How the VCMI is helping companies reach net zero

What is the VCMI?

Earlier this year, the VCMI published the Claims Code of Practice, a rulebook that provides clarity and guidance on how to credibly utilise carbon credits as part of corporate climate commitments . By offering clarity, transparency, and consistency in defining commitments and claims, the Claims Code instills confidence among stakeholders engaging with voluntary carbon markets.

Developed through two years of research and engagement with stakeholders from various sectors and regions, including extensive testing and public consultations, the Claims Code operates within an evolving governance framework for voluntary carbon markets and corporate accountability. It has been intentionally designed in collaboration with existing standard-setting bodies to ensure alignment and complementarity, thereby enhancing clarity for businesses, stakeholders, and the public at large.

Who is the VCMI intended for?

The VCMI Claims Code of Practice is intended for:

• Companies seeking to credibly utilise carbon credits and obtain validation through a VCMI 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.
• Showcase progress towards meeting short-term emissions reduction targets and minimising cumulative emissions over the target period.
• 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 Claims that companies and other non-state entities can pursue. Each of these claims signifies actions that surpass the internal decarbonisation efforts of companies:

• VCMI Silver stands as the entry-level tier, demanding the acquisition and retirement of high-caliber 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. Buy and cancel 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 VCMI Claim.
• VCMI 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. Acquire and eliminate 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 VCMI Claim.
• VCMI 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.

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 and meeting its Assessment Framework.

4. Obtain third-party assurance of reported information 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 VCMI Claim-specific requisites, while disclosing pertinent information regarding the acquired carbon credits.

Final Thoughts

Looking ahead, the expansion of the Claims Code throughout 2023 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, updated claim names, regulations for claims at the product, service, or brand level, enhanced guidance for carbon credit purchasers, and provisions for specific sectors, geographies, and smaller entities, among others.

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.

Source: VCMI Claims Code of Practice