MSCI Inc., a leading provider of decision-support tools for the global investment community, has introduced MSCI Carbon Project Ratings to help buyers, investors, and developers of carbon credits better evaluate the quality and integrity of carbon projects.
“Carbon markets are critical to accelerating decarbonisation and meeting net-zero goals, but only 5% of projects on the market are considered to be of very high integrity. Lack of confidence in the quality and integrity of projects is causing some buyers, investors and developers to hesitate,” said Guy Turner, Head of MSCI Carbon Markets.
To address this, MSCI Carbon Project Ratings evaluates over 4,000 projects in the global carbon credit market, offering comprehensive, investment-grade, independent assessments of project integrity and risks. The criteria MSCI considers include climate, environmental, and societal impacts, as well as legal and ethical risks such as financial crime, fraud, and sanctions.
“MSCI Carbon Project Ratings give clients the confidence to stake their strategies, capital and reputations on carbon credits while allowing them to compare credits across the entire market, mitigate risks from investment decisions, and fulfill disclosure requirements,” added Turner.
Using a transparent, rules-based methodology, each project is assessed based on six main criteria and more than 50 sub-criteria, broadly categorised under emissions impact and implementation integrity. The rating is a composite of these two categories and follows a seven-point letter scale, from AAA to CCC. Projects rated AAA are most likely to deliver 1 tonne of emissions reduction per credit and contribute to positive social or environmental outcomes while maintaining legal and ethical standards.
MSCI Carbon Project Ratings are integrated with MSCI’s broader suite of Carbon Markets solutions, offering integrity-based insights across the market, including price indexes and corporate climate performance assessments.