New guidelines for responsible voluntary compensation and carbon neutrality communication

VCMI Provisional Claims Code of Practice on the voluntary use of carbon credits

The international Voluntary Carbon Market Integrity Initiative (VCMI) has released provisional guidelines for the use of claims in communication concerning the voluntary use of carbon credits.

The VCMI Claims Code places the following requirements on companies making claims related to climate responsibility:

• Long- and short-term reduction targets for greenhouse gas emissions, which are aligned with the 1.5 degree reduction target laid out in the Paris Agreement and cover both direct and indirect emissions (scope 1–3)
• A detailed plan for achieving the emissions reduction targets
• An annually released emissions inventory

These must be drawn up in line with, for example, the Science Based Targets initiative or the GHG Protocol and be verified by a third party.

High-quality carbon credits must be used to balance out any residual emissions. VCMI does not specify or assess the quality of the units but instead refers to other guidelines in this respect (such as the Integrity Council for the Voluntary Carbon Market, see below).

Companies’ VCMI claims come in three types: Gold, Silver and Bronze. VCMI Gold is available to companies that are on track to achieve the targets for all their emissions and cover all their remaining unabated emissions with carbon credits. VCMI offers Silver and Bronze claims to companies that do not yet fully comply with the requirements for VCMI Gold.

In addition, VCMI specifies carbon neutral claims for brands, products and services.

The VCMI Claims Code currently does not take a stand on the avoidance of double counting concerning the host country’s targets. However, in connection with the use of carbon credits, the Code requires companies to indicate whether the emission reduction or removal associated with a credit is included in the host country’s target. VCMI will continue to examine the question of double counting, among other things.

The provisional guidelines are available for public consultation until 12 August 2022, and the final Claims Code of Practice will be released in late 2022 or early 2023.

Nordic Code of Best Practice for Voluntary Compensation

In the context of the Nordic Dialogue on Voluntary Compensation, a draft code of best practice for voluntary compensation was published in early June.

The Nordic Code is more general than the VCMI code and addresses parties other than companies. Similarly to the VCMI code, the Nordic Code requires users of voluntary compensation to set targets and adopt measures in line with the 1.5 degree goals, set up an emissions inventory and release information related to compensation. Third-party verification is also required. The Nordic Code specifies the minimum criteria for high-quality carbon credits, carbon crediting programmes and carbon registries.

In contrast to the VCMI Claims Code, the Nordic Code deals with the avoidance of double counting concerning the host country’s targets. It specifies three purposes and related claims for carbon credits. The use of carbon credits for offsetting the climate impact of specific emissions requires the use of carbon credits that are not counted towards the targets of any country. Such credits can also be used to drive global ambition without aiming to offset the climate impact of specific emissions (“overall mitigation in global emissions”). Carbon credits that help countries achieve their national targets can be used as a collective climate action towards reducing net national emissions (“national mitigation contribution”).

Nordic stakeholders have the opportunity to comment on the Code of the Nordic Dialogue until 8 August 2022.

Gold Standard for Global Goals

The highly recognised Gold Standard Foundation, established by NGOs, updated its guidelines on claims in early June. Similarly to the Nordic Code, the Gold Standard for Global Goals addresses the avoidance of double counting by specifying purposes and claims based on whether they are counted towards the host country’s targets. An offsetting claim states that the climate impact of specific emissions has been counterbalanced. This requires that a carbon credit and the associated emission reduction or removal be only applied to offsetting the emissions that the claim refers to and not for any other targets. Impact claims can involve carbon credits that are counted towards countries’ national targets, with the purpose of helping countries meet their climate goals. A compliance claim relates to the mandatory use of carbon credits and helps the user meet the obligations set by national emissions trading or carbon tax, for example.

Other ongoing initiatives

The international Integrity Council for the Voluntary Carbon Market (ICVCM) will publish a quality standard for carbon credits and carbon crediting programmes, as well as an assessment framework for different types of projects and programmes in July. It will consider the methods for assessing the quality of projects developed by NGOs and other stakeholders in the context of the Carbon Credit Quality Initiative (CCQI).

The International Organization for Standardization (ISO) is also developing a standard on carbon neutrality. In turn, the World Resources Institute (WRI) published its guidelines on the voluntary use of nature-based carbon credits in early June.

Regulations banning greenwashing are being developed at the EU level. National studies of voluntary compensation and carbon offsetting are also under way in countries such as Finland and Great Britain.

Nordic Offset actively follows the development of responsible voluntary compensation and related communication guidelines. Please contact our experts to learn more!