The Carbon Rating Agency (CRA) was conceived by Shandi Modi in 2007. It was clear that public money would be devoted to the challenge of climate change, but without private sector involvement, this alone would not be sufficient. Environmental assets require tools for accounting and risk measure at a standard consistent with other asset classes. Without these tools, institutional investors would not be able to deploy capital. With their benefit, however, investors would be attracted to low carbon investment opportunities.
CRA believes that the case for serious involvement by private capital in the carbon market is compelling: it offers an opportunity to achieve healthy investment grade returns in a market un-correlated to stocks and bonds. Our ratings are designed to help these markets develop by reducing regulatory uncertainty, improving market standards and enhancing risk analysis and transparency.
CRA's ratings provide a rigorous assessment of the likelihood of a project or portfolio delivering its stated emissions reductions in the stated time period. In addition, each rating evaluates the economic and social development benefits that the project does, or does not bring.
Improved transparency and better risk management – including ratings – are an integral part of the process to turn carbon into a new asset class. At present, each emission reduction project is unique and has its own risk profile. Carbon ratings will help to standardise carbon as a commodity and create a new asset class. Rated projects will no longer be unique but comparable to other projects with the same rating.
We hope our ratings will play an integral part in the evolution of carbon markets.
The Carbon Rating Agency is an IDEAcarbon company committed to establishing rigorous and comparable standards that will enable the global carbon markets to attract the levels of finance necessary for preventing climate change. We are the leading global assessors of international CDM and JI ventures, providing project stakeholders with key insights in a range of risk factors. Tailored to client needs, our reports can either be commissioned as quick snapshots of performance or a comprehensive assessment of various project variables.
It is the UN’s belief that “climate change is one of the greatest challenges of our time and that all Parties share a vision for long-term cooperative action”. We believe that significant steps toward positive climate change will only become a reality when the public and private sector are mutually engaged in long term commitments. A substantial obstacle preventing these investments continues to be a lack of transparency in the variety of risks that are involved with climate projects- a factor found to be increasingly significant since the Economic downturn.
The Carbon Rating Agency was created to facilitate the need for an independent review of climate projects, providing senior figures within both public and private entities with the information necessary to commit to projects. This information includes both the quantitative analytical tools and qualitative consideration of policy and regulatory issues to create accurate indicators of project performance
The Carbon Rating Agency was created from the same minds behind IDEAglobal and IDEAcarbon, allowing it to draw upon the experience of proven experts in the fields of global investment and climate finance. By deliberately separating from its parent companies, the Carbon Rating Agency is able to become a truly independent authority in its field- free from any external interferences or pressures. It is this that allows our reports to possess the highest level of accuracy available, and has created the trust necessary to build long term relationships with our clients.
The Carbon Rating Agency has full access to the database of climate projects held by the United Nations. This unparalleled source of data is the foundation of our quantitative modelling, as well as a trusted provider of the most up to date information on policy and regulatory disclosure available. The benefit of this is that our ratings are always at the cutting edge of the latest market changes and statistics..
CRA has developed risk assessment tools to enhance the market transparency and transactional efficiency. One important output of this risk analysis is an independent opinion on the likely performance of an emission reduction project. Our risk analysis is based on a combination of expert evaluation, a standardised and transparent risk analysis tool, and the input from a highly expert independent rating committee.
About the collaboration
The R20 Regions of Climate Action is a non-profit organization founded in 2010 by Governor Arnold Schwarzenegger and other global leaders in cooperation with the United Nations. The R20 is a coalition of partners led by regional governments that work to promote and implement projects that are designed to produce local economic and environmental benefits in the form of reduced energy consumption and greenhouse gas emissions; strong local economies; improved public health; and new green jobs. Since announcing our partnership in 2012, the IDEAcarbon and Carbon Ratings Agency teams continue to contribute their expertise towards helping Regions 20 achieve our shared global environmental and economic goals.
CARBONrik aggregates project-level contributions to risk up to the aggregate portfolio level. Contributions to risk of portfolio components are easily tracked and allow for more effective reporting, decision-making, and carbon asset management