CNaught - Science-based approach to carbon credits

Commitments Strategy Portfolios Categories Allocation Research Ratings Monitoring

Five commitments to our customers

CNaught is easy to use because our customers trust us to do the work of building a diversified, high-impact portfolio of carbon credits for them. While the details of our approach will shift over time, they are grounded in five commitments to our customers that will not.

1. Our focus is climate impact

2. We ground our approach in science

3. We seek to minimize risk

4. We are transparent about our approach

5. We seek to continuously improve

We build you a strategy

Carbon credits are not a commodity. While they are all designed to represent one tonne of carbon, in practice different categories of project and different specific projects have different likelihoods of delivering on their promise. That means that you are unlikely to succeed in your climate goals if you choose projects based on price or idiosyncrasies like proximity to your location, pictures, or narrative descriptions. You also are also unlikely to be able to respond convincingly to regulatory or media scrutiny. CNaught delivers a strategy that systematically reduces risk and maximizes climate impact.

Design diversified portfolios

There is increasing scientific consensus that most buyers should be purchasing a portfolio of carbon credits that are diversified across project type and geography. This is the approach supported by the World Economic Forum, and it is the approach endorsed by the leading paper in the field–The Oxford Principles for Net Zero Aligned Carbon Offsetting.

CNaught’s portfolio approach has several key advantages:

Mitigating risk

A portfolio of non-correlated assets mitigates risk. If there is a challenge with a single project, the remaining portfolio will be unaffected. This is why financial investors diversify across stocks and bonds and domestic and international stocks.

Driving impact

A portfolio enables a buyer to simultaneously drive impact through projects that are already at scale while also sending a market signal that there will be buyers of emerging technologies that we need to reach scale to meet our climate goals.

Evolving over time

The portfolio can and should shift over time to reflect current best practices and the kinds or projects that are performing most strongly.

Evaluate project categories

CNaught’s portfolios are made up of four different categories of project types, which build on a paradigm laid out in the Oxford Principles. Each category has its own strengths and weaknesses. Understanding those strengths and weaknesses allows us to design a portfolio that accounts for them.
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The categories of projects vary across two axes: whether they avoid emissions vs. remove carbon and how long they store carbon.

Because category III is largely theoretical at this time, with very few projects offering this type of credit, CNaught portfolios are a blend of categories I, II, IV, and V.

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Allocate across categories

Consistent with Oxford, we weight our current portfolios toward the highest-impact technologies currently available at scale: the best avoided emissions projects. We believe we need to think beyond just carbon removals–because carbon credits remain necessary to incentivize an array of avoided emissions activities. At the same time, we allocate a meaningful portion of our portfolios toward carbon removal projects with both short and long-term storage because it is critical that carbon removal solutions scale if we are to meet our climate goals.
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Over time we believe the weight of the portfolio will shift toward removal and longer-term storage as removal solutions scale and global progress on emission reductions also reduces the number of avoided emission projects.

Conduct deep project-level research

Even within individual categories and project types, there is substantial variation in climate impact between individual projects. We closely examine projects to ensure solid evidence of additionality, limited risk of overcrediting, reasonable durability of carbon for the project type, and strong evidence that the project avoids double-counting. We further avoid projects that may cause non-climate harm, such as those sponsored directly by governments with a history of human rights abuses.

Double-check work with third-party ratings

We don’t believe it is good enough to just ask you to trust us. You know that we are selling you a product, and there is especially good reason to be a skeptical buyer in the carbon credit space. That’s why we also leverage independent third-party ratings agencies like BeZero, Calyx Global, Renoster, and Sylvera to help us better understand the risks of projects that are listed on credit registries like Verra or Gold Standard. We will not support a project unless at least one of those experts has given the project a rating that suggests the project is likely delivering one tonne of carbon for each tonne claimed. In practice, this means we will only consider about 15% of credits available in the voluntary carbon market.

Monitor the performance of our portfolios over time

The carbon-credit space is fast-moving and ever-changing, and we keep up with macro- and micro-trends so that you don’t have to. At the macro level, that can mean tracking multi-stakeholder efforts like the development of core carbon principles from the Integrity Council for the Voluntary Carbon Market (ICVCM); registry-level developments, like Verra’s efforts to revise some of its project methodologies; and new research about the effectiveness of different project types. At the micro level, that means monitoring the performance of projects we support. We proactively seek out information so that we can constantly evaluate projects–all with an eye toward how they might impact our ability to deliver impact and mitigate risk for our customers.

Our approach