Hivos & Voices for Just Climate Action | Report on divestment from carbon markets and towards public climate finance

Shared Planet worked with Hivos and the Voices for Just Climate Action programme to write a report and policy brief persuading policymakers to shift investment towards grant-based, additional public climate finance and away from carbon markets. This work is particularly urgent in the context of Article 6 of the Paris Agreement on carbon markets, which is set to expand investment into carbon markets – a trend that climate justice movements have long rallied against – and the continued underinvestment in public climate finance.

The team conducted a literature review to explore critiques including the perverse incentives, measurement and verification issues, informational asymmetries, market-gaming, and social inequalities that arise from carbon markets. We mapped the international financial institutions, development finance institutions, NGOs, and coalitions that engage with carbon markets to analyse their stance, the initiatives they have to execute their support or opposition, and whether or not they provide financial support to carbon markets. We conducted semi-structured interviews with individuals representing organisations in support of carbon markets in the Global South to better explore their reasons for support.

Our report involved an analysis of the distributional impacts of carbon markets vis-à-vis public climate finance, principle-oriented critiques of carbon markets vis-à-vis public climate finance, and the narratives used by supporters to justify carbon markets – including our counters to those narratives.