Posted: July 21, 2023

Time to Drop Offset-Based Environmental Claims? Not Quite.

July 21, 2023, 9:55am PDT

The Voluntary Carbon Markets Integrity Initiative (VCMI) recently published comprehensive guidance emphasizing transparency, internal abatement, and adherence to science-based targets when companies make climate claims.

While some headlines jumped to the conclusion this means climate-minded companies should completely ditch claims utilizing offsets, the truth is far more nuanced.

Let’s break down how we got here, what the guidance says, and how it will impact the voluntary carbon market.

Clearing The Air On Corporate Claims

The last few years, the impacts of climate change have become unignorable. Realizing the need to take immediate action, a lot of well-meaning companies raced to put together sustainability plans to help do their part.

Many of those plans were deeply comprehensive and rigorously implemented. But for some enterprises – especially those just kickstarting their climate journey – knowing where to start was tricky. Doing something seemed better than doing nothing at all, which led to corporate sustainability plans that weren’t as buttoned-up as they could have been – particularly with the use of carbon offsets. In turn, the marketing claims made against those plans weren’t always in-line with the actions taken.  

What happened next? A wave of greenwashing accusations was unleashed against those claims, leaving some enterprises wondering where they went wrong, and if they should say anything about their efforts at all. Worse yet, some companies saw the backlash and deemed it safer to stay on the sidelines of sustainability entirely.

The phenomenon of ‘greenhushing’ escalated to new heights.

Amidst the confusion, the VCMI stepped up to help clear the air. Recognizing that carbon offsets are part of every credible scenario to keep global warming to 1.5 degrees Celsius, they developed straightforward guidance designed to help companies align their marketing messages with a standardized set of decarbonization best practices that truly support the claims being made.

With this sound, widely accepted framework, corporates would have the confidence needed to pursue their sustainability goals, especially when buying and using offsets as a part of that journey. And, when properly applied, the guidelines would ensure that companies and consumers see eye-to-eye on the real impact behind a climate claim.  

So, how does the VCMI code work?

How The Guidelines Work

In essence, the VCMI codes lean on actions that are pretty much standard consensus for good sustainability plans.

They’re broken down into four clear steps.

1. Comply with the “Foundational Criteria”

That’s a fancy way of saying “put together a rock-solid sustainability plan for your company built upon industry best practices.” Those practices include…

  • Measuring and reporting your emissions comprehensively and transparently
  • Setting a science-based target for reaching net zero through internal abatement and tackling remaining emissions through high-quality carbon credits
  • Proving you’re on track to meet those science-based targets
  • Not lobbying against goals of the Paris Agreement

2. Pick an Emission Claim from a Tiered Certification System

So, once your sustainability plan is up-and-running, how will you message your impact? The claims code introduces a tiered certification system consisting of Silver, Gold, and Platinum levels (this system is somewhat similar to other industry’s sustainability certifications like the LEED rating system in grene building).

The higher the intensity of actions by a company, the higher the tier they will fall into:

  • At the Silver level, brands retire offsets equivalent to 20-60% of their residual emissions.
  • The Gold level requires the retirement of offsets between 60-100% of residual emissions.
  • Finally, the Platinum level represents a state where companies retire offsets equal to or greater than 100% of their residual emissions. In other words, the platinum tier represents what historically has been called carbon neutrality, without explicitly using the term.

3. Use Only High-Quality Carbon Credit (and Do It Transparently)

Pretty straightforward, right? But what does “High-Quality” actually mean? The guidelines point to the Integrity Council for the Voluntary Carbon Markets (ICVCM’s) Core Carbon Principles (CCPs) as the answer. The CCPs are essentially basic principles rooted in trust and integrity that, when followed, act as a solid benchmark for what a good carbon credit should be.

But wait… it’s not enough to just utilize high-quality carbon credits. According to the VCMI’s guidelines, you need to report what you used. This means letting the public know the types, sources, quantities of carbon credits purchased and retired every year.

That reporting needs to be made publicly available to people on a company’s website, in a climate strategy report or within something more comprehensive like a sustainability report.

4. Monitor Your Carbon Projects to Make Sure They Deliver on All The Above (via Third Parties)

Now that you’ve done everything needed to get your VCMI claim level, how do you keep it? Through ongoing monitoring.

As part of this, the guidelines not only hold companies accountable to their sustainability goals, but put additional rigor on them to make sure their carbon projects are making an impact. Fortunately, this can be done with the help of third-party auditors who can help ensure credits are legit, and contributions to climate goals are being made.

So What Does This Mean For The VCM?

The new guidelines set a high bar for companies when making claims against their sustainability plans. So how will that affect carbon projects and their usage?

1. More Than Ever, High-Quality Carbon Credits Remain an Essential Tool

Contrary to the headlines that offsets should be abandoned, the VCMI acknowledges their significance in addressing unavoidable emissions. There is no way to achieve climate goals without them.

However, the VCMI guidance sends a clear message to companies who may not have utilized carbon credits appropriately: it's time to make a true investment in the planet, both through real internal abatement initiatives and investment in high-quality and credible carbon projects.

Ultimately, it comes down to quality. All carbon projects generating credits must meet rigorous criteria, and companies should support credible projects. And that definition of “good” will get even tighter when the Integrity Council for the Voluntary Carbon Market (ICVCM) releases further recommendations later in 2023.

2. Demand for Low Quality Projects Will Drop

As we’ve predicted previously, we expect the VCM to continue doubling down on quality and rigor as the market grows.

Broad acceptance of the Claims Code would mean that companies looking to cash in on ‘carbon neutral’ claims solely through the purchasing of carbon credits, without a broader decarbonization strategy involving internal abatement, may invest less in projects. However, these companies are allowed to invest in cheaper, lower-quality projects to begin with that may have less impact than intended.

3. Companies May Move Away from Claims of ‘Carbon Neutrality’ and to ‘Climate Contribution’

The term ‘carbon neutral’ has been a contentious one in the VCM. The VCMI’s new language around climate contributions is an acknowledgement of that contention, and an attempt to drop some of the baggage associated with the term.

Our opinion?

At the end of the day, whatever words being used or claims being made need to be legitimate, and in service of positive climate impact and outcomes. As long as that is happening, we encourage companies to speak to the impact they are having to galvanize others to become part of the solution.

4. Standardization and Transparency are the Keys to Combating Greenwashing

By establishing standardized methods for making corporate claims (i.e. Silver, Gold, and Platinum tiers) the VCMI offers a super easy-to-understand framework for companies to rely upon when making claims. It should give them the confidence to proudly message their contributions to the planet in a way that connects with consumers – who care more and more about the impact of the products and services they choose. We hope this counteracts the trend of ‘greenhushing’, where corporations stay quiet about their sustainability efforts for fear of criticism.

5. The VCM Continues to Mature

Alignment between the VCMI, ICVCM, and the Science Based Targets Initiative (SBTI) brings us closer to establishing a widely accepted framework for corporate decarbonization journeys. By fostering supply and demand alignment, this framework can help lay the groundwork for government agencies to establish specific country-based disclosure policies.

Clear guidelines and standards also instill confidence in companies, allowing them to engage in the voluntary carbon market more meaningfully.

The Bottom Line

The VCMI claims code represents a significant step forward in promoting internal abatement and quality carbon credits as essential elements of corporate climate action. Catona Climate fully supports this approach, embracing the alignment with science-based targets and prioritizing impactful and credible climate contributions. By adhering to these principles, companies can move beyond worrying about the right words to use, and focus on the work of making a real difference.

Author - Headshot - Desktop - Rob Lee

Rob Lee

Rob Lee is Chief Carbon Officer at Catona Climate. Rob has been a respected thought leader in the carbon industry for as long as it has existed.

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