Establish a Policy to Make Credible Corporate Claims
Environmental Defense Fund
High-quality carbon credits can play a significant role in corporate climate strategies, but only if they are accompanied by clear and credible information to help stakeholders understand the claims your company is making. Developing a claims policy that is transparent and aligned with best practices will minimize the potential risks of purchasing carbon credits and maximize the benefits.
An increasing number of companies are using the procurement of carbon credits to make claims about their climate performance, such as a claim of ‘carbon neutrality.’ While there are significant benefits for both the planet and your business in purchasing high-quality carbon credits, there are also substantial risks if your company makes a non-credible claim. These risks include reputational damage to your company, and increased skepticism toward carbon credits that could slow climate action.
Developing a clear and transparent policy around what carbon credits your company will or will not purchase based on quality and other measures, along with a policy about what claims your company is comfortable making based on purchased carbon credits, will mitigate the risk and maximize the benefits of procuring credits.
Address the Integrity of Your Carbon Credit Strategy
One of the key challenges with respect to corporate carbon credit programs has been uncertainty related to what credible claims a company can make as a result of their carbon credit programs. Various phrases, labels, and claims exist, with several companies defining individualized approaches to enacting and communicating on their respective climate action. In a ‘lessons learned’ document describing early experiences in the procurement of carbon removals, Microsoft noted that, “organizations are working in isolation and tracking outcomes in different ways that cannot be compared easily. This leads not only to inefficiency but also to inconsistencies in claims.”1
Organizations like the Voluntary Carbon Markets Integrity Initiative (VCMI) are working to address uncertainty by developing standards for both corporate buyers and suppliers of carbon credits. In their , VCMI outlines four steps for corporations to make credible claims and develop a procurement scope:
- Comply with the foundational criteria: For companies to make credible carbon credit claims they must first maintain and publicly disclose their emissions inventory, and then set and disclose science-based near-term emissions reduction targets and commit to net zero emissions by 2050 or earlier. They must also demonstrate that they are on track to meet their near-term emissions target and that their policy advocacy supports the Paris Agreement rather than presenting a barrier.
- Select a claim to make: Determine what kind of claim the company is trying to make. For example, purchasing and retiring high-quality carbon credits equal to or greater than 100% of your company’s remaining emissions would represent a “VCMI Platinum” claim under the VCMI Code of Practice.
- Meet the required carbon credit use and quality thresholds: VCMI defines high-quality credits as those that meet the Integrity Council for the Voluntary Carbon Market (ICVCM) Core Carbon Principles and qualify under its Assessment Framework Credits. These credits should also represent mitigation that occurs outside of the value chain of your company.
- Report transparently on the use of carbon credits: Transparently reporting information related to carbon credit procurement in publicly available annual corporate sustainability reports is critical for substantiating a claim.2
Once the strategy’s objectives, a plan for purchasing and managing carbon credits, and a corporate carbon credit claims policy have been established, companies can tie it all together in their strategy’s vision, outlining the intended outcome and impact of their future carbon credit portfolio and their approach for realizing the vision over time.