Are long-standing “carbon neutral” claims by Google and others credible? Hard scientific scrutiny is likely to say “no,” but a new claims watchdog could confusingly say “yes.”
That watchdog, Voluntary Carbon Markets Integrity (VCMI) initiative, last week announced a trial code aimed at testing the credibility of corporate net-zero claims tied to the use of offsets. Google, Unilever Plc and Hitachi Ltd. have agreed to trial it.
Google’s carbon-neutral claim relies not just on using renewable energy, but also the purchase of carbon offsets from projects such as tree planting or gas capture to compensate for emissions it can’t cut from its own operations. The strategy has become increasingly popular. For every product stamped carbon neutral — from wine to make-up and even cargoes of natural gas — companies are relying on such credits.
The idea of offsetting — that companies can continue to pollute while buying credits that fund emissions reductions elsewhere in the world — has been slammed by scholars and activists alike. Ideally purchasing carbon offset credits would help remove, reduce or avoid adding CO₂ to the atmosphere, but the poor quality of many offsets offered on the market has invited skepticism. Investment bank Credit Suisse labeled the opaque, unregulated industry a “wild west” in a report published in May.
VCMI is one of two new initiatives setup over the last year to tackle the problems. While VCMI is focusing on corporate claims, the Integrity Council for the Voluntary Carbon Market (ICVCM) aims to address the quality of the underlying carbon offsets.
ICVCM was supposed to publish its draft “core carbon principles” in May but it has now delayed the guidance to July. The council says the guidance will help determine what counts as “high quality” offsets. VCMI, with backing from the British government and the Children’s Investment Fund Foundation, has been faster and published its provisional guidance for expert comment last week.
It offers companies the option to apply for three levels of badges, VCMI Gold Net Zero, VCMI Silver or VCMI Bronze. For individual products or brands, companies can also apply to be VCMI Carbon Neutral. The badge of credibility a company receives depends on the ambition of its emissions reduction targets, whether it’s on track to meet them, and how many offsets it’s purchased to cover the remainder.
VCMI “does not specify or rely on any particular pathway to reach global net zero consistent with 1.5 degrees Celsius global warming,” according to its provisional guidance. It passes no judgment on the credibility of the underlying emissions reduction target, as long as it’s deemed “science based,” nor on the quality of the underlying offset (both are deferred to third parties). It will simply judge whether claims match progress against that target and the offsets bought, with badges awarded accordingly.
Sadie Frank, financial regulation lead at US nonprofit CarbonPlan, said deferring these core tasks to other bodies means VCMI is setting the bar “low.”
Which takes us back to Google. For VCMI, Google may be able to claim carbon neutrality on the basis it’s on a “science based” path to net zero, even if that path is contested. There is currently one body — the Science-Based Targets initiative — that maintains a credible, widely-recognized standard for setting science-based targets, but Google has not received SBTi’s stamp of approval and VCMI does not require it either. VCMI further requires Google to buy offsets to receive its stamp of approval and states that these should be of “high quality,” but there’s no agreed-upon standard yet from ICVCM on what qualifies.
VCMI has yet to pass judgment on any company’s claims and Google has stated its support for the guidance. “As we all as a community work to address the climate crisis it’s important that we have standard ways of being genuine in the way we’re reporting on our progress,” said Kate Brandt, chief sustainability officer at Google, in a press release when VCMI’s guidance was published. The company declined to comment further.
In its current state, the code of practice is “insufficient,” said Gilles Dufrasne, policy officer at nonprofit Carbon Market Watch who also serves on VCMI’s expert advisory group. It “continues with this logic of providing consumers with one overall message that the services and goods that they consume don’t have a negative impact on the climate, and that will continue to be very misleading.”
VCMI’s code also risks weakening hard-fought standards. SBTi is clear on the use of offsets. A company can only be considered net zero (or carbon neutral) when it has reduced 90-95% of its emissions and addressed the residual emissions with offsets that actually remove carbon dioxide from the air. “Companies cannot balance their unabated emissions ahead of that and claim to be net-zero,” an SBTi spokesperson said. “We recommend avoiding claims that imply no impact on the climate before a company reaches a state of net-zero emissions.” Offsets tied to carbon removal make up less than 5% of the global market for offsets.
There’s a middle road available here. Instead of claiming to be “carbon neutral” or “net zero” on the strength of offsets, companies could claim to be “carbon responsible” or “on track” to net zero after they have passed through the filters that SBTi, ICVCM, and VCMI have created.
VCMI’s executive director Mark Kenber defends the use of offsets. “The voluntary carbon market exists only for a public purpose,” he said. “That is to reduce or remove emissions that wouldn’t happen otherwise and to channel finance particularly to developing countries.”
While that’s a laudable goal, the opacity of the market as it exists shrouds how much money paid for offsets actually ends up in developing countries. A Greenpeace investigation published in May found that offset brokers can pocket as much as 85% of the price companies pay, which leaves only a small fraction ending up in developing countries.
For all its weaknesses, experts stress VCMI’s guidance is work in progress and the initiative is seeking feedback from market participants. “Offsets have mostly been a dangerous distraction,” said Kate Hampton, chief executive of the Children’s Investment Fund Foundation and a member of VCMI’s steering committee. “But we can’t simply ignore the market and hope it will go away. Making the business case for integrity means connecting with consumers through claims. This carries risks, but the bigger risk is that meaningful action becomes invisible in a sea of disinformation.”