Five takeaways from the VCMI Claims Code announcement

Introduction

The challenges the Voluntary Carbon Market is going through are really about two structural debates: how to deliver high integrity credits that truly reduce emissions and how to make ‘credible claims’ in the market. 

The Voluntary Carbon Markets Initiative (VCMI) is designed to address the claims debate. 

Are carbon credits a legitimate part of a net zero transition? That is what this issue boils down to. The VCMI answer is yes, but clear and transparent global guidance on this has been missing - the Claims Code of Practice is designed to address this.

Four steps

Today the VCMI outlined a four step process for companies and other organisations using carbon credits. Any carbon credit claims must be additional to a credible emissions reduction plan and this must be backed up with evidence. The credits must meet other requirements, such as meeting the emerging Core Carbon Principles (CCPs), or until then, CORSIA-eligible credits. Importantly, companies must disclose information, such as their GHG emissions and the number of credits they retire. 

Three tiers 

So what exactly can companies claim? Organisations have three types of claims they can choose relating to the amount of credits they retire. Specifically, the tiers relate to the proportion of carbon credits retired, relative to their emissions footprint:

The tiered approach is designed to simplify what organisations can claim while also providing an incentive for increasing action.

Five takeaways

Carbon contributions, not offsets

Perhaps the most contested claim being used in the VCM - and one of the key grounds for greenwashing claims - is that of offsetting, the idea that a company’s emissions are negated by purchasing voluntary offsets. The VCMI makes clear that its code is supplemental to company reductions, emphasising that ‘climate contribution’ claims are the appropriate approach for those using carbon credits.

Quality matters

An important step to using carbon credits is evidencing that carbon credits are of high efficacy. The VCMI has established a partnership with the Integrity Council for the Voluntary Carbon Market and emphasises the importance of CCPs as a benchmark of carbon quality, although CORSIA-eligible credits can be used in the meantime. However as market participants know, a particular methodology is never a guarantee of project quality, and assessments such as ratings provide the risk information needed to understand carbon efficacy. 

Claims must be transparent

As with the CCPs that were announced earlier this year, the VCMI also identifies the importance of information disclosure to improve integrity and transparency in the market. Companies will be required to disclose information about their emissions reduction targets as well as the carbon credits they purchase. 

The VCMI has wide buy-in

It was evident from the launch of the claims code that there is significant buy-in from a wide group of stakeholders. The launch event had support from NGOs, business coalitions and advocacy organisations. Representatives of the government of Kenya, the UK and Japan expressed their support for the initiative. Other market initiatives, such as the IC-VCM and the SBTi spoke at the event, helping to build a market-wide view which should boost the credibility of the approach taken by the VCMI. 

An important turning point

The launch of the VCMI claims code may be an important turning point for the market, helping to provide clarity for organisations purchasing credits. Along with the CCPs, the aim is to provide a globally consistent approach on how to use voluntary carbon credits as part of the net zero transition. We see carbon ratings as complementary to both and members of both initiatives have also acknowledged the importance of ratings to understanding project based carbon efficacy. 

As our CEO Tommy Ricketts said last week, ‘buying a credit is really about paying for pollution, whether you make a hard, soft or squidgy claim is secondary. Neither is a panacea, rather these market initiatives serve to deliver essential building blocks for a market-based approach for ensuring carbon credits help tackle residual carbon emissions’. 

For efforts to tackle the climate challenge, this has never been so important. As Maria Mendiluce, CEO of We Mean Business campaign said at the launch event today. ‘Without the Voluntary Carbon Market, we will not reach the goals of the Paris Agreement.’