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Accenture, Digital Asset lead InterWork Alliance group to standardize carbon credits

forest sustainable carbon offset

The InterWork Alliance (IWA), the group that plans to standardize tokenized assets and multi party contracts, has set up a group to focus on sustainability. The initial aim is to standardize carbon offsets.

The working group is led by Digital Asset, Accenture and Xpansiv, a subsidiary of CBLmarkets, a company that trades carbon offsets and water rights. 

As a first step, the group plans to address carbon credits, the process by which companies try to address carbon emissions. One kind of carbon credit involves companies buying carbon offsets, which fund projects to reduce emissions such as planting trees or electrification initiatives that encourage less open flame cooking and heating.

Some carbon offset projects also involve building solar farms and other renewable energy projects. However, carbon offsets measure carbon emissions saved, not to be confused with renewable energy certificates, which measure electricity.

“While tokenization has the power to accelerate climate action, the auditing of carbon credits and offsets has not been solved to date. The IWA will tackle this challenge by developing a solution that assures tokens designed to address sustainability are trusted to interwork on the business level, regardless of underlying technology platforms,” said IWA President Ron Resnick.

Some argue that offsets are not always beneficial. And the auditing is certainly a part of that. A recent ProPublica report found that some forests were cut down after receiving the offset funding. It gives an example of a forest that started selling credits in 2013 and satellite imagery four years later showed only half the area was still forested.

Where are the ESG blockchain startups?

Meanwhile, the working group members include Accenture, Chainlink, Climate Chain Coalition, Digital Asset, Microsoft Corp., Nasdaq, Neo Global Development, R3, SIX Digital Exchange (SDX), Xpansiv, and others.

We’d never previously heard of Xpansiv. While its parent CBLmarkets trades carbon offsets, we believe Xpansiv quantifies the environmental impact of producing commodities such as gas, but we’re not entirely sure because the website scored 10/10 for jargon.

The Climate Chain Coalition is an industry body that includes several of the startups we mentioned, including Xpansiv.

It’s good to have lots of heavyweight players. But we were puzzled that we didn’t see any of the startups in the space that we’d expect, such as Everledger, CirculorEnergy Web FoundationPower LedgerLO3 Energy and Electron. We contacted a couple, and they hadn’t been approached. So we asked the IWA.

“You had a lot of startups go after these spaces, and everyone’s sort of building these walled gardens that don’t match the buyers’ requirements,” said IWA Chair Marley Gray. “So we decided to back the bus up, and get everyone to agree on what a carbon credit is, how it’s structured and how we should then tokenize that.”

We’re unclear whether Xpansiv is one these startups or it’s included because it’s closer to the buyers. We’re also aware of at least two startups already working together on standards and interoperability – Circulor and Everledger.

While it’s entirely possible that each startup might have a different approach, perhaps by including more diverse perspectives and the reasons they adopted their methodologies could help towards an optimal standard. Especially given the ultimate goal of the group is a noble one.

“If an organization is not yet member (of IWA), we encourage them to join and help drive this initiative forward,” said Marley Gray.

Update: The article has been updated twice to include additional IWA quotes and responses.