Sustainable finance
Sustainable Development Mechanism (SDM)
Definition
The Sustainable Development Mechanism is a proposed international carbon crediting mechanism, advanced notably by Japan in the Paris era, intended to succeed the Clean Development Mechanism by generating credits from mitigation activities while demonstrably contributing to sustainable development in host countries. Its lineage runs into the Article 6.4 mechanism established by the Paris Agreement — itself long referred to informally as the "sustainable development mechanism" — which operationalises UN-supervised crediting with sustainable development criteria and mandatory share of proceeds for adaptation.
References
This reference provides supporting context for how “Sustainable Development Mechanism (SDM)” is defined and used.
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Overview
How it is used
The concept structures analysis of Article 6. 4 design, the Joint Crediting Mechanism's framing, and academic work on crediting reform.
Why it matters
The SDM marks the moment carbon markets were told to grow up — development integrity made part of the crediting machinery, not an afterthought.