6.1. Definition of Green Dividend.
A green dividend is akin to an equity contribution to the carbon equity of the reporting entity. A green dividend take place when the shareholders of the reporting entity formally decide and instruct the reporting entity to invest a given amount of its profit into climate mitigation actions that the company would have not undertaken solely based on financial considerations.
This models assumes that in its commitment to fund for non-financially viable projects that aim at addressing climate change, the reporting entity is settling its liability which is recorded under the line item “Unpaid Carbon used by the company”
6.2. Initial recognition
The amount of green dividend decided by a company is initially booked in the carbon equity of the reporting entity. An equivalent counter booking is recorded in the line item “Unpaid-carbon used by the company”, thereby reducing this liability.
A Green Dividend is the only option available to a reporting entity to reduce the liability booked under “Unpaid-carbon used by the company”