Making sense of the alphabet soup: the common themes across carbon credit integrity guidance
By Jordan Faires and Pedro Barata
A year ago, the voluntary carbon market was craving guidance on quality and integrity. There was no public, unified guidance to show carbon credit programs or companies what carbon credits were good, what was junk, and what lay in between.
This year, the voluntary carbon market has more guidance than ever before. Multiple expert bodies with global perspectives and reach have released guidance that better define integrity and quality, and guides buyers and programs toward these principles. Initiatives like the Integrity Council for the Voluntary Carbon Market’s (IC-VCM) Core Carbon Principles (CCPs) and the Voluntary Carbon Markets Integrity Initiative (VCMI) Claims Code of Practice have the potential to help the market make a major shift toward integrity and climate impact at a pivotal moment. Other resources like the Carbon Credit Quality Initiative (CCQI) and the Tropical Forest Credit Integrity (TFCI) guide are also available to help buyers decipher their carbon credit choices.
And yet, there is understandable sense of “what now?” in the voluntary carbon market. After waiting so long for clear guidance on quality and integrity, we have an alphabet soup of initiatives and guidance available. Businesses and other buyers may still wonder: how does this universe of disparate initiatives, processes, standards, and guidance documents fit together to support a cohesive climate strategy?
To help decipher the actionable advice from the alphabet soup of guidance, here are the common threads that EDF sees running through each of these resources:
- Acting within value chains is critical. First and foremost, businesses must commit to reducing emissions from their operations and value chain in line with science. This includes identifying a path forward to wean dependencies on fossil fuels, reducing greenhouse gas emissions in a net zero pathway, and publishing a clear climate transition action plan. Initiatives like the Science Based Targets Initiative, the UN-backed Race to Zero campaign, the UN’s High Level Expert Group on the Net-Zero Emission Commitments of Non-State Entities, and ISO all provide guidance on best-practice net zero goals. (Looking to further understand the differences between these frameworks? Net Zero Tracker provides a detailed comparison in their Similarly, the VCMI Claims Code of Practice provides a set of pre-requisites for companies to achieve before they make claims related to climate credits. Taken together, these frameworks and standards can be seen as a strong signal and direction of travel for ambitious net zero strategies.
- Companies have a responsibility to go above and beyond their science-based goals – including beyond value chain mitigation. To complement science-aligned reductions in its operations and value chain, companies must go further in their climate strategies to support global climate goals. This includes investments in “beyond value chain mitigation” through the purchase of high-quality carbon credits, to enable systemic changes, in all sectors and ecosystems, that are necessary for the global net zero transition. While SBTi is developing further guidance on beyond value chain mitigation this year, companies need not wait. Guidance like the Tropical Forest Credit Integrity (TFCI) Guide can help buyers select carbon credits, like those from jurisdictional REDD+ programs, that systematically move markets toward scale and integrity. Later this year, the ICVCM will also ramp up its assessment process of identifying and labeling credit types that meet its Core Carbon Principles (CCPs). This CCP label will indicate an overall baseline for credit quality, and companies should respond by shifting their portfolio over time to CCP-tagged credits.
- Due diligence to ensure environmental and social integrity is key. As companies’ sophistication increases, they should undertake deeper additional due diligence on individual carbon credit projects to ensure they have benefits for climate and communities. To that end, tools such as the Carbon Credit Quality initiative can help, providing free, transparent information on the quality of different types of carbon credits. The work of nascent carbon credit rating agencies can also play a key role in helping companies understand the quality of the credits they are purchasing.
- Transparency and truthfulness above all. Finally, when communicating about the environmental and social impact of carbon credit purchases, companies should be cautious to avoid false or misrepresentative claims. Legal challenges related to greenwashing, including around the use of credits, are on the rise, and many governments around the world are beginning to address these challenges with new guidance and regulations. There is now increased regulatory scrutiny on claims and the need for disclosure in the VCM from several institutions globally. From CFTC and FTC in the United States to Nordic Countries Claims Code, pressure is bearing on the VCM to up its game. Following the best-practices on the use of credits identified in the VCMI Claims Code of Practice and reporting transparently on sustainability activities can help to avoid potential accusations of greenwashing in carbon credit purchasing.
While new guidance and standards is a significant step in the right direction, there is much more work to be done to strengthen high-integrity carbon markets and simplify the path forward for businesses looking to implement ambitious net zero strategies. However, by taking these steps, companies and other carbon credit buyers can drive forward progress for robust voluntary carbon markets and meaningfully contribute to tackling the climate crisis.