This report assesses the contribution of the CDM to meeting its environmental and sustainable development objectives and provides recommendations for improving the mechanism. The report discusses selected areas which are deemed particularly important for achieving its environmental and sustainable development objectives, including: the role and performance of designated operational entities which are responsible for the validation of proposed CDM project activities and the verification of emission reductions; the demonstration of additionality; the contribution of CDM projects to sustainable development; the role of HFC-23 and N2O destruction projects; the participation of stakeholders in the process; the environmental integrity of "policy CDM' and "sectoral CDM'; and options for limiting the use of CDM and JI by Annex I countries and in emissions trading schemes.