CDM Accreditation Standard for Operational Entities

EB 46 introduced a CDM Accreditation Standard for Operational Entities, revised by Annex 2 to EB 48 and Annex 1 to EB 56. The purpose of the accreditation standard is to facilitate and promote common understanding and consistent implementation of the CDM accreditation requirements by providing users with a compilation of all the CDM accreditation requirements in a single document.

The CDM accreditation standards described in Appendix A to Decision 3/CMP.1 (CDM M&P) specify the requirements applicable to AEs and DOEs. An AE/DOE shall also comply with the requirements described in other sections of the CDM M&P and in the decisions and/or clarifications issued by COP/MOP and the CDM EB (EB 56, Annex 1, part II).

The latest version of the accreditation standard (version 2) does not come into effect until 17 March 2011 (EB 56, paragraph 12).

The accreditation standard covers the following areas:

Legal issues;
Human resources and competence;
Liability and finance;
Process requirements;
Information management;
AE's/DOE's organisation;
Quality management system;
Handling complaints;
Pending judicial process;
Safeguarding impartiality; and
Confidentiality management.

Legal issues

An AE/DOE must be a legal entity under applicable national and/or international law so that it can function legally, enter into contracts, make decisions independently and be sued for failure to perform its contractual obligations.

The requirements with reference to various situations that may arise are as specified:

The accreditation shall be granted to a legal entity irrespective of whether the entire organization or a part of it performs the validation/verification functions;

The accreditation shall be confined to the CDM functions, scopes and site assessed by the CDM-AT as identified by an AE/DOE in its organisational structure and as indicated in its completed application for accreditation form;

Even if the validation and/or verification/certification functions are carried out only by a part of a legal entity, the CDM-AT shall examine all other activities of the legal entity that might affect its CDM operations, in particular, for potential conflicts of interest, independence and impartiality.

The central office of the DOE shall assume full responsibility for decision-making regarding validation, verification and certification, as well as quality assurance and control.

Other functions may be allocated to its sites other than its central office, if the central office of the DOE decides to do so in accordance with the Annex A (EB 56, Annex 1, Part III).

Human resources and competence

An AE/DOE shall have a system in place to determine necessary resources in order to meet the CDM accreditation requirements related to validation and/or verification/certification functions that the AE/DOE undertakes.

An AE/DOE must ensure that it has deployed sufficient resources relating to the type, range and volume of present and future estimated or planned workload. Resource sufficiency should be evaluated at least annually. The personnel carrying out validation and/or verification/certification functions must be under the supervision of a responsible senior executive of an AE/DOE (EB 56, Annex 1, Part IV.A).

Competence

The resources which are arranged by an AE/DOE must cover all activities related to its CDM functions, both at the management and validation/verification team level. For specific CDM technical and methodological aspects, an AE/DOE shall ensure availability of technical expertise.

The AE/DOE shall ensure that its management is competent to:

Analyse and determine the human resource requirements;

Evaluate and qualify the personnel;

Allocate the personnel;

Assess implications and conduct of contract reviews;

Select validation and/or verification/certification team members and independent technical review personnel; and verification of their competence;

Maintain competence level of validation and/or verification/certification personnel and arranging any necessary training;

Supervise implementation of validation and/or verification/certification procedures;

Decide on validation and/or verification/certification functions;

Manage all functions of AE's/DOE's including impartiality related activities; and

Implement overall quality management system (EB 56, Annex 1, paragraph 43).

An AE/DOE must ensure that an individual validator/verifier meets the following competence requirements:

The ability to apply the knowledge and understanding, gained through the education, work experience, auditor training and the CDM related work experience; and

The skills to perform validation and/or verification functions and apply the relevant auditing principles and procedures.

An AE/DOE must ensure that personnel involved in independent technical review have knowledge relevant to the specific sectoral scope and project activity which is being validated and/or verified/certified (EB 56, Annex 1, Part IV.B).

Management of human resource and competence

An AE/DOE must conduct and document an initial competence analysis in response to the evaluated needs for each technical area within the sectoral scopes in which it operates. This analysis will provide the basis for determining the specific competence requirements for management functions and the validation/verification team.

This competence analysis should cover these aspects:

General CDM;
Typical CDM project related;
Detailed technical;
Regulatory;
Specific methodological;
Technical verification; and
Financial (EB 56, Annex 1, Part IV.C).

Annex D to EB 56, Annex 1 describes the technical areas and identifies and establishes the requirements for the initial qualification of personnel in each technical area to ensure that members of a validation/verification team, including where applicable a technical expert, collectively have the necessary competence.

An AE/DOE shall ensure the competence of its personnel. An AE/DOE must demonstrate how its personnel have acquired the requisite competence, as determined through the competence analysis, before qualifying them for relevant functions. An AE/DOE must establish a system and resources for maintaining and updating competencies to keep up-to-date with new requirements, taking into account technological changes and changes in the CDM requirements.

An AE's/DOE's management shall have documented procedure for the following:

Ensuring satisfactory performance of all personnel involved in CDM activities on an ongoing basis.
Identifying training needs on a regular basis taking into account new technical and regulatory needs.
The selection of validation/verification team members, ensuring that the validation/verification team collectively has the required competencies in the technical, methodological and sectoral aspects of specific CDM project activities.
Qualification of the personnel involved in validation/verification functions for technical areas within the sectoral scopes.
Engaging individuals on a contract basis (validators, verifiers and/or technical experts) to fully comply with its policy and the quality management system.

The performance evaluation process should include three main steps:

Establishing the evaluation criteria (qualitative and/or quantitative);
Selecting the appropriate evaluation method; typical methods include review of validation/verification reports, on-site observation, interview and/or feedback from stakeholders; and
Conducting the evaluation.

An AE's/DOE's management shall establish, document and implement an appropriate system for the recruitment/deployment and training of personnel. An AE/DOE may subcontract another legal entity to provide specific technical expertise that shall supplement internal resources of the AE/DOE (EB 56, Annex 1, Part IV.C).

Liability and finance

An AE/DOE must demonstrate that it has the financial resources and stability that are required for its operations of CDM related activities through:

Evidence of financial resources including previous 3 years financial statements for companies existing for more than three years (balance sheets, profit and loss accounts, etc); or any other relevant evidence such as shareholders commitment for newly established companies; and

Business or work plan or equivalent financial plan for next three years (EB 56, Annex 1, paragraph 75).

An AE/DOE must have a documented procedure to continuously monitor its income and expenditure.

An AE/DOE must demonstrate that it has analysed, identified and evaluated the nature, scale and impact of all potential financial risks arising from its CDM related activities and has adequate arrangements to cover the identified financial risks, through liability insurance or financial resource reserves (EB 56, Annex 1, paragraphs 78-79).

Process requirements

An AE/DOE must establish, document, implement and maintain documented procedures for carrying out its validation and/or verification/certification functions competently, in line with requirements specified in the CDM modalities and procedures, the latest version of the CDM Validation and Verification Manual, and relevant decisions of the COP/MOP and the CDM EB (EB 56, Annex 1, paragraph 80).

Contract review

An AE/DOE shall have a documented procedure for inviting and reviewing requests for applications from authorized representatives of CDM project participants, designed to capture all the necessary information including complete details of the CDM project function that the CDM project participants would like the DOE to validate or verify/certify. Essential information to be included in the application documentation are:

The PDD that defines project boundaries and sites included in assessment, the nature of the data needed for validation/verification and the methodology used;

Information about the CDM PPs, the host Party and its DNA;

Information about persons or organizations engaged in identification, development, and consultancy and financing of the project activity;

Scope of the validation/verification; and

Contract period and the liability conditions (EB 56, Annex 1, paragraphs 81-82).

Regarding the review of a request for application, the DOE shall review the request for application and supplementary information before entering into a contract to ensure that requirements for validation/verification are understood and that the documentation is complete, accurate and verifiable. A contract may only be entered into if impartiality, competence, accreditation, and other considerations are fulfilled. The DOE shall have a documented procedure for contractual agreements with the project participant for the provision of validation and/or verification/certification functions (EB 56, Annex 1, paragraphs 83-84).

Selection of the team for validation/verification functions

An AE/DOE must have a documented procedure for determining the competencies needed in its audit team, based on the contract review and for validation/verification opinions and decisions. The validation/ verification team will be composed of a team leader and other validator/verifier and/or technical experts, as needed (EB 56, Annex 1, paragraphs 87-91).

Allocation of human resources for a specific validation/verification functions

An AE/DOE shall have a procedure for determining the human resources needed for the team to carry out a complete, effective validation/verification (EB 56, Annex 1, paragraph 92).

Planning and preparation for validation/verification functions

An AE/DOE must have a documented procedure for preparing a plan for validation/verification, identifying all the tasks required to be carried out in each type of project activity, the human resource needed for the team and identification of any specific sectoral and geographical aspects. The tasks given to each member of the validation/verification team should be clearly defined and communicated to the client, the CDM project participant (EB 56, Annex 1, paragraphs 94-95).

Information management

An AE/DOE must have a procedure for management of all information with respect to its validation and/or verification/certification processes. The following information is to be made available in the public domain, uploaded to an AE's/DOE's website:

A list of all CDM project activities for which it has carried out validation, verification and certification;

Information obtained from the CDM PPs marked as proprietary or confidential shall not be disclosed without the written consent of the provider of the information, except as required by national law. Information used to determine additionality as defined in paragraph 43 of Decision 3/CMP.1, to describe the baseline methodology and its application, and to support an environmental impact assessment referred to in paragraph 37 (c) of the same, shall not be considered proprietary or confidential and shall be made publicly available;

The PDD and the monitoring report obtained from the CDM PPs;

The validation and verification reports by the DOE;

The certification report by the DOE; and

All documented procedures related to provision of information on validation and verification services, the allocation of responsibilities within the AE/DOE and its procedures for complaints handling shall be made publicly available (EB 56, Annex 1, paragraphs 98-99).

The DOE shall submit an annual CDM activity report to the CDM EB. The organizational structure, names, qualifications, experience and terms of reference of senior management personnel, such as the senior executive, board members, senior officers, team leaders and other relevant personnel must be made available annually to the CDM secretariat (EB 48, Annex 2, paragraphs 90-91).

AE's/DOE's organization

An AE/DOE shall have an organisational structure to work in a credible, independent, non-discriminatory and transparent manner, complying with national law; and to safeguard impartiality, including provisions to ensure the impartiality of its operations.

The organisational structure shall be documented, showing duties, responsibilities and authorities of management personnel, validation, verification and certification personnel and others involved in CDM activities and any operational or supervisory committees, and any planned changes shall be notified in advance in accordance with the CDM accreditation procedure (EB 56, Annex 1, paragraphs 103-104).

An AE/DOE shall identify top management (individuals, a group of persons or a board or committee) having overall authority and responsibility for the various functions listed in EB 56, Annex 1, paragraph 105.

Quality management system

An AE/DOE must establish, document, implement and maintain a quality management system for ensuring and demonstrating consistent application of the CDM accreditation requirements, made available to the CDM secretariat. The top management of an AE/DOE shall demonstrate its commitment to developing and implementing a quality management system in accordance with the CDM accreditation and validation/verification requirements, and put measure in place for implementation of the policies.

The top management of an AE/DOE shall appoint a member of management as a CDM quality manager, who shall have responsibility and authority for ensuring that the AE/DOE's procedures for complying with accreditation requirements are established, implemented and maintained; and reporting to the AE's/DOE's top management on the performance of the quality management system and proposing changes (EB 56, Annex 1, paragraphs 107-111).

Document and record management system

An AE/DOE must establish procedures to control all documents that form part of its CDM quality management system, such as a quality manual, procedures, and instructions, validation and verification guidelines and procedures, regulations, standards and other normative documents. This procedure should define the controls needed for:

Approval of documents by authorised personnel before they are issued;

Re-approval of documents by personnel authorised to approve changes before they are issued;

Identification of changes in documents and current revision status;

Availability of authorised and applicable versions of all required documents at points of use;

Prompt removal of all obsolete documents from all points of issue or use;

Suitable marking of all obsolete documents retained for legal or other reasons; and

Identification, update and distribution of external documents (EB 56, Annex 1, paragraph 113).

An AE/DOE shall establish and maintain procedures to define the controls which are needed for the identification, collection, indexing, access, filing, storage, protection and retrieval of its records. Retention time and disposition of records shall also be defined in the established procedures. In addition, an AE/DOE shall have a documented procedure for maintaining and managing specific records pertaining to its CDM validation or verification and certification activities and for securely transporting and transmitting documents and for securely maintaining them in accordance with its own retention period (EB 56, Annex 1, paragraphs 114-119).

Internal audits

An AE/DOE shall have a documented procedure for conducting internal audits, at least once per year, addressing all the CDM accreditation requirements, and in accordance with a predetermined schedule and procedure, conduct internal audits of its CDM activities to verify that its quality management system is effective and to ensure that its operations continue to comply with the CDM accreditation requirements, relevant sections of the CDM modalities and procedures, relevant decisions and/or clarifications issued by COP/MOP and the CDM EB, and its own documented procedures (EB 56, Annex 1, paragraph 120). An internal audit should:

Be conducted by personnel independent of the function audited, either AE's/DOE's qualified personnel or external qualified expert;

Include timely corrective actions to ensure compliance with the CDM accreditation requirements if audit findings cast doubt on the effectiveness of the operations or on the correctness of the CDM validation, verification and certification activities;

Ensure adequate recording of the function audited, the audit findings and corrective actions taken;

Verification and recording of the implementation and effectiveness of the corrective actions taken through follow-up audit activities; and

Address all elaborated requirements in the present documents (EB 56, Annex 1, paragraph 122).

Managing non-conformities in operation

The AE/DOE shall establish a procedure to identify non-conformities and undertake corrective and preventive actions in response to the audits, work carried out by the DOE, as well as feedback from stakeholders. The procedure shall ensure designation of responsibilities for management follow-up; evaluation of the significance of nonconforming work; appropriate actions to ensure compliance with CDM accreditation requirements; allocation of responsibility to authorise the resumption of work; initiation of corrective actions; and recording of implementation of corrective actions (EB 56, Annex 1, paragraphs 123-124).

Corrective and preventive actions

An AE/DOE shall establish a documented procedure and designate appropriate personnel for implementing corrective action when nonconformities or departures from the defined policies and procedures are identified in line with the CDM accreditation requirements.

In addition, an AE/DOE should have a procedure for proactively identifying potential sources of non-conformities and areas for improvement and for implementing preventive actions to prevent the occurrence of non-conformities or improve the effectiveness of its validation and verification/certification functions (EB 56, Annex 1, paragraphs 125-127).

Management review

An AE/DOE shall conduct periodic management reviews of its CDM activities in order to ensure continuing suitability and effectiveness of the AE's/DOE's quality management system, consistency and implementation of its policy and procedures and its ongoing compliance with competencies to meet the CDM accreditation requirements. This review should consider:

Follow -up actions from previous management reviews;

The suitability of policies and procedures;

Results of internal and external audits;

Feedback from stakeholders related to the fulfilment of the CDM accreditation requirements;

The status of corrective and preventive actions;

Results and status of quality assurance measures undertaken;

The fulfilment of quality objectives;

Status of complaints, disputes and appeals;

Recommendations for improvement;

Projects rejected or placed under review by the CDM EB; and

Other relevant issues such as changes in the volume and scope of work, resources, competences and personnel training, etc (EB 56, Annex 1, paragraph 131).

Handling complaints, disputes and appeals

Complaints

An AE/DOE shall establish a procedure to receive, manage, evaluate, take necessary corrective action and make decisions on complaints. The documented procedure shall be made available to the CDM secretariat and the public. In addition, the AE/DOE should have a system for investigating and taking appropriate correction and corrective actions regarding complaints. The complaints-handling procedure should include:

The procedure for receiving the complaint, gathering and verifying all necessary information for evaluating the validity of the complaint, investigating the complaint and for deciding what actions are to be taken;

The criteria for determining the validity of complaints;

Tracking and recording complaints;

Ensuring appropriate correction and corrective action are taken;

Safeguarding the confidentiality of the complainant and subject of the complaint;

Ensuring that persons engaged in the complaints handling processes are different from those who carried out the validation or verification and certification activities;

Acknowledging receipt of the complaint, providing the complainant a progress report where feasible;

Informing the complainant of the outcome of the investigation and the final notice of the end of the process; and

Maintaining the record of complaints (EB 56, Annex 1, paragraph 136).

Disputes

An AE/DOE shall have a documented procedure for handling disputes, made available to the CDM secretariat, including considerations of the same kind as those which apply to the complaints-handling procedure above (EB 56, Annex 1, paragraphs 137-138).

Appeals

The AE/DOE shall establish, maintain and implement a procedure for appeals which shall be made available to the CDM secretariat and the project participants. The appeals process will include an independent appeal panel responsible for the appeals process, and considerations of the same kind as those which apply to the complaints-handling procedure above (EB 56, Annex 1, paragraphs 139-140).

Pending judicial processes

An AE/DOE shall maintain a record of all judicial processes which are pending against it as well as information of any previous judicial cases. It is the DOE's responsibility to inform the UNFCCC CDM secretariat of any such case pending at the time of application and at any time during its accreditation cycle (EB 56, Annex 1, paragraphs 142-143).

Safeguarding impartiality

An AE's/DOE's operations shall be independent and free from any bias or conflicts of interest that may compromise its ability to make decisions impartially. If the AE/DOE is part of a larger organization, it shall ensure that no conflict of interest exists between its functions as an AE/DOE and those of other parts of the organization. If the AE/DOE has related bodies, shall ensure that no conflict of interest exists between its functions as AE/DOE and those of the related bodies (EB 56, Annex 1, paragraphs 144-148).

Safeguarding impartiality at the policy level

The AE/DOE must establish and implement a policy on safeguarding impartiality (EB 56, Annex 1, paragraph 150).

The AE/DOE shall ensure its impartiality at the policy level, inter alia, by:

Having the top management's commitment to safeguarding impartiality in the AE/DOE.s validation and/or verification/certification functions as evidenced through defined institutional structure and impartiality policy and procedures, appropriate implementation of these policy and procedures and operation and conduct of its activities;
Having a statement that describes its understanding of the necessity of impartiality in validation and/or verification/certification functions, how it manages conflict of interest and how it ensures the objectivity of validation and/or verification/certification functions;
Taking action to respond to any threats to its impartiality arising from the actions of other parts of the organization, persons outside of the organization, subcontractors, related bodies or other bodies or organizations; and
Maintaining a professional environment and culture in the organization that supports a behaviour of all personnel that is consistent with impartiality (EB 56, Annex 1, paragraph 152).

The AE/DOE shall make its policy for safeguarding impartiality publicly available on its website (EB 56, Annex 1, paragraph 153).

Safeguarding impartiality at the organisation level

The AE/DOE shall have a committee that safeguards the AE/DOE's impartiality in its validation and/or verification/certification functions and ensures that the policy on safeguarding impartiality is effectively implemented (Impartiality Committee).

The Impartiality Committee shall:

Be separate from the management of the AE/DOE operations and established at the highest level within the organization. The AE/DOE shall ensure, in the composition of this committee, participation of key interested parties, with a balanced representation of each of them;
Have a chairman who shall be a person independent from and external to the AE/DOE;
Have documented terms of reference. This committee shall meet at least once a year, and maintain a complete record of its proceedings;
Approve the conflict of interest analysis and the mitigation measures described in EB 56, Annex 1, XII D, as well as monitor and review the implementation of the systems to safeguard the AE/DOE's impartiality (conflict of interest analysis, procedures and mitigation strategies and actions);
Have access to all validation and/or verification/certification files or records and be able to review them, if needed;
Prepare an annual synthesis report of its activities, which shall be included in the DOE's annual report to the Executive Board (EB 56, Annex 1, paragraph 155).

In cases where the Impartiality Committee identifies issues through the monitoring or review of the implementation of the AE/DOE's systems to safeguard impartiality, it shall report the instance to the AE/DOE's top management. If the top management does not follow the advices of the Impartiality Committee, this committee has the right to report the issue to the Executive Board (EB 56, Annex 1, paragraph 156).

Safeguarding impartiality at the operational level

The AE/DOE shall establish and implement a procedure for analysing potential threats against impartiality. This procedure shall ensure that a conflict of interest analysis is carried out at least once annually and whenever a significant change occurs in the AE/DOE activities, such as changes in the organizational structure or of the legal status and mergers with or acquisitions of other organizations (EB 56, Annex 1, paragraphs 158-159).

The following risks shall be included in the conflict of interest analysis:

Source of revenue: risks from a client paying for the validation or verification/certification work. This risk is significant when the AE/DOE has numerous contracts with the same client;
Self-interest: risks from a person or an organization acting in its own interest, for example financial self-interest;
Self-review: risks from a person or an organization reviewing its own work; assessing the CDM validation or verification/certification activities of a client to whom the AE/DOE or its related bodies provided consultancy would be a self-review risk;
Familiarity (or trust): risks from a person or an organization being too familiar or trusting of another person instead of seeking validation or verification/certification evidence is a familiarity risk; and
Intimidation: risks from a person or an organization having a perception of being coerced openly or secretly, such as a risk to be replaced or reported to a supervisor (EB 56, Annex 1, paragraph 160).

The AE/DOE shall establish and implement a documented procedure for the mitigation of threats against its impartiality. This procedure shall describe which mitigation strategies and actions are to be taken and how they will be implemented (EB 56, Annex 1, paragraph 164).

The AE/DOE shall analyse and review, at least once a year, all data and information relevant to impartiality, such as the conflict of interest analysis, the mitigation strategies and actions undertaken, any non-conformities raised with regard to impartiality and the corrective actions implemented to correct those non-conformities. Based on that analysis of data and information, the AE/DOE shall carry out, once a year, an analysis of the process to safeguard impartiality and a review of its effectiveness (EB 56, Annex 1, paragraphs 168-169).

Confidentiality management

An AE/DOE shall have a documented policy and mechanism to safeguard the confidentiality of information which is obtained or created during the course of validation and/or verification/certification functions, except where, Decision 3/CMP.1 or any other subsequent COP/MOP decision requires these to be made publicly available. Personnel engaged shall also be bound by these confidentiality requirements. An AE/DOE shall not disclose information about a contracted client (project participant) that is not required to be made publicly available to a third party without this client's prior written consent (EB 56, Annex 1, paragraphs 171-173).