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2023 VCMI_Claims Code Background Document

VCMI Claims Code Briefing Document

Introduction

The VCMI Claims Code of Practice, released in November 2023, builds upon the provisional Claims Code from June 2022. This document serves to provide supplementary information and guidance related to the Claims Code, ensuring its operability and clarity for users. The Claims Code aims to promote credible, net-zero-aligned participation in voluntary carbon markets, informed by multistakeholder consultations and road-testing.

A. Principles for High Ambition and High Integrity for Voluntary Corporate Climate Action

The VCMI Claims Code is grounded in several key principles aimed at guiding corporate climate actions:

  1. Science-Aligned: Corporate strategies should align with the IPCC's goal of limiting global warming to 1.5°C.
  2. Comprehensive: Climate actions must be based on accurate greenhouse gas inventories.
  3. Net-Positive Benefit: Actions should benefit individuals and communities, maximizing social and ecological co-benefits.
  4. Rights-Compatible: Corporate actions must respect human rights under international law.
  5. Nature-Positive: Actions should support the recovery of natural ecosystems.
  6. Additional: Companies should ensure that their actions lead to emissions reductions beyond business-as-usual scenarios.
  7. Immediate: Companies should prioritize immediate emission reductions, especially before 2030.
  8. At Scale: Corporate investments should significantly contribute to climate mitigation.
  9. Transparent: Companies must disclose their climate commitments and activities.
  10. NDC-Enabling: Actions should support national climate plans and ambitions.
  11. Consistent: Corporate lobbying should align with climate commitments.
  12. Collective and Predictable: Companies should collaborate with diverse stakeholders for climate action.

B. Claims Code Development Process

The development of the VCMI Claims Code involved extensive engagement and consultation:

C. Corresponding Adjustments

Under Article 6 of the Paris Agreement, corresponding adjustments are necessary to prevent double counting in voluntary carbon markets. These adjustments are accounting tools used when mitigation outcomes are transferred internationally to ensure that they are not counted towards multiple Nationally Determined Contributions (NDCs).

  1. Authorization: Host countries must authorize mitigation outcomes as internationally transferred mitigation outcomes (ITMOs) for use towards their NDCs.
  2. Voluntary Use: Voluntary carbon market participants may request corresponding adjustments for their mitigation outcomes, but this is not mandatory.

D. Further Guidance on Carbon Credit Quality

The VCMI has outlined the importance of ensuring the quality of carbon credits through several measures:

  1. Due Diligence: Buyers are encouraged to conduct thorough due diligence on carbon credits they purchase. Resources like the Carbon Credit Quality Initiative (CCQI) offer tools for assessing credit quality.
  2. Emissions Reductions vs. Removals: The debate continues regarding whether to prioritize emissions reductions or removals. Companies are advised to invest in projects that yield high-quality climate mitigation and co-benefit impacts.

Key Feedback and Adjustments

1. Balancing Ambition and Accessibility

Feedback indicated that while the Claims Code provided a strong framework for climate leadership, it posed accessibility challenges for smaller organizations. In response, VCMI is developing provisions for specific sectors, including hard-to-abate sectors and SMEs.

2. Guidance Implementation

Many stakeholders expressed the need for clearer definitions and criteria within the Claims Code to ensure independent assurance. The MRA Framework was developed to enhance transparency and provide detailed guidance on reporting and verification.

3. Treatment of Scope 3 Emissions

The complexity of accounting for Scope 3 emissions was highlighted in consultations. VCMI has revised its approach, allowing for near-term target-setting flexibility while maintaining the integrity of emissions reduction commitments.

4. Clarity of VCMI Claims

Stakeholders requested clearer definitions of claims and their requirements. In response, VCMI has refined claim names and descriptions, introducing "Carbon Integrity" claims with tiered levels to facilitate understanding and marketability.

5. Expanding Guidance on Carbon Credits

There remains a need for further clarity regarding the quality of carbon credits. VCMI has mandated the use of Core Carbon Principles (CCP)-approved credits, with plans to accept various credit types during a transitional phase.

6. Scope 3 Flexibility Claim Development

Research indicated that allowing flexibility in Scope 3 emissions accounting could accelerate corporate climate action. VCMI is working on developing criteria for this flexibility while ensuring it aligns with broader climate goals.

7. Foundational Criteria

The Foundational Criteria have been refined based on feedback, ensuring that companies can align their near-term targets with existing frameworks while maintaining high standards for climate action.

Conclusion

The VCMI Claims Code represents a significant step towards enhancing credibility and integrity in voluntary carbon markets. By incorporating stakeholder feedback and developing comprehensive guidance, VCMI aims to facilitate meaningful corporate participation in climate action while ensuring alignment with global climate goals.

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