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Tag Archives: netzero

Can a global framework authenticate voluntary carbon credit schemes?

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

Considerations for the impacts on SMEs as major corporates ‘race to zero’

Numerous corporations have joined the “race to net zero” emissions, announcing targets and policies to reduce their carbon outputs. The impacts these declarations will have on small to medium sized enterprises (SME) within major corporates’ supply chains should be considered.

For example, Unilever is a leader in producing fast moving consumer goods (FMCG) and their announced climate policy and targets in their Climate Transition Action Plan. The plan was put to shareholder vote earlier this month with the majority of shareholders voting in support of the climate action strategy. The company’s voluntary targets, signify a movement that responsible businesses cannot and should not wait for regulation. Corporates opting for voluntary annual emission reports and in this case, an advisory shareholder vote, signify an increased level of transparency and accountability between investors, consumers and businesses. 

However, the impacts of these policies on the supply chain and wider network need to be considered.  

>Where does the cost lie? The plan discusses the intent to cost neutrally reduce the emissions from raw material suppliers. The cost of reducing these emissions will be placed onto the suppliers, potentially placing the burden on the supply chains of SME’s to shoulder.
>What support for SMEs will be provided? The introduction of carbon data invoices is an example of an area where smaller companies will need assistance. Although it may sound like a simple tweak to the system, it may be complex to set up and deliver and potentially not cost neutral.
>How will the new supplier reporting frameworks chosen by major multinationals start to shape and influence the uptake of different reporting methodologies? As there are an overwhelming variety of these methodologies in use (TFCD, Science based targets, GRI, CDP, as well as national government systems), there is much debate around how to select one global standard to use. Unilever in this case have chosen Science Based Targets, which may have an influence on the uptake of that particular framework at a global scale. 

Corporates are setting expectations on acceptable reporting methodologies for their suppliers. This has the potential to be a positive environmental step, as data will be influential in setting a global consensus for mass scale climate reporting methods. When large corporations dictate that science based targets are the new reporting frameworks they want from suppliers, it may be hard to envision how this reporting framework won’t become a new norm for SMEs in Australia and elsewhere.

Written by Marita Doak and Donald Fraser

Placing an emphasis on supplier sustainability

Organisations in Australia are demanding more environmental reporting, driving suppliers to update and make mandatory environmental commitments and changes. This is a growing trend in the agricultural industry and supply chain in particular. Large companies such as Coles and Woolworths are seeking additional control and oversight, requiring their suppliers to help them meet their environmental targets. 

Last week the Coles group announced a “together to zero” campaign, outlining a collaborative scheme with consumers and its supply chain to meet their emissions targets. The group announced plans to be powered entirely by renewable energy by 2025 and to cut operational emissions by 75% below FY20 levels by 2030. 

Equilibrium is working with a number of suppliers in the agriculture and food manufacturing sectors to develop and implement sustainability programs, including Environmental Management Systems (EMS)

An EMS aims to implement a plan and system of environmental actions and targets which align with the company’s environmental policy and business objectives and extend all the way to a ground level approach. An EMS is a journey of continuous improvement (plan > do > check > act) and assists organisations to manage their environmental impacts through; 

> Achieving and maintaining compliance with relevant environmental laws, standards and the company’s environmental commitment
>Establishing systematic risk management processes to identify and rectify environmental risks;
>Establish a required level or environmental performance within the groups corporate environment to prevent the occurrence of events that are likely to significantly impact the environment
>Enabling visibility and periodic evaluation of environmental targets and performance metrics for decision making

The movement towards corporate responsibility, the ambition of businesses to meet their environmental objectives and better business outcomes are increasingly seen as mutually inclusive.