A global initiative to boost the $2B carbon offsetting market has released guidance to help companies choose better carbon credits and introduce more transparency to the unregulated sector. With carbon offsetting demands growing to accommodate net-zero targets, the independent body aims to issue labelled credits by the end of the year.
The global carbon offset market is unregulated, which makes it hard for companies to gauge which credits are good, with questions over the industry’s poor transparency and the environmental quality of projects. To combat this, the Integrity Council for the Voluntary Carbon Market (ICVCM) has published its criteria for projects to achieve its new Core Carbon Principles (CCPs).
Speaking to FoodNavigator, an ICVCM spokesperson said: “The past year has seen a number of companies withdraw from earlier commitments to purchase carbon credits as concerns mounted over the quality of credits on the market.”
They added that the issue wasn’t a lack of good carbon credits, but rather a difficulty for buyers to distinguish between the good and the bad. The sector is filled with bilateral transactions, with minimal standardisation and no central exchange, meaning companies must carry out extensive due diligence in-house. Some have found that the credits they bought turned out to be of lower quality than they initially thought. “This has reduced confidence and purchases, which ultimately means less finance for projects to reduce and remove carbon emissions,” the spokesperson said.
“It is expected that this [new guideline] will give buyers greater confidence and drive up both purchases and prices for high-quality credits, increasing finance for impactful projects and providing incentives for developers to improve standards,” they added.
The result of a 60-day deliberation between stakeholders in the voluntary carbon market and scientific and industry experts, the 10 core principles are spread into three categories: emissions impact, governance and sustainable development. Additionality, permanence, robust quantification and prohibiting double counting make up the first part, while effective governance, tracking, transparency and third-party validation and verification compose the governance category. The last one, meanwhile, involves sustainable development benefits and safeguards, and contributions towards net-zero transition.
Currently, it isn’t mandatory for a business retiring a carbon credit to disclose its name, but under the new standards, registries retiring CCP credits will need to identify on whose behalf the credits have been retired. And once a credit has been retired, it can’t be traded or used to meet climate targets by another company.
Carbon-neutral’ claims and greenwashing concerns
According to FoodNavigator, the carbon credit framework advises companies to follow a ‘climate contribution’ approach, where “carbon credits are not counted towards, nor represent compensation for, a company’s remaining value chain emissions”. It refers to using credits for climate mitigation, rather than making claims that a company has canceled, counterbalanced or netted out its emissions.
A spokesperson from climate action organisation Science Based Targets Initiative said this could lead to pushback against carbon-neutral claims, historically the most widely used climate-related ‘achievement’ used by businesses. The term can have multiple connotations – some feel it can facilitate a company’s climate mitigation action beyond its value chain, while others find it conceals the impact of firms that haven’t decarbonised.
This confusion has also led to a reduction in carbon credit investment out of fear of being accused of greenwashing. It echoes a recent poll by the Chartered Institute of Marketing that revealed that 45% of marketing professionals have come under pressure from clients to provide more ‘green’ marketing, but the demand for such campaigns is outpacing education in this sector.
Many of the surveyed marketers don’t feel comfortable working on such projects as they fear they’ll be accused of greenwashing, and almost half (49%) said they had spoken to their employer or client about the reputational and legal risks accusations of greenwashing have brought in the last five years.
Companies have been using carbon offsets – which include measures like tree planting – to cut emissions and meet their net-zero plans for years, but this practice has been criticised by many experts, including Greenpeace. One argument is that there aren’t enough trees in the world to offset everybody’s emissions, and there likely never will be.
“We do expect this will have a significant impact on the market,” ICVCM COO William McDonnell told Reuters, “but we can’t prejudge the pre-designed assessment process we are about to start.”
