New research from The Climate Board reveals need for wider voluntary carbon market participation for companies to meet ambitious climate targets

  • Survey of 145 global companies finds that while majority believe in efficacy of carbon credits in helping to set and meet climate targets, just half are actively using them
  • Decarbonizing scope 3 remains the biggest area of concern for corporates, with 93% saying they are facing critical challenges to meet targets
  • Findings have helped to inform the development of both the VCMI’s Claims Code of Practice and its recently released Scope 3 Flexibility Claim, aimed at building confidence in the Voluntary Carbon Market

25 January 2024, Washington D.C. – The Climate Board (TCB), a leading specialist research and information services firm, and the Voluntary Carbon Markets Integrity Initiative (VCMI) have jointly published a report exploring corporate perspectives on the voluntary carbon market. The report highlights the need for wider carbon market participation if companies are to meet ambitious scope 3 targets. Developed by TCB with support from VCMI, it surveyed 145 global companies across 10 sectors. The report’s insights underscore the operational challenges for companies in executing carbon reduction strategies. It also provided a real-time view of corporate approaches to the Voluntary Carbon Market, highlighting how high-quality carbon credit use can complement internal abatement initiatives.

The report found that: 

  • Majority of companies have or plan to use the carbon markets as an additional tool to meet 2030 targets: 41% of respondents had purchased carbon credits as part of their carbon reduction strategies in the past 2 years; 19% of respondents had not participated in the carbon market in the same timeframe, but plan to do so prior to 2030; and 40% of respondents either had no plans to engage or were undecided as to when they might participate. 
  • There are critical challenges preventing corporates from achieving scope 3 emissions reductions targets: 93% of respondents that have already developed and set scope 3 emissions reduction targets are facing significant challenges to reaching their goals. The most common of these challenges were: the cost of decarbonization, engaging supply chain in emission reduction efforts, and lack of emissions reductions technologies available at the necessary scale.  
  • Companies said science-based targets would be more achievable with a permitted degree of flexibility when using carbon credits: 70% of respondents said that the use of carbon credits, under specific eligibility, would increase the likelihood that their company would either maintain or, in some cases, set a science-based target.

The Climate Board’s research was conducted in sequential phases, with each phase informing the one following it, with findings used to inform and refine VCMI’s Claims Code of Practice (Claims Code), which provides guidance to companies and other groups on the use of high-quality carbon credits and how they communicate their use of those credits. Further guidance following the initial Claims Code was published ahead of COP28 last year. This guidance enables companies to make Carbon Integrity claims using high-quality carbon credits, directing finance to initiatives that mitigate climate change, and demonstrating that they are going above and beyond science-aligned emissions cuts. It also included VCMI’s Monitoring, Reporting & Assurance (MRA) Framework to operationalize the Claims Code and provide clear steps for companies to follow to make a Carbon Integrity claim. By following VCMI guidance, companies can play their part in accelerating global net zero and channel finance to mitigate climate change in parallel with their own internal emissions reductions, to meet the 1.5 C temperature goal. 

The Climate Board’s research has also directly informed the development of VCMI’s new Scope 3 Flexibility Claim, which is currently in beta version, set to be finalized in Q3 of this year. The new claim will unlock demand for carbon credits from companies making progress towards science-aligned targets, but unable to fully meet them.   

The three primary reasons respondents cited for not participating in the voluntary carbon market were that companies 1) were focusing on internal operational progress towards meeting net zero commitments before participating, 2) were concerned about greenwashing claims, and/or 3) needed more standardization or guidance around high-quality carbon credits. 

The beta release of this Scope 3 Flexibility Claim outlines clear guardrails including how the use of carbon credits must decline over time, leading to their complete phaseout no later than 10 years after the first claim is made, or by 2035, whichever is the earlier. At this point, there should be no further emissions gap to bridge and carbon credits should only be used to address remaining emissions once near-term targets have been met. Companies interested in making this claim will also be required to meet VCMI’s Foundational Criteria and show progress on reducing emissions within its operational control (i.e. scope 1 and 2). 

Partnering with TCB allowed VCMI a real-time, independent perspective on the challenges corporate firms face on the ground when it comes to meeting emissions reduction targets. TCB’s research enabled the advancement of VCMI’s core mission: a world on track to achieving net zero emissions by mid-century.

Angela Paulk, CEO of The Climate Board, said: “As we interviewed executives, we heard a lot about the operational challenges that many sustainability professionals face in meeting regulatory and strategic targets related to climate – as well as their thirst for more information. Such real-time dialogue is key to supporting the evolution of the carbon markets. Our focus on impact – supporting executives with industry-leading actionable insights and best practices – made us the right partner to both capture corporate sentiment and help synthesize the opportunities for VCMI to advance its mission.”

Ana Carolina Szklo, Technical Director – Markets and Standards at VCMI said: “Through our collaboration with The Climate Board, we’ve delved deep into the complex world of corporate carbon credit practices. The findings underscore a pivotal juncture in our collective journey towards a more sustainable future. As VCMI continues to champion high-integrity voluntary carbon markets, these insights not only highlight the challenges but also pave the way for transformative solutions aligned with the Paris Agreement’s objectives. We will continue to forge pathways that both benefit our planet and resonate with the aspirations of communities worldwide.”

About TCB 

The Climate Board (TCB) is a sustainability partner and network for corporate executives. Membership of TCB provides sustainability executives with both on-demand support and the network’s insights on pressing strategic issues, regulatory change, and implementation. TCB’s global network and cross-disciplinary expertise aim to translate insights into actionable best practices compatible with ambitious climate standards.  

About VCMI 

The Voluntary Carbon Markets Integrity Initiative is an international non-profit organization with a mission to enable high-integrity voluntary carbon markets (VCMs) that deliver real and additional benefits to the atmosphere, help protect nature, and accelerate the transition to ambitious, economy-wide climate policies and regulation.  

To read the full report click here.

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