The Voluntary Carbon Markets Integrity Initiative (VCMI), which develops methodologies and criteria with the stated goal of helping to define what a high-quality carbon credit is, has published new guidance for companies on scope 3 emissions (indirect emissions from a company’s value chain). It allows a company to rely on carbon credits to claim progress towards their climate targets until as late as 2040 — a date with no basis in science and an approach that could disadvantage frontrunners and be used by others to mask climate inaction.

“VCMI risks undermining its own credibility by allowing companies to present themselves as climate leaders while, in reality, falling behind on their commitments and potentially even increasing their indirect (Scope 3) emissions,” emphasises Lindsay Otis Nilles, CMW expert on global carbon markets: “Offering a pathway that rewards appearance over real action not only weakens trust, but also delays the urgent transformation the climate crisis demands.”

The only way for companies to truly decarbonise is to reduce emissions at their source. If they are allowed to offset their emission gaps through carbon credits for the next 15 years, as the VCMI approach suggests, it risks enabling them to avoid the harder work of actually reducing their scope 3 emissions. Reducing emissions should happen today, not in a decade, the NGOs say.

“The VCMI scope 3 claim risks dialling back the already insufficient levels of corporate climate ambition. We believe it is highly likely that the Scope 3 Claim could mislead investors, consumers and regulators, allowing companies with ambitious-sounding emission reduction targets to actually continue increasing their emissions in the short-term,” echoes Thomas Day of NewClimate Institute. “This could disadvantage ambitious companies with genuine climate strategies by allowing laggard competitors to exaggerate their own efforts.”

Hard but necessary

Reducing emissions at their source is the only credible pathway to net zero, NGOs and scientists say. Carbon credits can shift focus and resources away from direct emissions reductions, weakening incentives for companies to reduce their scope 3 emissions. Delaying real action for over a decade will only intensify the impacts of the climate crisis while allowing companies to falsely claim climate leadership.

“Corporate climate action in accordance with the Paris Agreement implies steep emission reductions across all scopes. Carbon credit schemes are a false solution: they consistently fail to deliver their purported climate benefits, while causing real harm to people and biodiversity. Claims that rest on carbon credits will be built on shaky foundations, and will not pass the scrutiny of civil society, regulators or courts,” observes Niels Debonne, senior policy officer at Milieudefensie.

Allowing carbon credits in scope 3 does a disservice to companies that are taking real steps to reduce their emissions. Under VCMI’s new guidance, there might be no obvious difference between the claims of companies that are leading the way in emissions reduction and those simply buying carbon credits to avoid having to reduce emissions.

“It’s a huge task for companies to reduce their scope 3 emissions, that’s why they need help doing it. Carbon credits don’t meet this need. Emissions don’t just disappear into thin air — and they shouldn’t disappear in data either,” explains Thea Lyngseth, a programme officer at the Environmental Coalition on Standards (ECOS). “Investing in carbon credits for scope 3 instead of reducing emissions at their source only delays real climate action, as well as wasting companies’ time and resources.”

About

ECOS – Environmental Coalition on Standards is an international NGO with a network of members and experts advocating for environmentally friendly technical standards, policies, and laws around the world.

NewClimate Institute is a non-profit think tank based in Germany, supporting research and implementation of global climate action. Our flagship projects such as the Climate Action Tracker and the Corporate Climate Responsibility Monitor are internationally recognised and followed.

Milieudefensie (Friends of the Earth Netherlands) is a Dutch environmental NGO with over 100,000 members and donors. Milieudefensie campaigns for climate justice and Paris-aligned, transparent and high-integrity corporate climate action.