UNEP Finance Initiative Partnership Proposal — Technology-Enhanced Carbon Integrity

Executive Summary

The urgent need for robust carbon market infrastructures and transparent verification mechanisms has never been more critical. The UNEP Finance Initiative (UNEP FI) has established itself as a leader in promoting sustainable finance through partnerships with over 500 financial institutions, including the Net-Zero Banking Alliance and the Net-Zero Insurance Alliance. By focusing on the Principles for Responsible Banking and Investment, UNEP FI is positioned to drive the transition toward a sustainable economy.

DaedArch Corporation is pleased to propose a partnership that leverages our sensor-based Monitoring, Reporting, and Verification (MRV) platform to enhance the integrity of carbon markets. Our technology provides real-time, ground-truth sensor data that ensures the accuracy and transparency of carbon credits, aligning with UNEP FI’s commitment to developing carbon markets in emerging economies. This partnership will not only strengthen the credibility of carbon credits but will also create new financial product opportunities that align with TCFD, ISSB, and PCAF guidelines.

Value Proposition

Enhancing Carbon Credit Integrity

DaedArch’s MRV platform utilizes advanced sensor technology to deliver continuous monitoring and automated reporting of carbon sequestration activities. This capability directly addresses common challenges in carbon credit verification, such as data quality and the risk of double counting. Our solution provides:

• Real-Time Data: Continuous monitoring ensures that carbon sequestration activities are accurately reported and verified, reducing the risk of misrepresentation.
• Automated Reporting: Streamlined reporting processes reduce administrative burdens and improve compliance with TCFD and ISSB reporting requirements.
• Transparent Verification Chains: Our platform enhances trust among stakeholders, providing a clear audit trail for carbon credits that can be verified by third parties.

Alignment with UNEP FI’s Mission

By partnering with DaedArch, UNEP FI can significantly enhance the efficacy of its initiatives, including:

• Net-Zero Banking Alliance & Net-Zero Insurance Alliance: Our MRV technology supports financial institutions in achieving net-zero targets by providing reliable data on carbon offset projects, enabling better portfolio alignment methodologies.
• Principles for Responsible Banking and Investment: The integration of our technology into existing frameworks will empower financial institutions to make informed investment decisions based on high-quality data, ensuring alignment with the principles of responsible banking.

Market Infrastructure and Product Opportunities

The partnership will also create opportunities for new financial products that leverage enhanced carbon credit integrity, including:

• Carbon Credit Derivatives: Financial instruments that are underpinned by verified carbon credits, allowing for more sophisticated risk management strategies.
• Green Bonds: Bonds that are directly tied to projects utilizing DaedArch’s MRV technology, ensuring that proceeds are used for verified carbon offset initiatives.
• Insurance Products: Insurance mechanisms that can be developed around the reliability of carbon credits, providing further risk mitigation for financial institutions.

Partnership Model

Structure

The partnership will be structured as a collaborative initiative where UNEP FI and DaedArch work together to integrate our MRV platform into UNEP FI’s existing frameworks. Key components of the partnership model include:

• Joint Development: Co-developing guidelines and best practices for the implementation of MRV technology in carbon markets.
• Capacity Building: Providing training and resources to financial institutions on how to utilize the MRV platform effectively.
• Stakeholder Engagement: Engaging with stakeholders, including regulatory bodies, to promote the adoption of our technology in emerging economies.

Governance

A steering committee will be established, comprising representatives from both UNEP FI and DaedArch, to oversee the partnership’s initiatives, monitor progress, and ensure alignment with strategic goals.

Pilot Program

Objectives

The pilot program aims to demonstrate the efficacy of DaedArch’s MRV platform in enhancing carbon credit integrity within a selected emerging economy. Key objectives include:

• Implementation of MRV Technology: Deploying the sensor-based platform in a real-world carbon offset project to monitor and verify carbon sequestration activities.
• Data Collection and Analysis: Gathering data to assess the reliability and accuracy of carbon credits generated through the monitored projects.
• Stakeholder Feedback: Engaging with local financial institutions and stakeholders to gather insights and refine the technology and partnership model.

Scope

The pilot program will focus on a specific region known for its carbon offset projects, such as reforestation or afforestation initiatives. Key activities will include:

1. Site Selection: Identifying suitable carbon offset projects for deployment.
2. Sensor Installation: Installing DaedArch’s sensors to monitor key metrics related to carbon sequestration.
3. Data Reporting: Utilizing the MRV platform to generate automated reports for stakeholders.

Evaluation Metrics

The success of the pilot program will be evaluated based on:

• Data Accuracy: The precision of carbon credits generated compared to traditional verification methods.
• Stakeholder Engagement: The level of buy-in from local financial institutions and project developers.
• Regulatory Compliance: Alignment with TCFD, ISSB, and PCAF guidelines.

Timeline

Phase 1: Partnership Agreement (Months 1-2)

• Finalize partnership terms and governance structure.
• Establish the steering committee.

Phase 2: Pilot Program Preparation (Months 3-4)

• Identify and select pilot project sites.
• Install sensor technology and conduct training sessions for local stakeholders.

Phase 3: Pilot Program Implementation (Months 5-8)

• Begin real-time monitoring and data collection.
• Generate initial reports and engage with stakeholders for feedback.

Phase 4: Evaluation and Scaling (Months 9-12)

• Analyze pilot program results and refine the MRV platform as needed.
• Develop a roadmap for scaling the technology across additional projects and regions.

Commercial Terms

Revenue Sharing Model

DaedArch proposes a revenue-sharing model based on the carbon credits generated through the pilot program. The specifics will be negotiated during the partnership agreement phase, but a preliminary framework includes:

• Credit Sales: A percentage of the revenue from carbon credits sold will be shared between UNEP FI and DaedArch.
• Service Fees: DaedArch may charge service fees for ongoing monitoring and reporting services, which can be structured as a fixed fee or based on the volume of credits verified.

Investment Requirements

The partnership will require initial investment for technology deployment, training, and stakeholder engagement. A detailed budget will be developed during the partnership agreement phase.

Compliance and Risk Management

Both parties will ensure that all activities comply with relevant regulations and standards, including TCFD, ISSB, and PCAF guidelines. A risk management framework will be established to identify and mitigate potential risks associated with the pilot program.

Conclusion

The proposed partnership between UNEP Finance Initiative and DaedArch Corporation represents a strategic opportunity to enhance the integrity of carbon markets while supporting the development of sustainable finance initiatives. By integrating our sensor-based MRV platform, we can collectively improve data quality, ensure compliance with emerging standards, and create new financial product opportunities that align with the global transition to a net-zero economy.

We look forward to the opportunity to discuss this proposal further and explore how we can work together to drive meaningful change in the carbon market landscape.