Information Availability and Rating Withdrawal

BeZero Carbon

7 July 20222 min

Ratings

Transparency is the bedrock of an efficient market. Although the Voluntary Carbon Market (VCM) is developing at pace the availability of key information in the public domain is variable, formats are non-standardised, and the frequency of disclosure can be irregular. Read our short explainer on the importance of sustained information availability, and how it informs the eligibility of a credit to have a BeZero Carbon Rating.

The availability of relevant information in the public domain is foundational to the orderly functioning of efficient and sustainable markets. In the financial sector, firms publish quarterly and annual financial statements, following independently established accounting standards and make them available in public domain. These reports are expected to be continuously available and are never withdrawn or removed.

The VCM is currently undergoing a once in a generation scale-up. This requires establishing and adhering to similar principles to traditional financial markets, i.e. the sustained availability of relevant information in the public domain.

A key part of our ratings qualifying criteria is to put best practice from public capital markets into action in the VCM. A BeZero Carbon Rating will only be assigned to projects which have all key information available in the public domain - on registry / accreditation agency portals or otherwise in the public domain.

Once published, it is essential that such information remain continuously available in the public domain. This will go a long way to ensuring that the VCM establishes and maintains the minimum standards expected from efficient and developed financial markets.

This is an avoidable risk to the VCM. It is simply never the case in financial markets that once public, something is made private again. Such behaviour changes the playing field by creating information asymmetries or agency issues and is a regression on transparency and disclosure standards.

As mentioned above, BeZero’s Carbon Ratings rely on public information as a qualifying criteria. Having data there one day, and not the next, affects our ability to continue to keep our rating public. BeZero has designed a solution to overcome this VCM anomaly.

In the event we learn information has been withdrawn, our first port of call is to contact the relevant party(s) where such information was previously hosted to identify underlying reasons for change in document disclosure, if data will be shared again, and within what timeframe. If we do not receive an informative response and a reasonable timeframe to resolution, the rating is placed on ‘rating watch’ and this view made public.

Following a ‘rating watch’, we will continue to make reasonable endeavours for a further four weeks to determine if and when the documents will be made available in public domain.

If the relevant data and documents are reinstated in the public domain, we will remove the rating from watch following due verification. If not, the project will no longer be eligible for a BeZero Carbon Rating. The rating will then be removed from our website, API and platform, which will be communicated via our website and the Ratings Update email.

Projects that have had their ratings withdrawn will continue to feature on our website and platform for a further period of 12 months, so that the market is aware of the change and the rationale for it. Full details on our withdrawal process due to withdrawal of information can be found here.

Ultimately, it is in everyone’s interest to strongly discourage the removal of such information from the public domain. The easiest solution is not a lengthy withdrawal and engagement process, it is simply to ensure that all information made public stays that way.