The Voluntary Carbon Markets Integrity (VCMI) is a multi stakeholder platform driving initiatives focused on ensuring credible, net zero aligned participation in global voluntary carbon markets. The VCMI developed a global framework to guide the commitment and targets of voluntary carbon credit (CC) schemes. Australia’s voluntary scheme, the Emissions Reduction Fund (ERF) could be guided by this international framework. The ERF provides incentives for a range of organisations and individuals to adopt new practices and technologies to reduce their carbon emissions. Within the scheme one Australian Carbon Credit Unit (ACCU) is earned for each tonne of CO2 stored or avoided by a project. ACCUs can then be sold to generate income, either to the government through carbon abatement contracts, or in the secondary market. The VCMI justify the development of a global framework through claims that the use of carbon credits, such as ACCUs, could hinder the development of greenhouse gas (GHG) abatement action within supply chains and companies, which is essential to reaching net zero targets.
Benchmarking CC claims would help provide clarity for consumers and investors. The many phrases promoting commitments, “carbon neutral”, “”carbon negative”, “carbon free”, “climate positive”, “net zero GHG” or “net zero emissions” targets, make it difficult to identify greenwashing targets against robust, transparent commitments. The inconsistency exposes an element of risk for companies, as overstating climate performance can lead to litigation and fines when commitments are deemed false or deceptive. The purpose of a global code would help develop a clear guide for the use of voluntary CC schemes, positioning CC within a company’s overarching net zero commitments, helping to identify, define and validate a company’s commitments.
The VCMI outlines a code of practice within four steps, with all components assisting organisations in making credible claims about their voluntary use of carbon credits.
> Meet the prerequisites: The VCMI outlines that companies must only use CC “in addition to – not a substitute for science-aligned decarbonisation across their value chains”. Before involvement within voluntary CCs schemes companies must make a public announcement outlining their commitment to reach net zero emissions by at least 2050, which will cover scope 1, 2 and 3 emissions. This commitment must include near term targets and milestone targets as well as following the Science Based Target Initiative guidance for setting the target boundary and emissions coverage.
> Identify claim (s) to make: The VCMI offers gold, silver and bronze statuses. These score commitments based on progress towards its corporate climate targets for a given year and the use of offsets to go beyond those targets.
> Purchase high quality credits: Credits must be associated with a “credibly governed standard setting” body, which must have environmental quality and must be compatible with human rights.
> Report transparently on the use of carbon credits: Transparent reporting of information regarding the number and type of credits is essential to substantiate the claims.
Although a step in the right direction the VCMIs claims and code depend on a functional and reliable governance and assurance system. Would the adoption of a code work in the Australian markets? Especially given that the current CC scheme and Clean Energy Regulator have been challenged in the media due to claims of “continuing to lack transparency”?
However successful it may be, a global code of practice could assist in creating a foundation for the credible use of carbon credits and associated claims, helping limit greenwashing, set interim science based targets, and provide transparency. Above all, the scheme is designed to limit the scope of companies using offsets to claim net zero targets. Ensuring that CCs are one element of a greater commitment strategy which includes abatement of carbon emissions.
Equilibrium works across various industries including agriculture, transport and manufacturing to assist in developing emissions reduction schemes. Our carbon management services provide clients a variety of reduction opportunities in exploring carbon abatement within supply chains, providing renewable alternatives as well as carbon offset purchases.
The final version of the standard is expected to be published in early 2023.
Read VCMI’s full Claims Code of Practice
Submit Feedback for the Provisional VCMI Claims Code of Practice