Please note that the content of this insight may contain references to our previous rating scale and associated rating definitions. You can find details of our updated rating scale, effective since March 13th 2023, here.
BeZero Carbon Ratings are our independent opinion on the likelihood of carbon credits delivering one tonne of carbon dioxide equivalent avoided or removed. To qualify for a rating, projects must have applied an additionality test, must be audited by a recognised third party auditor, and must make sufficient information on the design and ongoing monitoring of the project available in the public domain.
Our assessment involves analysis of a wide range of publicly available information, including but not limited to project documents, monitoring reports, verification reports, baseline data, buffer pool contributions, project internal rates of return (IRR) and/or financial viability analysis, sector research, country level datasets and the local policy backdrop.
Critical to our assessment is the continuous availability of sufficient, reliable and verifiable information pertaining to a project’s carbon claims. The unavailability of sufficient, reliable and/or verifiable information is referred to as 'information risk'.Information risks can manifest in a number of ways. For example, project documents may have insufficient data to enable independent calculation of carbon stocks or project finances, discrepancies in buffer pool contributions between project documents and as recorded by the registry, insufficient reporting of rationale underlying performance standards, uncertainties underlying project assumptions related to leakage, permanence risks, etc.
Our analysis of information risk may be informed by global and national datasets, such as the International Renewable Energy Agency’s penetration rates and emission factors, the World Bank’s data on rural electrification and property rights (for Nature Based Solutions), and the World Health Organisation’s indices on access to clean cooking. The availability of information regarding the monitoring of electricity use and generation, and strength of legislative enforcement, are also taken into consideration. BeZero’s assessment of the veracity of country level datasets and information is usually informed by proxy assessments, such as the World Bank Property Rights Index and Corruption Perceptions Index (CPI) amongst many others.
Information risk affects the analytical process and constrains us from reaching an informed view on the risks being assessed. To factor in information risk, our analytical approach is to be prudent. In practice, this could result in ratings analysts taking a more conservative assessment of the relevant risk factor being notched down, for example, from ‘little risk’ to ‘significant risk’, on account of information risk. Our assessment of information risk is primarily included in our assessment of non-permanence risk. This is to avoid binary approaches to non-permanence and to encompass the uncertainties that might be faced across multiple other risk factors that may undermine the possible contractual committed quality of credits.
In many instances for projects that meet our qualifying criteria, it is possible to overcome the existence of information risk via additional transparency and disclosure. When a project developer can and does share any additional information that had previously not been made public, all disclosures must be made publicly available in order for BeZero to consider them as part of our ratings. Private information is not considered as part of the rating.
If the additional disclosure is deemed to potentially have a material impact on the project rating, BeZero may decide to place the rating on “watch” and follow our standard process - see our monitoring, watch, withdrawal process for more information. Continued availability of sufficient, reliable and verifiable data and information is a critical component of BeZero's ratings and assessments. Assessment of information risk is therefore an important part of our analysis and informs users on the basis of our analysis and opinions.