&A Institute is closely monitoring the actions of the new coalition and will share developments as they unfold.  Our team is available to assist internal sustainability teams in preparing for forthcoming cap and trade programs.

Sustainability leaders can brief their companies’ decision makers on the formation of this global coalition and its work, and how it may affect corporate action in the coming months and years.

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Founded in 2006, Governance & Accountability Institute (G&A) is a New York–based sustainability consulting and research firm advising corporate leaders and investors at the intersection of strategy, governance, and regulation. For nearly two decades, we have partnered with executive teams and boards to translate sustainability strategy into durable enterprise value — helping organizations navigate shifting market expectations, evolving policy landscapes, and increasing capital markets scrutiny. Set up a call to learn more about how we can help your company.

Hank Boerner

Chairman & Chief Strategist

Henry (Hank) Boerner is a strategist, trendwatcher, researcher, author, editor & publisher, and “sentinel” who detects and frames critical emerging trends as these affect and influence leaders and their organizations. He is expert in crafting effective strategies for addressing and scoping critical issues and resolving real or potential crisis situations that affect corporate, public and social sector organizations, and has been a trusted senior advisor to executives and boards in these sectors in the United States and other countries for more than three decades.