© 2006 UNDP. All Rights Reserved Worldwide. Proprietary and Confidential. Not For Distribution Without Prior Written Permission. UNDP MDG Carbon RBEC EFP Workshop MDG contribution assessment Presented by Matt Spannagle Thursday 28 th September 25-29, 2006, Bratislava, Slovakia

1 UNDP MDG Carbon Facility 1  Purpose of project’s MDG contribution assessment  Overview on assessment  Component 1: Safeguard Principles  Component 2: MDG assessment  Overview on assessment procedure  Roles of CO/HO/etc Overview of presentation

2 UNDP MDG Carbon Facility 2 ‘MDG Impact’ Number of Countries with access to CDM carbon finance market Low High Low High Objective for UNDP MDG Carbon Facility Current CDM Market Background: Key objective of MDG Carbon is to facilitate carbon finance for CDM projects with high development dividend Purpose of MDG contribution assessment

3 UNDP MDG Carbon Facility 3 To fulfill this objective, project MDG contributions have to be assessed in a coherent and consistent way that enables  Comparability and prioritization of projects  Demonstration and tracking of MDG Carbon portfolio contribution  requires a tool which assesses project MDG contributions in a consistent, credible and transparent way! Purpose of MDG contribution assessment (cont.)

4 UNDP MDG Carbon Facility 4 MDG contribution assessment will serve the following purposes:  increase program credibility  protect the “MDG” brand which is based on people-centered, time-bound and measurable indicators  premium pricing based on MDG contribution  streamline project MDG contribution assessment to increase objectiveness and minimize transaction costs  allow for portfolio balancing based on projects’ MDG contribution Purpose of MDG contribution assessment (cont.)

5 UNDP MDG Carbon Facility 5 Purpose of MDG contribution assessment (cont.) For project proponents, maximizing project MDG contributions credibly enables:  Differentiation from other market products  Risk reduction due to higher CER prices and/or security of purchase  Risk reduction due to higher community buy-in which increases likelihood of delivering CERs as projected (i.e. stabilizing output)  Integration of MDG Carbon with broader policy frameworks etc.

6 UNDP MDG Carbon Facility 6 The assessment is based on two components: Overview of assessment  Component 1: Acknowledgement of Safeguard Principles  Set of principles in the area of Human Rights, Labor Standards, Anti- Corruption, Environmental Protection etc  Projects not compliant are not eligible for MDG Carbon  Component 2: MDG assessment  Assessment of project contribution to each MDG Goal  Projects with negative impact on an MDG Goal not eligible for MDG Carbon  Eligible projects can be scored & ranked based on their MDG contribution

7 UNDP MDG Carbon Facility 7 Overview of assessment (cont.) Potential projects Safeguard principles MDG assessment compliant Not compliant Negative impact Positive impact Ineligible projects Higher MDG contribution Lower MDG contribution

8 UNDP MDG Carbon Facility 8 Component 1: Safeguard Principles  Avoid ‘negative impacts’  Eliminate projects ineligible for UNDP cooperation  Ensure transparency and rigor in project selection  Increase credibility of the MDG Carbon Facility Objectives Sources  International conventions on human rights, labor standards, environmental protection and corruption  Ten Principles of the UN’s Global Compact  World Bank Environmental and Social Safeguard Policies  IFC Environmental and Social Standards  IFC Equator Principles Background  Component 1 of MDG assessment tool

9 UNDP MDG Carbon Facility 9 Component 1: Safeguard Principles (cont.) Application  Contractual agreement  Signed by the representative of the project  Subject to independent verification  (details to be determined & finalised with UNDP legal) Non - compliance  UNDP will terminate the contract or any other form of collaboration with the project  UNDP will consider public announcement of the withdrawal

10 UNDP MDG Carbon Facility 10 Component 1: Safeguard Principles (cont.) Human rights Principle 1: The project respects internationally proclaimed human rights Principle 2: The project is not complicit in human rights abuses Principle 3: The project respects dignity, human rights, cultural property and uniqueness of indigenous peoples Principle 4: The project does not involve involuntary resettlement Labor Standards Principle 5: The project respects the employees´ freedom of association and right to collective bargaining Principle 6: The project does not involve any form of forced or compulsory labor Principle 7: The project does not employ any form of child labor Principle 8: The project does not involve any discrimination based on gender, race, religion or sexual orientation Principle 9: The project provides workers with a safe and healthy work environment The principles

11 UNDP MDG Carbon Facility 11 Component 1: Safeguard Principles (cont.) Environment Principle 10: The project takes a precautionary approach in regard to environmental challenges Principle 11: The project does not involve significant conversion or degradation of critical natural habitats, including those that are: (a) legally protected (b) officially proposed for protection (c) identified by authoritative sources for their high conservation value (d) recognized as protected by traditional local communities Anti-corruption Principle 12: The project does not involve corruption at any level Cultural heritage Principle 13: The project does not involve the alteration, damage or removal of any critical cultural heritage The principles (cont.)

12 UNDP MDG Carbon Facility 12 Component 2: MDG assessment The MDG assessment is conducted in several steps: Score target 1 Score target 2 Score target … Score target 11 1) Quantify the impact on each target 2) Justify impact assessment 3)Sum target scores up to obtain goal score 4) Weight goal score with country specific weighting 5) Obtain weighted overall MDG score 6) Weight with HDI 7) Obtain final MDG score Justification target 1 Justification target 2 Justification target … Justification target Score MDG 1 Score MDG … Score MDG 7 Country-specific weighting Weighted overall MDG score HDI weighting Final MDG score

13 UNDP MDG Carbon Facility 13 Component 2: MDG assessment (cont.) Step 1: Quantify the impact on each target  The project’s impact on the target is quantified with pre-defined indicators  The quantification is based on the number of people impacted  Example: ‘number of children vaccinated against measles’ Step 2: Justify impact assessment  Positive and negative impacts on the target are described  The choice of indicator (if applicable) is justified  Monitoring of impacts is described Step 3: Sum target scores up to obtain goal score  If several targets under one goal (i.e. goals 1, 6 and 7), target scores are summed to obtain the score for the goal

14 UNDP MDG Carbon Facility 14 Component 2: MDG assessment (cont.) Step 4: Weight goal score with country specific weighting  Goal scores are weighted differently based on prioritization of MDG in the country  Weights set at national, regional or local level  Project proponents have to adopt weights set for the particular project location Step 5: Obtain weighted overall MDG score  Weighted goal scores are summed to obtain overall MDG score Step 6: Weight with HDI  The score is weighted with the Human Development Index of the project’s country location Step 7: Obtain final MDG score  The final MDG score for the project is obtained

15 UNDP MDG Carbon Facility 15 Goal Weightings Goal weighting

16 UNDP MDG Carbon Facility 16 Overview of assessment procedure The MDG assessment procedure is build in parallel to the CDM procedure: PIN (Project Idea Note) PIN screening for CDM eligibility & reasonableness PIN screening for initial assessment of MDG contribution (Part C in PIN) PDD (Project Design Document) MDG assessment Validation of PDD by DOE Quasi-validation of MDG assessment by stakeholder & CO/RBx/HO Stakeholder consultation process Project implementation

17 UNDP MDG Carbon Facility 17 Overview of assessment procedure (cont.) CDM monitoring report Verification by DOEVerification by DOE/CO/RBx/HO Issuance of CERs Project implementation MDG monitoring report Repeating over crediting period

18 UNDP MDG Carbon Facility 18 Roles of UNDP CO CO role in MDG assessment  Set goal weightings in accordance with PRSPs and national policy priorities  Conduct assessment in cooperation with Project Proponent  Check references on baseline information (e.g. literacy rate in country)  Oversee stakeholder consultation process  Participate in stakeholder consultation process, which is quasi-validation of project MDG assessment  Ensure comparability among MDG Carbon projects within the country by checking on consistent assessment (e.g. all projects use same poverty line etc.)

19 UNDP MDG Carbon Facility 19 Roles of UNDP RBx/HO RBx/HO role in MDG assessment  Development of standardized MDG assessment tool, procedures etc  Development of guidance on MDG assessment  High-level validation & verification to ensure comparability among projects from different regions  Assistance as required