Shadia Nasralla and Susanna Twidale

LONDON, (Reuters) – A global consultation was launched Tuesday to establish a standard for assessing companies’ claims regarding progress toward internal climate targets. It also assesses their use of carbon offset credit credits. This is aimed at bringing transparency and regulation to unregulated markets.

Shell (LON 🙂 and Easyjet, two global corporations that have net zero emissions targets, stated they will need carbon credits to offset any residual greenhouse gasses.

The offset credits are based on the planting of trees and switching to cleaner fuels. They trade in an unregulated market that is open to all, with different approaches and standards.

Greenpeace, a group of climate activists, is critical of offsets. It claims they conceal a failure to take action in order to cut actual carbon emissions.

The Claims Code of Practice, which was launched by Voluntary Carbon Markets Integrity Initiatives (VCMI) and supported by the British government, aims to assist investors in determining whether claims by companies that use carbon offsets can be trusted.

Mark Kember (VCMI executive director), stated in an interview that “something needs to be in place that will provide consistency in corporate claims regarding carbon credit use and their decarbonization.”

Last year’s VCMI was established by Britain, the philanthropic Children’s Investment Fund Foundation Foundation, and is supported by United Nations Development Programme.

New code will make terms like net zero or climate neutral transparent.

A company may be given a Gold, Silver, or Bronze award depending on its progress toward corporate climate targets in a particular year and whether offsets are used to exceed those targets. Ideally, the goal is to reach net zero carbon within the shortest time possible.

The VCMI uses benchmarks to evaluate corporate climate targets. For example, the Science Based Targets Initiative states that a company cannot claim to have a credible zero-carbon plan if they use carbon credits to offset less then 10% of their emissions.

This was done to restrict the ability of companies to claim their offsets have decreased emissions. In reality, these same companies continue to emit planet-warming gases from their own operations.

Expect the publication of the final standard in 2023.