INDEPENDENT CDR RISK RATINGS

Public and private buyers, investors and fund managers can use independent CDR risk ratings when deciding which projects to support and on what terms. A rating is an external assessment, usually expressed as a grade with supporting analysis, of specified risks to a project's carbon benefit or future delivery. A buyer can use it to shortlist suppliers, request stronger evidence or decide against paying in advance. A public fund can use it when assessing applications or setting funding conditions. The implementing organisation commissions or subscribes to the assessment and specifies how its staff should use the findings; the rating agency conducts the analysis. Where suitable coverage is missing, buyers or funders can commission additional assessments or support its development. Certification establishes compliance with a standard; ratings help users examine risks that compliance alone may not resolve.

The organisation using ratings should start with the decision it needs to make. Purchasing issued credits requires confidence in the carbon benefit already claimed; contracting future removals also requires an assessment of whether the supplier can deliver. Lending or investing requires separate financial analysis where the rating does not cover the developer's finances. Users should check which risks the service assesses, how much supporting evidence they can inspect and when ratings are updated. A weak accounting assumption may affect many projects using the same protocol, while a construction delay may affect only one supplier. Procurement and investment rules should explain when staff must seek further evidence, change contract terms or reject a project, and who can approve an exception for an unrated supplier.

Ratings can help purchasing teams compare suppliers without each team rebuilding the same specialist analysis. Several buyers subscribing to one service can draw on its project assessments, then investigate issues specific to their own contracts. If an assessment identifies uncertain delivery, a buyer can reduce its advance payment or spread purchases across more suppliers. If the issue is weak monitoring, it can require better evidence before contracting. A developer told that its monitoring evidence is inadequate can improve the monitoring plan or supply missing records before seeking a reassessment. Public funds can also use independent findings to explain why one application received support while another did not.

Using independent ratings to select suppliers or allocate funding can give potentially flawed assessments undue influence over which projects receive support. An inaccurate rating may exclude a credible supplier or steer money towards a weak project, while a single overall grade can obscure risks outside the assessment’s scope. Commercial ties between rating providers and developers can compromise independence, and requiring a rating can disadvantage smaller developers or new methods that have not yet been assessed. Buyers and funders should understand what each rating covers, examine its supporting evidence and accept credible alternatives where appropriate. Rating providers should disclose conflicts of interest and offer clear correction and appeal procedures without allowing paying clients to negotiate their grades.

The organisation using ratings should record which findings changed its supplier shortlist, contract terms, funding decision or monitoring requirements. It can then compare rated risks with subsequent evidence, such as delivery delays, corrected carbon estimates or reversals, and examine whether its response was useful. For example, did a delivery warning lead it to limit an advance payment before the supplier missed a milestone? Procurement teams should also review assessment fees, staff time saved and credible projects excluded because ratings were unavailable. The agency should update its methods and assessments when new evidence exposes recurring errors.

The buyer's procurement or investment team defines the decision and the evidence it needs; its legal and finance staff determine how findings affect contracts or funding conditions. The rating agency selects its analytical methods, employs the relevant scientific and technical experts, investigates the project and maintains the rating. Developers provide records and respond to factual questions. Communities and safeguard specialists should be consulted by the agency where local impacts fall within the assessment. The buyer should agree access to the agency's reasoning and an escalation process, while retaining responsibility for the final purchasing or investment decision.

Companies can commission and use ratings or establish independent services. Governments at each listed level, international institutions and philanthropic funders can incorporate ratings into their own procurement, investment or grant programmes. Their role is to decide how independent evidence informs the money they commit. The provider remains responsible for producing the assessment. Funding a provider should preserve its freedom to reach an unfavourable conclusion.