This method permits firms to report emissions reductions or renewable vitality purchases even when the bodily move of supplies or vitality does not immediately correspond to the reported attribute. For instance, an organization may buy renewable vitality certificates (RECs) related to a wind farm in a special location to offset its electrical energy consumption from a non-renewable supply. This separation between the bodily move and the environmental attribute is central to its operate.
Decoupling bodily supply from environmental attributes presents flexibility and expands market entry to sustainable practices. It will probably facilitate funding in renewable vitality initiatives by broadening the pool of potential consumers and streamlining transactions. Traditionally, this mechanism has performed a significant position within the development of assorted environmental commodity markets, enabling participation from entities that may in any other case lack direct entry to particular initiatives or applied sciences. This broadened participation can drive higher funding and speed up the transition to a extra sustainable future.
This text will additional discover the mechanics, purposes, and implications of this precious software, inspecting particular examples and addressing potential challenges.
1. Monitoring
Sturdy monitoring mechanisms are elementary to the integrity and effectiveness of those methods. A transparent chain of custody for environmental attributes, akin to renewable vitality certificates or carbon offsets, is crucial. This monitoring ensures that claims are substantiated by precise technology or discount of the underlying commodity and prevents double counting or fraudulent actions. With out meticulous monitoring, the system’s credibility is undermined, doubtlessly jeopardizing market confidence and hindering the achievement of sustainability targets. Take into account a state of affairs the place an organization claims to make use of renewable vitality based mostly on bought certificates. Monitoring ensures that these certificates correspond to distinctive and verifiable renewable vitality technology, stopping their resale or duplicate use. This transparency is essential for accountability and builds belief within the system.
A number of methodologies facilitate this important monitoring operate. Digital platforms, registries, and serial quantity methods are generally employed to report the creation, switch, and retirement of environmental attributes. These applied sciences present an auditable path, enhancing transparency and enabling verification of claims. As an illustration, a blockchain-based registry might report each transaction involving a renewable vitality certificates, offering an immutable report of its possession historical past. Such methods contribute to market effectivity by streamlining transactions and minimizing the chance of errors or fraud. The choice of applicable monitoring strategies is dependent upon the precise traits of the environmental commodity and the market’s regulatory framework.
In conclusion, efficient monitoring is indispensable for making certain the credibility and performance of those methods. It types the spine of a clear and accountable marketplace for environmental attributes, selling belief amongst individuals and supporting the transition to extra sustainable practices. Challenges stay in harmonizing monitoring methods throughout completely different markets and commodities, however ongoing efforts to develop standardized approaches maintain promise for additional strengthening the integrity and affect of those essential mechanisms.
2. Transferability
Transferability is a defining attribute of those methods, enabling the decoupling of bodily materials or vitality flows from the related environmental attributes. This separation permits these attributes, typically represented by certificates or credit, to be traded independently, facilitating market entry and selling funding in sustainable practices. With out transferability, the advantages of those methods could be severely restricted, proscribing participation to entities with direct entry to particular initiatives or applied sciences. The flexibility to switch these attributes expands market attain and permits a wider vary of actors to take part in and profit from sustainable initiatives.
Take into account a company looking for to cut back its carbon footprint. With out transferability, the corporate could be restricted to immediately investing in emissions discount initiatives inside its personal operations. Nonetheless, by means of a system permitting the switch of carbon offsets, the company should buy credit representing emissions reductions achieved elsewhere, maybe supporting a reforestation venture or a renewable vitality set up in a special area. This flexibility not solely broadens the vary of obtainable offsetting choices but additionally permits firms to help initiatives with doubtlessly increased environmental affect or cost-effectiveness. The transferability of attributes thus unlocks higher effectivity in reaching sustainability targets.
Environment friendly switch mechanisms are essential for realizing the total potential of those methods. Clear guidelines and procedures governing possession switch, together with strong monitoring and verification methods, are important for sustaining market integrity and stopping fraud. Standardized contracts and digital platforms can streamline transactions and scale back administrative burdens, additional enhancing market liquidity and accessibility. Nonetheless, navigating numerous regulatory landscapes and making certain interoperability between completely different methods stay ongoing challenges. Addressing these challenges by means of harmonization and standardization efforts will probably be crucial for maximizing the effectiveness and affect of those methods in selling a extra sustainable future.
3. Transparency
Transparency is paramount for the credibility and effectiveness of those methods. With out clear visibility into the technology, monitoring, and retirement of environmental attributes, the system’s integrity is compromised, doubtlessly resulting in double counting, fraudulent claims, and diminished market confidence. Open entry to info relating to the origin, possession, and supreme use of those attributes is essential for making certain accountability and constructing belief amongst market individuals.
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Information Accessibility
Publicly accessible information on the technology and switch of environmental attributes is essential for transparency. This information ought to embody info on the supply of the attribute (e.g., particular renewable vitality venture, emissions discount exercise), the dates of technology and switch, and the entity holding the attribute at any given time. Accessible information permits unbiased verification of claims and promotes market integrity. For instance, a registry of renewable vitality certificates ought to present detailed details about every certificates, together with its technology date, related energy plant, and present proprietor. This available info permits stakeholders to trace the certificates and confirm their validity.
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Audit Trails
Complete audit trails are important for monitoring the lifecycle of environmental attributes. These trails ought to doc each step within the course of, from the preliminary technology of the attribute to its closing retirement or use. Detailed data of possession transfers, cancellations, and different related actions present a transparent and verifiable historical past, enabling scrutiny and stopping manipulation. Take into account a carbon offset generated from a forestry venture. A clear audit path would doc the venture’s validation, the issuance of offsets, every subsequent switch of possession, and the ultimate retirement of the offset when used to compensate for emissions. This documented historical past enhances accountability and strengthens market confidence.
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Verification and Certification
Impartial third-party verification and certification play a vital position in making certain the validity and credibility of environmental attributes. Impartial auditors can confirm the accuracy of reported information, the integrity of monitoring methods, and the adherence to related requirements. Certification schemes present a standardized framework for assessing the standard and environmental integrity of initiatives producing these attributes. As an illustration, a renewable vitality certificates is perhaps verified by an unbiased auditor to substantiate that the underlying electrical energy technology meets particular standards for renewable sourcing. This unbiased validation reinforces the worth and trustworthiness of the certificates.
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Disclosure Necessities
Clear and constant disclosure necessities are important for selling transparency and knowledgeable decision-making. Firms and organizations utilizing environmental attributes needs to be required to reveal details about the kind and amount of attributes used, their supply, and the way they’re utilized to fulfill sustainability targets. Standardized reporting frameworks can facilitate comparability and benchmarking, enhancing accountability and driving steady enchancment. For instance, an organization claiming carbon neutrality ought to disclose the categories and sources of carbon offsets used to compensate for its emissions, offering transparency and enabling stakeholders to evaluate the credibility of the declare.
These aspects of transparency are interconnected and mutually reinforcing, contributing to the general integrity and effectiveness of those methods. By selling openness and accountability, transparency fosters belief amongst market individuals, encourages wider adoption of sustainable practices, and helps the transition to a extra environmentally accountable economic system.
4. Verification
Verification is a crucial element of those methods, making certain the integrity and credibility of environmental claims. With out strong verification processes, the system’s effectiveness is undermined, doubtlessly resulting in false claims, double counting, and a lack of market confidence. Verification offers assurance that environmental attributes, akin to renewable vitality certificates or carbon offsets, characterize real and quantifiable environmental advantages.
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Impartial Auditing
Impartial third-party auditing is essential for verifying the accuracy and completeness of information underpinning environmental claims. Auditors assess the processes used to generate, observe, and retire environmental attributes, making certain compliance with related requirements and methodologies. As an illustration, an auditor may evaluate the documentation and procedures of a renewable vitality venture to substantiate that the generated electrical energy meets the factors for renewable vitality certificates (RECs). This unbiased scrutiny enhances the credibility of RECs and fosters belief available in the market.
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Information Integrity Checks
Information integrity checks are important for stopping errors, omissions, and fraudulent actions. These checks contain evaluating information from a number of sources, validating calculations, and figuring out inconsistencies. For instance, in a carbon offsetting venture, information integrity checks may contain evaluating reported emissions reductions with independently verified information from monitoring tools. These checks make sure the accuracy of the claimed reductions and stop overestimation or manipulation of information.
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Compliance with Requirements
Adherence to acknowledged requirements and protocols is essential for making certain the standard and comparability of environmental attributes. Requirements present a framework for outlining the traits of eligible initiatives, methodologies for quantifying environmental advantages, and procedures for monitoring and verifying attributes. As an illustration, compliance with a acknowledged carbon offsetting customary offers assurance that the offset represents a real and quantifiable discount in greenhouse fuel emissions. This adherence to requirements facilitates market transparency and permits knowledgeable decision-making.
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Chain of Custody Audits
Chain of custody audits give attention to verifying the entire and clear monitoring of environmental attributes all through their lifecycle. These audits hint the possession and switch of attributes from their level of origin to their closing retirement, making certain that there are not any gaps or inconsistencies within the chain of custody. For instance, within the case of RECs, a sequence of custody audit would observe the possession of every certificates from its technology by a renewable vitality facility to its eventual retirement by a shopper. This complete monitoring prevents double counting and ensures that every REC corresponds to a novel unit of renewable vitality.
These interconnected verification processes contribute to the general robustness and reliability of those methods. By offering assurance of the validity and integrity of environmental claims, verification enhances market confidence, encourages broader participation, and helps the achievement of sustainability targets. Stringent verification is crucial for sustaining the integrity of those essential market mechanisms and fostering the transition to a extra sustainable future.
5. Market Entry
Market entry is intrinsically linked to the performance and effectiveness of those methods. By decoupling the bodily supply of a commodity from its related environmental attribute, these methods create a tradable marketplace for these attributes. This market mechanism considerably expands entry for each consumers and sellers, enabling participation from entities that may in any other case lack direct involvement. As an illustration, an organization with out the bodily infrastructure to hook up with a renewable vitality venture can nonetheless buy renewable vitality certificates (RECs), thereby claiming the environmental advantages of renewable vitality and supporting the renewable vitality market. Conversely, renewable vitality venture builders acquire entry to a wider pool of potential consumers, growing the marketability of their RECs and facilitating venture financing.
This enhanced market entry has a number of essential implications. Firstly, it drives higher funding in sustainable practices. By growing the demand for and liquidity of environmental attributes, these methods present monetary incentives for initiatives and applied sciences that generate these attributes. This could result in elevated funding in renewable vitality initiatives, carbon discount initiatives, and different sustainable practices. Secondly, expanded market entry facilitates the achievement of sustainability targets. By enabling organizations to buy environmental attributes from numerous sources, these methods provide flexibility in assembly sustainability targets, notably for entities with restricted choices for direct engagement in sustainable initiatives. For instance, an organization working in a area with restricted renewable vitality assets can nonetheless contribute to the worldwide transition to renewable vitality by buying RECs generated elsewhere. Lastly, this broadened participation fosters competitors and innovation inside the marketplace for environmental attributes, driving down prices and enhancing the effectivity of useful resource allocation. This aggressive panorama encourages the event of recent applied sciences and approaches for producing environmental attributes, additional accelerating the transition to a extra sustainable future.
In abstract, market entry is just not merely a byproduct of those methods; it’s a elementary element that drives their effectiveness in selling sustainable practices. By making a liquid and accessible marketplace for environmental attributes, these methods unlock higher funding, facilitate the achievement of sustainability targets, and foster innovation. Nonetheless, challenges stay in making certain equitable entry and stopping market distortions. Addressing these challenges by means of cautious market design and strong regulatory oversight is essential for maximizing the advantages of those methods and making certain their contribution to a extra sustainable future.
6. Declare Validity
Declare validity is prime to the integrity and effectiveness of e book and declare methods. These methods depend on the peace of mind that bought environmental attributes characterize real and quantifiable environmental advantages. With out strong mechanisms to ascertain declare validity, the system’s credibility is undermined, doubtlessly resulting in greenwashing, market distortions, and a lack of public belief. A legitimate declare signifies that the declared environmental profit, akin to a discount in greenhouse fuel emissions or the technology of renewable vitality, has really occurred and is attributable to the precise motion or venture related to the declare.
A number of components contribute to establishing declare validity. Rigorous monitoring and verification processes are important for making certain that environmental attributes are precisely accounted for and can’t be double-counted. Clear requirements and methodologies for quantifying environmental advantages are essential for making certain consistency and comparability throughout completely different initiatives and attributes. For instance, a carbon offset declare’s validity is dependent upon the verification of the underlying emissions discount venture, making certain it meets established requirements for additionality, permanence, and correct quantification. Equally, the validity of a renewable vitality certificates (REC) declare depends on verification that the related electrical energy technology genuinely got here from a renewable supply and that the REC has not been beforehand claimed or retired. With out these validation steps, claims turn out to be unsubstantiated, eroding the integrity of your complete system.
Sustaining declare validity requires ongoing monitoring and enforcement. Common audits and information integrity checks are important for detecting and stopping fraudulent actions or errors. Clear reporting and disclosure necessities allow stakeholders to scrutinize claims and maintain actors accountable. Moreover, strong authorized frameworks and enforcement mechanisms are obligatory to discourage false claims and preserve market integrity. The results of invalid claims might be vital, starting from reputational injury to monetary penalties and authorized liabilities. Subsequently, making certain declare validity is just not merely a technical consideration however a vital moral and authorized crucial for the long-term success and credibility of e book and declare methods. These methods play a significant position in driving sustainable practices and reaching environmental targets, and their effectiveness hinges on the unwavering validity of the claims they help.
7. Environmental Integrity
Environmental integrity is a cornerstone of credible and efficient e book and declare methods. These methods, designed to trace and switch environmental attributes, should uphold rigorous requirements to make sure they genuinely contribute to environmental safety and keep away from unintended detrimental penalties. With out environmental integrity, such methods danger turning into instruments for greenwashing reasonably than drivers of significant change. This dialogue explores key aspects of environmental integrity throughout the context of those methods.
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Additionality
Additionality addresses whether or not an environmental profit, akin to carbon emissions reductions or renewable vitality technology, would have occurred with out the precise venture or exercise related to the declare. A venture is taken into account extra provided that it goes past business-as-usual practices and wouldn’t have occurred with out the inducement supplied by the e book and declare system. As an illustration, a renewable vitality venture financed solely as a result of availability of tradable renewable vitality certificates (RECs) demonstrates additionality. Lack of additionality compromises environmental integrity, because it represents a claimed profit that might have occurred anyway, leading to no web environmental acquire.
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Permanence
Permanence refers back to the sturdiness of an environmental profit. For instance, in carbon offsetting initiatives, permanence ensures that sequestered carbon stays saved for a major period. A reforestation venture that dangers future deforestation resulting from weak land tenure safety lacks permanence. Equally, renewable vitality technology inherently possesses permanence, because the electrical energy generated displaces fossil fuel-based technology on the time of manufacturing. Making certain permanence is essential for sustaining the long-term environmental integrity of those methods and stopping the reversal of claimed advantages.
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Leakage
Leakage refers back to the unintended displacement of environmental impacts from one location or sector to a different. As an illustration, a venture geared toward decreasing deforestation in a single space may inadvertently shift logging actions to a special area. Equally, insurance policies selling biofuel manufacturing might not directly result in elevated deforestation for agricultural growth. Minimizing leakage is essential for making certain that e book and declare methods obtain their meant environmental outcomes and don’t merely shift the issue elsewhere. Sturdy monitoring and accounting mechanisms are important for figuring out and mitigating potential leakage results.
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No Double Counting
Stopping double counting is paramount for sustaining environmental integrity. Double counting happens when the identical environmental profit is claimed by a number of events. For instance, if a single renewable vitality venture generates RECs which might be offered to a number of consumers, just one purchaser can legitimately declare the related renewable vitality technology. Sturdy monitoring and retirement mechanisms are important for stopping double counting and making certain that every environmental attribute is uniquely assigned and claimed. Clear registries and chain-of-custody documentation assist to ascertain clear possession and stop the duplicate use of environmental attributes, making certain that claimed advantages correspond to precise environmental enhancements.
These aspects of environmental integrity are interconnected and important for making certain that e book and declare methods genuinely contribute to environmental progress. With out cautious consideration of additionality, permanence, leakage, and the prevention of double counting, these methods danger undermining their very own goals and eroding public belief. Sustaining environmental integrity is just not merely a technical matter however a elementary moral requirement for making certain that these methods function efficient instruments for reaching real and lasting environmental enhancements.
8. Standardization
Standardization performs a vital position within the effectiveness and widespread adoption of e book and declare methods. These methods, which facilitate the switch of environmental attributes, depend on standardized frameworks to make sure transparency, comparability, and belief. With out standardization, the marketplace for environmental attributes dangers fragmentation, inefficiency, and potential for fraud. Standardized standards for attribute technology, monitoring, and verification set up a standard language and algorithm, enabling market individuals to confidently commerce and make the most of these attributes. Take into account the marketplace for renewable vitality certificates (RECs). Standardized definitions of what constitutes a REC, how it’s generated, and the way its possession is tracked be sure that RECs from completely different sources might be in contrast and traded seamlessly. This standardization fosters market liquidity and encourages broader participation from consumers and sellers.
Standardization fosters interoperability amongst completely different e book and declare methods. Within the absence of frequent requirements, methods developed independently could also be incompatible, hindering the switch of attributes throughout platforms or jurisdictions. This lack of interoperability can restrict market entry and stop the environment friendly allocation of environmental advantages. For instance, standardized protocols for monitoring carbon offsets allow the switch of offsets between completely different registries or platforms, facilitating worldwide carbon markets and enabling broader participation in emissions discount efforts. Standardization additionally simplifies the method of verification and validation. By establishing clear standards and procedures, standardization streamlines the work of third-party auditors and certifiers, decreasing transaction prices and growing market effectivity. This streamlined course of enhances transparency and builds confidence within the integrity of environmental claims.
In conclusion, standardization is just not merely a technical element however a elementary pillar supporting the integrity and scalability of e book and declare methods. Standardized frameworks guarantee transparency, facilitate market entry, and promote belief amongst individuals. These components are important for driving funding in sustainable practices and reaching environmental targets. Whereas challenges stay in harmonizing requirements throughout completely different sectors and jurisdictions, ongoing efforts towards standardization are essential for unlocking the total potential of those methods and fostering the transition to a extra sustainable future. The absence of standardization dangers fragmentation and inefficiency, hindering the expansion and affect of those precious market mechanisms. By selling standardization, stakeholders can contribute to the event of sturdy and credible e book and declare methods that successfully drive environmental progress.
Regularly Requested Questions
This part addresses frequent inquiries relating to these methods, aiming to offer clear and concise info.
Query 1: How do these methods differ from bodily supply of commodities?
These methods decouple the environmental attribute of a commodity from its bodily type. Whereas bodily supply entails the switch of the particular materials (e.g., renewable vitality delivered by way of energy strains), these methods enable the switch of the environmental profit (e.g., a renewable vitality certificates) individually. This separation permits higher flexibility and market entry.
Query 2: What are some examples of environmental attributes traded in these methods?
Examples embody renewable vitality certificates (RECs), carbon offsets, and sustainable biomass certificates. These attributes characterize particular environmental advantages related to the manufacturing or consumption of a commodity.
Query 3: How is double counting prevented?
Sturdy monitoring methods, typically involving registries or digital platforms, are essential for stopping double counting. These methods report the technology, switch, and retirement of every environmental attribute, making certain that every attribute is claimed solely as soon as.
Query 4: What position does verification play in making certain the credibility of those methods?
Impartial third-party verification is crucial. Verification audits assess the processes used to generate and observe environmental attributes, making certain they meet established requirements and characterize real environmental advantages. This oversight builds belief and market integrity.
Query 5: How can one make sure the environmental integrity of a claimed attribute?
Key issues embody additionality (making certain the claimed profit wouldn’t have occurred in any other case), permanence (the long-term sturdiness of the profit), and avoidance of leakage (unintended displacement of environmental impacts). Rigorous requirements and verification processes deal with these considerations.
Query 6: What are the potential challenges related to these methods?
Challenges embody making certain strong verification and standardization, stopping fraud, and addressing potential market distortions. Ongoing efforts give attention to refining these methods to maximise their effectiveness and environmental integrity.
Understanding these key features is essential for successfully using these methods to realize sustainability goals.
For additional info on particular purposes and case research, proceed to the following part.
Sensible Steering for Using E book and Declare Methods
This part presents sensible steerage for entities excited about using these methods to realize sustainability goals. The next ideas present insights into efficient implementation and deal with potential challenges.
Tip 1: Perceive Relevant Requirements.
Familiarization with related requirements and certification schemes is essential. Completely different markets and environmental commodities could have particular necessities for attribute technology, monitoring, and verification. Understanding these requirements ensures compliance and facilitates credible claims.
Tip 2: Conduct Thorough Due Diligence.
Earlier than buying environmental attributes, conduct thorough due diligence on the venture or supply producing the attributes. This analysis ought to embody verifying the venture’s additionality, permanence, and adherence to related requirements. Due diligence mitigates the chance of buying invalid or low-quality attributes.
Tip 3: Prioritize Transparency.
Transparency is crucial for constructing belief and making certain accountability. Clearly disclose the kind, supply, and amount of environmental attributes used to fulfill sustainability targets. Clear reporting enhances credibility and demonstrates dedication to environmental integrity.
Tip 4: Select Respected Suppliers.
Choose suppliers with a confirmed observe report of producing and managing high-quality environmental attributes. Search for suppliers who adhere to acknowledged requirements, preserve strong monitoring methods, and endure unbiased third-party verification.
Tip 5: Combine with Present Sustainability Methods.
These methods ought to complement, not change, direct efforts to cut back environmental impacts. Combine using environmental attributes with broader sustainability methods, specializing in steady enchancment and direct emissions reductions.
Tip 6: Monitor Market Developments.
The marketplace for environmental attributes is consistently evolving. Keep knowledgeable about modifications in rules, requirements, and market dynamics. Monitoring these developments ensures knowledgeable decision-making and permits organizations to adapt their methods as wanted.
Tip 7: Take into account Lifecycle Impacts.
Consider the total lifecycle impacts of the commodities and processes related to the environmental attributes. Take into account components such because the embodied carbon emissions related to renewable vitality applied sciences or the potential for land use change impacts from biofuel manufacturing. A holistic lifecycle perspective ensures that environmental advantages are usually not offset by unintended penalties.
By adhering to those sensible tips, organizations can successfully leverage the advantages of those methods whereas upholding environmental integrity and contributing to a extra sustainable future. The following pointers present a basis for navigating the complexities of those markets and making knowledgeable selections aligned with broader sustainability goals.
The concluding part will summarize the important thing takeaways of this text and provide views on the long run improvement of those methods.
Conclusion
E book and declare methods provide a robust mechanism for decoupling environmental attributes from bodily commodities, enabling market-based approaches to sustainability. This text explored the core parts of those methods, together with monitoring, transferability, transparency, verification, market entry, declare validity, environmental integrity, and standardization. Every aspect is essential for making certain the credibility and effectiveness of those methods in driving actual environmental progress. Sturdy monitoring and verification mechanisms, coupled with clear information administration, are important for stopping fraud and sustaining market integrity. Moreover, adherence to rigorous requirements and rules of environmental integrity ensures that claimed advantages characterize real and lasting enhancements.
The way forward for e book and declare methods hinges on continued refinement and adaptation. Addressing challenges akin to making certain equitable market entry, harmonizing requirements throughout numerous sectors, and strengthening verification processes will probably be essential for maximizing their affect. As the worldwide pursuit of sustainability intensifies, e book and declare methods provide a precious software for driving innovation, mobilizing funding, and accelerating the transition to a extra sustainable future. Additional analysis and improvement, coupled with strong coverage frameworks, will probably be important for realizing the total potential of those methods and making certain their contribution to a extra environmentally accountable economic system.
