Carbon Market Watch

For fair and effective climate protection.

Code of Conduct – improvement indispensable (Newsletter #2)

05 Jul 2009

Annex to decision 3/CMP.1 paragraph 8 (f) requests “members, including alternate members, of the Executive Board shall have no pecuniary or financial interest in any aspect of a CDM project activity or any designated operational entity.” However, Board members often play multiple roles at the same time, including UNFCCC negotiators, representing their countries’ DNA or managers of large government CDM purchasing programs. Although members should act in their personal capacity, there are severe concerns about conflicts of interests of Board members. This shows as a conflict of interest is only noted in 4 out of 47 meeting reports. Yet a study has shown that membership of the country involved in the Board raises the chances for a project to be approved and more recently, the New York Times has reported that some Board members abuse their role and aggressively promote projects that benefit their home countries (NYT, April 7, 2009).

In an attempt to address serious problems with conflicts of interests, the Board adopted a code of conduct at its last meeting. However, the adoption of this code of conduct is rather embarrassing as it hardly provides the language to change the current situation. The adopted document suggests that each Board member will “exercise personal discretion in deciding whether s/he has a real or perceived conflict”. This means everyone can make up its own definition of conflict of interest. This will most likely not alleviate the considerable problems how Board members are currently acting in informal meetings. Moreover, Board members do not have diplomatic immunity and therefore risk prosecution or lawsuits on the basis of their decisions. At the upcoming meeting, the Board will consider an analysis of the submissions received to the public call for input on efficiency in the operation of the CDM and opportunities for improvement which closed in May 2009. This would be a good opportunity for Board members to reconsider the adopted language.

Action to be taken by COP/MOP:  As the CDM Executive Board was unable to give itself a meaningful code of conduct, CDM Watch will call to Parties in Copenhagen to give the Board a real code of conduct. This code of conduct should go hand in hand with measures that are more likely to guarantee transparent and independent decisions by Board members. These measures should include:

  • Disclosure of all financial and professional interests that may impact their impartiality in the case of certain decisions
  • Resignation from any association with a company involved in the CDM
  • Commitment to act as an independent entity and not to take instructions from any party or external body

Moreover, CDM Watch believes that the professionalization and recruitment of full-time salaried

Board members with technical and financial expertise related to the CDM would play another important role in ensuring the independence of Board members.