How the VCMI Claims Code of Practice is helping companies reach net zero

What is the Voluntary Carbon Markets Integrity Initiative (VCMI)?

The Voluntary Carbon Markets Integrity Initiative (VCMI) is an international non-profit empowering companies, governments and non-state actors to realise the full potential of high-integrity voluntary carbon markets (VCMs). VCMI provides guidance on how different actors can make voluntary use of carbon credits to make a meaningful impact on climate action.

What is the VCMI Claims Code of Practice?

VCMI's Claims Code of Practice (Claims Code) provides a universal standard for companies to, first, use carbon credits as part of their net zero transitions, and second, make verified claims about this use. The Claims Code enables companies to make ‘Carbon Integrity’ Claims, recognising their achievements in going above and beyond science-aligned emissions cuts to accelerate global net zero.

The Claims Code was developed through an 18-month, deliberative process involving experts, governments, companies, and civil society actors from around the world, to provide a high-integrity standard with international recognition, so that companies can engage with confidence and governments can develop policy in a harmonised way.

Who is the VCMI Claims Code of Practice for?

The VCMI Claims Code of Practice is intended for:

• Companies seeking to credibly utilise carbon credits and obtain recognition through a Carbon Integrity Claim.
• Individuals, businesses, and other consumers interested in making environmentally conscious purchases.
• Investors and stakeholders evaluating the credibility of a company's climate initiatives, including its use of carbon credits alongside broader decarbonisation efforts.
• Governments and regulatory agencies exploring ways to incentivise the credible use of carbon credits by non-state actors and establish truthful, clear, and informative guidelines through corporate reporting requirements, advertising standards, consumer protection measures, and other policies.

How does the VCMI work?

To qualify for an enterprise-wide VCMI Claim, companies need to adhere to the following steps:

1. Adhere to Foundational Criteria:

These criteria are formulated to align with the long-term objectives of the Paris Agreement and reflect current corporate best practices.

Companies have to:

• Maintain and publicly disclose an annual inventory of greenhouse gas emissions.
• Establish and publicly disclose scientifically validated, short-term emissions reduction targets, with a public commitment to achieving net zero emissions by no later than 2050.
• Disclose financial and governance metrics that demonstrate a company’s progress towards meeting its near-term target.
• Demonstrate that the company's public policy advocacy aligns with the objectives of the Paris Agreement and does not hinder ambitious climate regulation.

2. Choose a VCMI Claim:

VCMI offers three tiers of Carbon Integrity Claims that companies and other non-state entities can pursue. Each of these claims signifies actions that surpass the internal decarbonisation efforts of companies:

• Carbon Integrity Silver stands as the entry-level tier, demanding the acquisition and retirement of high-calibre credits amounting to 10% or more, yet less than 50%, of a company's remaining emissions, subsequent to demonstrating advancement towards its short-term goals.
  1. Meet the Foundational Criteria;
  2. Purchase and retire carbon credits of a quantity that equals or surpasses 10%, but is less than 50%, of their leftover emissions from the most recent reporting year. These credits should only be applied to funding extra climate mitigation beyond these targets. The proportion of carbon credits to be bought and retired must rise with each successive year a company makes a Claim.
• Carbon Integrity Gold necessitates the procurement and retirement of high-quality carbon credits equivalent to 50% or more, but less than 100%, of a company's residual emissions after showcasing progression towards its near-term targets.
  1. Meet the Foundational Criteria;
  2. Purchase and retire premium carbon credits that are equal to or more than 50% but less than 100% of their leftover emissions from the most recent accounting year. These credits should be exclusively used to fund extra climate control measures beyond these targets.
  3. The proportion of carbon credits that a company must purchase and retire should increase every year following a Claim.
• Carbon Integrity Platinum represents the apex tier, aspiring companies to acquire and retire high-quality carbon credits covering 100% or more of remaining emissions.
  1. Meet the Foundational Criteria;
  2. Buy and retire carbon credits of high quality that are equal to or exceed 100% of the remaining emissions from the most recent reporting year. These credits should only be used to finance additional climate mitigation beyond these targets.
  3. The proportion of carbon credits that a company must purchase and retire should increase every year following a VCMI Claim.

All applicants must satisfy the four Foundational Criteria and exhibit emissions reductions relative to the base year, whether absolute or intensity-based. Furthermore, the proportion of carbon credits purchased and retired should escalate each subsequent year following the company's attainment of a VCMI Silver or Gold Claim.

3. Meet the requisite carbon credit utilisation and quality standards.

Carbon credits utilised by a company must meet the highest quality benchmarks to uphold the credibility of its claims and foster integrity throughout the market. VCMI delineates these as credits aligned with the Integrity Council for the Voluntary Carbon Market (ICVCM) Core Carbon Principles (CCPs).

‍Until CCP-Approved credits become available, VCMI offers companies two approaches to purchasing and retiring high-quality carbon credits:

Option 1: Purchase and retire CORSIA-eligible credits, when a specific activity type has not yet been assessed by the ICVCM.

Option 2: Disclose how due diligence processes align with all 10 Core Carbon Principles.

Option 3: Combination of the above.

4. Verification of reported information and assurance for key metrics is crucial to substantiate a VCMI claim.

Transparent reporting and assurance of information are imperative, requiring claimants to demonstrate adherence to the Foundational Criteria and Carbon Integrity Claim-specific requisites while disclosing pertinent information regarding the acquired carbon credits.

The VCMI Monitoring, Reporting and Assurance (MRA) Framework outlines specific reporting and assurance criteria for companies to meet in order to make a Carbon Integrity Claim. This ensures that for each VCMI Claim issued, underlying information is appropriately evaluated, evidenced, and verified. The MRA Framework helps companies navigate the VCMI Claims process and adhere to all requirements found within the VCMI Claims Code.

Final Thoughts

Looking ahead, the expansion of the Claims Code throughout 2024 and beyond will encompass the development of additional modules and guidance. This includes a comprehensive monitoring, reporting, and assurance (MRA) framework, further, VCMI Claims tiers, and updated claim names and provisions for specific sectors and geographies.

Although VCMI Claims are confined to voluntary initiatives, robust comprehensive policies and regulations are deemed indispensable in averting catastrophic climate change.

The VCMI’s Claims Code of Practice serves as a crucial guide for companies to comply with upcoming environmental regulations like the CSRD. It also helps them effectively demonstrate their contributions to climate change mitigation beyond their value chains.

You can read more about the VCMI Claims Code of Practice by reading this report.