Companies can now make VCMI ‘carbon integrity’ claims for use of quality offsets

Companies that use high-integrity carbon offsets as part of their sustainability strategies can now make ‘carbon integrity’ claims backed by the VCMI Claims Code of Practice.

The Voluntary Carbon Market Integrity Initiative (VCMI) today released new guidance and a monitoring, reporting and assurance (MRA) framework to support companies in making higher-integrity claims about their use of carbon credits. 

It comes at a crucial time, as the updated GRI Climate Disclosures Standard draft (due to be finalised next year) includes new mandatory disclosures around the amount of carbon credits cancelled, the specific projects they came from, as well as “adherence to quality criteria”.

Carbon offsetting has been associated with greenwashing in the past, and carbon mitigation projects themselves have been under growing scrutiny since several investigations found they often overstated their positive impact. 

As a result, many companies decided to stop using carbon credits, focusing instead on GHG reduction measures – but experts believe the carbon market has a role to play in funding global decarbonisation and nature conservation, and estimate that more than US$50 billion could be unlocked by 2030.

This new guidance is part of market-wide efforts to make carbon offsetting more transparent and impactful, including the Integrity Council for the Voluntary Carbon Market (ICVCM) Core Carbon Principles released this year, as well as attempts to finalise a carbon market mechanism governed by the Paris Agreement at COP28.

“Buyers must have confidence that the carbon credits they buy make a genuine impact on emissions and they must be able to demonstrate that their use of credits complements genuine action to decarbonise their value chain. By setting high-integrity standards for the supply and use of credits we aim to mobilise private sector investment at scale for climate solutions to reduce and remove billions of tonnes of emissions,” said ICVCM Chair Annette Nazareth.

How to use the new VCMI framework to make a carbon offsetting claim

To make a ‘carbon integrity’-branded claim, companies first need to meet four foundational criteria: 

• maintain and disclose an annual greenhouse gas emissions inventory; 
• set and publicly disclose SBTi-validated near-term emissions reduction targets with a commitment to reach net zero emissions by 2050; 
• demonstrate that the company is on track to meet a near-term emissions reduction target; 
• and demonstrate that its public policy advocacy supports the goals of the Paris Agreement and does not prevent ambitious climate regulation.

After that, the new MRA framework details which information must be disclosed and how it must be evaluated, evidenced, and verified to assess whether to make a silver, gold or platinum claim under the Claims Code of Practice. This will depend on the percentage of remaining emissions they offset through the purchase and retirement of high-quality carbon credits: silver for 20% to 60%, gold for more than 60% but less than 100%, and platinum for 100% or more. 

Speaking to CSO Futures last month, VCMI’s Director of Policy and Partnerships Lydia Sheldrake called for Chief Sustainability Officers and their companies to start using these sets of rules to demonstrate the impact of a “reformed, trusted voluntary carbon market”.

New ‘Scope 3  flexibility’ claim

VCMI has also launched the beta version of a new ‘Scope 3 flexibility’ claim for the use of high-quality carbon credits to offset Scope 3 emissions until companies are able to achieve meaningful reductions. This is set to be finalised in Q3 2024, at which point companies will be able to make their first Scope 3-related claims.

The organisation explains that the claim will be “a practical solution to incentivise companies to act now and be recognised for climate leadership while increasing internal decarbonisation to get on the path to net zero”.

To avoid misuse of this new claim, VCMI has put “robust guardrails” in place: to be able to make a Scope 3 claim, companies must meet the foundational criteria detailed above, make meaningful progress to reduce Scope 1 and 2 emissions, use carbon credits to offset no more than 50% of their Scope 3 emissions, and ensure their use of credits declines over time, “leading to complete phaseout no later than  2035”.

“With COP28 beginning in a matter of hours, VCMs will once again be on the agenda, and it is important that what is discussed is the promotion of credible, and believable, climate action. Along with the work of the ICVCM and others delivering integrity into the VCMs, the Claims Code of Practice is a critical part of the rules that are forming in voluntary markets. We have delivered what buyers need to make Claims today, along with practical solutions to spur further corporate action. Companies can now step up their credible use of carbon credits, and should feel confident to do so,” said VCMI Executive Director Mark Kenber.

Earlier this month, VCMI kicked off an early adopters programme with Bain & Company, BCG, Better Drinks, Natura and Sendle, all of which are receiving hands-on support from VCMI to understand code’s requirements until the end of December.