Updating our Provisional Ratings scale to make uncertainty easier to uncover

We’ve updated our Provisional Ratings scale to match our AAA-D scale to provide greater transparency and create clarity around where the uncertainty lies.‍

Without a full view of the risks and uncertainties involved with a project, it’s not possible for investors and stakeholders to be wholly confident that they’re making the best investment decisions to advance your strategy. Our Provisional Ratings make it clear what we know and what we don't know about a project, so that our customers can consider all of the factors in their decision making – not just a portion of the picture. 

For investors and stakeholders seeking to purchase high-quality carbon credits, the challenge often lies in the scarcity of quality data and the prevalence of uncertainty. Our commitment to providing thorough assessments of carbon projects hinges on access to a diverse array of data, ranging from earth observation data to project developers’ monitoring reports. However, access to robust data in this new and emerging market is not always a given. 

To make informed investment decisions, it’s critical carbon market participants know where there is certainty and what’s not yet clear. Provisional Ratings serve as data-driven estimates, offering insights into the potential quality of carbon credit projects even when a full dataset is unavailable. Provisional Ratings provide a risk-balanced view into the project's quality while we pursue access to the holistic dataset necessary to provide a complete assessment

‍Probable Ranges: How We Produce a Provisional Rating

Provisional Ratings are all about the level of uncertainty associated with assigning a project Rating. If the uncertainty arising from the missing information spans more than one Rating grade, we assign a Provisional Rating. 

We leverage our proprietary ratings methodologies and data, along with third party data, to constrain the range of quality of a project but in some cases we lack all of the information required to produce a complete Rating for the specific project in question. In these instances, we calculate a probable rating range based on the available data combined with what we’ve seen from past ratings we’ve produced for a given project type. This helps ensure consistency in how these ratings are formulated and applied so participants can easily compare and understand relative risk associated with the missing information. 

To develop this range, we consider: 

• The highest probable rating based on known limiting factors, such as the additionality of the project’s activities; and 
• The lowest probable rating derived from the likely risk associated with incomplete information, such as no shapefiles being available or digitizable to independently assess the project’s reporting and carbon accounting. 

Provisional Ratings and Complete Ratings: Key Differences and Reassessment‍

The Provisional Ratings assess carbon credits based on the best information available to date and considering the risk and probable impact of the missing information. When new data is available and if it satisfies all of our rigorous analysis criteria, Sylvera will reassess the project and issue a complete rating.

A Rating may be Provisional primarily because of incomplete data disclosures, technical limitations, or the project’s pre-issuance status. The Provisional Ratings are derived from a holistic analysis of the same key factors used in the complete ratings, this includes measurements of a project's carbon impact, accuracy of reporting, additionality, permanence, and co-benefits to local communities and the environment. These factors form the core pillars of every rating, ensuring a comprehensive evaluation regardless of the project type.

‍A Refined Approach for Actionable Insights‍

Provisional Ratings are aligned to our complete Rating scale, spanning from AAA to D. This shift ensures that Provisional Ratings provide a consistent representation of a project's quality using the same scale as the complete ratings, making it easier to interpret and act on our assessments. Marked with a 'p' prefix in text, these ratings represent Sylvera's best estimate of a project's quality amid existing uncertainties.

To provide you with a more comprehensive understanding, we include additional details on the project pages, such as: 

• Context on why each Provisional Rating is assigned, 
• The probable rating range; and 
• Actions we’re taking to either provide a complete rating or improve the rating to the upper bound in the probable range.

In addition, Provisional Ratings can be categorized into tiers, aligned to our complete rating tiers, to provide a clearer understanding of associated risks:

• Tier 1: There is little risk that the claims of a project are overstated based on the data available. 
• Tier 2: Claims may be overstated and ‌buyers should analyze the project in detail while taking the risks into consideration when making a purchase decision based on the data available. 
• Tier 3: High likelihood of overstatement based on available data.

These tiers offer users a simplified perspective on the reliability of a project's claims, allowing for more informed decision-making.

Case Study: TIST KENYA VCS 004 (VCS597)

TIST Kenya VCS 004 is a 30-year ARR project in Kenya to establish agroforestry systems consisting mostly of non-native silky oak and eucalyptus trees and numerous native trees on smallholder farms previously utilized for subsistence farming. In our assessment of the project, we uncovered a high uncertainty associated with the project boundaries and there are technical limitations in highly accurate detection of forest growth and/or loss in smallholder planting. As a result, the determination of the Carbon Score for this project carries a level of uncertainty that could result in it spanning more than one rating, so we assigned a Provisional Rating to the project. 

The Provisional Rating assigned to the project is pA, with a probable range of AA–BBB. The high likelihood of the additionality of the project’s activities and relatively low non-permanence risk drive the upper bound (AA), assuming that the project carbon reporting is highly accurate. However, we’ve identified a real risk that the project carbon reporting has some inaccuracies, driving the lower bound (BBB) of the rating range. Based on the sample of projects that Sylvera has already rated, we estimate there’s minimal inaccuracy, resulting in a pA rating.

Visit the Sylvera app to explore our Provisional Ratings and see how they can help simplify decision making along your carbon journey.