The CPR Verde and ESG compliance need to go hand in hand to enable the voluntary carbon market in Brazil. Recently, the Federal Government launched a new market mechanism, CPR Verde, which regulates the generation and sale of voluntary carbon credits, which, added to command and control, advances in the objective of curbing illegal deforestation in Brazil. However, in order not to lose credibility, this mechanism needs a very robust compliance system, or it will lose credibility with the market.
What is CPR Verde
In our previous article, we explained what the Green Rural Product Certificate (CPR) is, a mechanism that, instead of paying for production, will pay for the maintenance of the forest that exists within the rural property. CPR Verde is a step towards the regularization of Payment for Environmental Services (PES) here in Brazil.
It is necessary for the rural producer (or owner of a forest area) to make an estimate (quantitatively) of the area’s carbon stock, preparing a protection project or one that “guarantees” the maintenance of stocks in the area. It’s a complex topic and needs a specialized technical service for it (like the one offered by HDOM). Afterwards, a third audit is required to validate the data and, finally, register with B3 and sell itself. It is not a simple rite, but a necessary one for the process to comply.
CPR Verde and ESG compliance
Like any PES mechanism, it is very important that there is a way to deliver trust and transparency to the market. It is at this point that eumostro helps in the process, as it manages to connect different actors that participate in the process (farmers, consulting companies, auditors, etc.), recording, organizing and presenting information in a transparent manner.
The blockchain as a trust protocol
The blockchain is an important technology that connects CPR Verde and ESG compliance, as it guarantees important points in the process:
- Data immutability: as the blockchain involves encryption and decentralized storage, it is almost impossible for users to change data without being detected by the validation system;
- Confidentiality: the confidentiality of project-sensitive information is often critical, and consortium (federated) blockchain networks allow different companies to share information securely and confidentially;
- Non-repudiation: when information is sent by a member of the value chain (a supplier, for example) he has no way of “saying” that “it wasn’t me”, that is, the recipient of the information is “sure” of who sent the information (source) bringing more conformity to the process;
- Authentication: the blockchain allows the customer-supplier (channel) to use a set of public and private cryptographic keys that authenticate the process, that is, when a service related to the carbon credit process is authenticated by the supplier, it is valid (as was an electronic signature).
Eumostro eumostro used the Hyperledger Fabric framework to create a federative blockchain network where CPR Verde project participants participate and, with service confirmations, deliver the ESG compliance that the environmental asset (voluntary carbon credit) needs to be assured.
The positive impact of a CPR Verde
Showing the positive impact of a CPR Verde is challenging. An environmental asset is intangible and, often, those who are buying do not understand very well what they are investing in. When you share the impact in a “pulverized” way, that is, in posts on LinkedIn, Instagram, Webpage etc., they are perceived in a “disjointed” way by your consumer (and buyer) and, often, you do not understand the real value of your project.
With eumostro you organize and show all the positive impact of your project with the ESG assurance it needs. It develops indicators and shows, in a simple and clear way, the quantified impact. In the qualitative (or subjective) question, you show through photos the stories behind the asset.
Finally, the assurance delivered by the connection with suppliers (digitally), enhanced by blockchain technology, deliver more security to the asset being traded. CPR Verde and ESG compliance must go hand in hand and the technology allows the asset purchase experience to be better, safer and to maximize the impact created by the project.