Stringent guidance unveiled for corporate use of ‘high integrity’ carbon credits

Scope 3 guidance will be published next year by the VCMI

The updated Claims Code of Practice (Claims Code) now includes a Monitoring, Reporting and Assurance (MRA) Framework for any integrity claims, which means that companies can now make claims using high-quality carbon credits, directing finance to initiatives that mitigate climate change.

The VCMI reiterates that carbon credits must account for real and verified reductions or removals in emissions while also adhering to stringent environmental and social safeguards. The guidance also states that companies should use these credits in addition to, rather than instead of, active decarbonisation measures.

John Kerry, U.S. Special Presidential Envoy for Climate said: “Voluntary carbon markets can be a powerful tool for mobilizing the investment in innovative technologies and actions needed to keep a 1.5 C limit on warming within reach.

“VCMI is performing a vital service by establishing high-integrity pathways for companies to support stronger climate action while making progress toward their own net zero- goals. By creating sound guardrails for the use of high-quality carbon credits, the new VCMI guidance will provide strong assurance that this finance will help deliver the greater climate action we so urgently need.”

The VCMI is also rolling out a “Scope 3 Flexibility” claim which, once finalised next year, will help companies utilise carbon credits as part of Scope 3 emissions action plans.

Corporate support

At the start of the month, the VCMI unveiled the first batch of corporates that would work with the initiative on a new “rulebook” to outline the usage of credits.

Bain & Company, BCG, Better Drinks, Natura and Sendle are among the first members of the Early Adopters Program (EAP). The programme, which runs through December, will help corporates make claims for the use of carbon credits to accelerate the uptake of the VCMI’s Claims Code of Practice.

In June, this year, the VCMI launched its Claims Code of Practice, acting as a rulebook for companies to follow when making climate-based claims and how carbon credits can be utilised to support decarbonisation.

The VCMI argues that the Claims Code can bring integrity to the demand side of these markets. The Code has three tiers for companies to access – Platinum, Gold and Silver. Each tier recognises investments that contribute to emissions reductions and removals that are beyond corporate actions to meet science-based targets.

The VCMI has worked with the likes of the Greenhouse Gas Protocol (GHGP); Science Based Targets Initiative (SBTi); the Integrity Council for the Voluntary Carbon Markets (ICVCM); and Carbon Disclosure Project (CDP) to create a robust rulebook.

Research suggests that companies engaged in the voluntary carbon market (VCM) are surpassing their counterparts in key areas of climate action, accountability and ambition, rather than simply using credits as a method to ‘buy their way out’.

According to the findings, 59% of buyers in the VCM reported a decrease in gross emissions on an annual basis due to reduced emissions and/or increased utilisation of renewable energy, while this reduction was reported by only 33% of businesses that were not engaged in carbon markets.

However, the issue remains that are large portion of companies are investing in the bottom end of the markets, in things known as “junk” credits. Indeed, edie has its own feature on the issue here.