Efforts to reduce greenwashing
With corporate decarbonisation driven by robust science a core focus of the “implementation decade”, ensuring genuine corporate progress was a priority for many. The UN Secretary General’s High-Level Expert Group, chaired by former Canadian Minister Catherine McKenna, launched a report that proposed tougher standards on net zero claims, including the requirement that carbon credits be used by companies in a way that is truly additional to decarbonisation efforts. This was echoed by the ISO Net Zero Guidelines, also released at COP27. Ensuring the use of carbon credits enhances climate mitigation rather than substituting for internal decarbonisation is one of VCMI’s key principles and our Claims Code of Practice will maintain this approach.
Article 6 decisions held off until COP28
Disappointingly, decisions on many key Article 6 issues have been held off until the next round of COP negotiations. This includes decisions on how to treat emission “removals”, whether to allow credits for “emissions avoidance” and when carbon credits could be “revoked”. Gaps in the rulebook run the risk of deterring carbon market investments, due to uncertainty around future regulations, and so they must be decided on as soon as possible.
However, one major agreement was on the creation of “mitigation contribution units”: Article 6.4 carbon credits issued without corresponding adjustments which can be used companies and other non-state actors to meet their own commitments, while at the same time contributing towards the host country’s progress towards meeting its NDC. There are still questions about how double-claiming can be avoided – or at least better understood – but the creation of these units aligns the UNFCCC framework more closely with the language used in VCMs.
VCMI’s guidance is clear and as ever based on transparency – if buyers use these units, they must make it clear that the emissions reductions will be used by the host country towards meeting their goals; and buyers must report transparently on which kind of units they’re using.
Unlocking climate finance in developing countries
High-integrity carbon credits can play a central role in directing financial flows to developing countries, and we’re pleased to see the creation of an African Carbon Markets Initiative, which has the potential to unlock $6bn in revenue by 2030 to be distributed equally and transparently among local communities.
Most carbon sinks, like tropical forests and mangroves, are in the Global South – and climate finance is crucial to protecting them. But these kinds of proposals only increase the need for integrity across the full spectrum of carbon markets. VCMI is keen to work with programmes such as the African Carbon Markets Initiative (ACMI) to ensure that these conditions are met, and that finance generated from the Voluntary Carbon Market plays a truly catalytic role.
At the heart of the action: On the ground in Sharm El-Sheikh
VCMI Co-Chairs Rachel Kyte and Tariye Gbadegesin joined other climate leaders on several globally significant panels and roundtables. These included Goals House’s deep dive on corporate net-zero, a UK Pavilion discussion on how Africa’s capital markets can close the finance gap, and a panel organised by Strive on communicating carbon offsetting with integrity.
We also hosted our own event with the We Mean Business Coalition on what businesses need – and what we need from businesses – to create high-integrity VCMs. The event saw Rachel, Tariye and WMB’s CEO Maria Mendiluce join an array of industry experts from the private and public sectors. Despite being on a Saturday evening, the event was well attended, with corporate and climate leaders cramming in to discuss this vital topic.
VCMI was referred to in top tier international media, including the Financial Times and Wall Street Journal’s coverage of the John Kerry announcement – moving us from the periphery to the core of media debate compared to the start of the year.