VCMI’s New Scope 3 Flexibility Claim is an Important First Step

Today, the Voluntary Carbon Markets Integrity Initiative (VCMI) added a new Scope 3 Flexibility Claim to their Claims Code of Practice. We welcome the news, as the new claim will bring much-needed flexibility to companies looking to deliver on ambitious climate transition plans. 

However, while this additional claim is a step in the right direction, its relatively limited scope will still leave critical tools for climate action on the table. Let’s dig in.

What is the VCMI Claims Code of Practice?

The VCMI Claims Code of Practice is a set of guidelines for making credible use of carbon credits within corporate climate strategies. The original guidance published in the summer of 2023 includes three levels of “Carbon Integrity Claims,” which, in addition to clearing specific quality thresholds, require companies to demonstrate progress towards an emissions reduction target, such as those mandated by the Science Based Targets Initiative.

Why add the Scope 3 Flexibility Claim?

The original Claims Code set a high bar for climate action– so high that fewer than five percent of companies will likely be able to meet even the lowest tier. The new claim level is designed to provide an easier on-ramp for companies, allowing them to apply carbon credits to a portion of their emissions targets now rather than waiting until after they’ve delivered on emissions reductions. Focusing on scope three emissions makes sense, as these emissions typically represent the largest gap between emissions reduction targets and companies’ greenhouse gas inventories. 

What’s in the new claim?

Specifically, the flexibility claim will allow companies to use carbon credits to meet up to 50 percent of their scope three emissions, provided they have made demonstrable progress on their scope one & two emissions. The use of credits will need to be fully phased out by 2035. 

Will the new claim help to create more climate action?

There’s no doubt that the flexibility claim will make it easier for more corporations to adopt the VCMI’s claims code for pursuing an ambitious climate agenda. The question is whether the level of flexibility it provides will be enough to make a dent in the ambition gap that exists between corporate climate targets and global progress towards net zero. We are skeptical that it will be so for two reasons. 

First, allowing credits for only a portion of scope three emissions is overly restrictive. Many companies, especially outside the US and EU, face significant logistical and policy hurdles to decarbonizing, including their scope one and two emissions.

In these cases, carbon credits can be a critical transitional investment. The structure of the new flexibility claim is sound but should be expanded in scope to include other types of emissions. 

Second, we are concerned that the requirement to sunset the use of credits by 2035 will strongly limit investment in the voluntary carbon market, particularly impacting new initiatives. 

Since establishing a new carbon project takes two to three years on average, many will be approaching the 2035 sunset target before they even begin issuing credits. 

This risks cutting off vital funding for new and innovative carbon offsetting and removal projects, such as upstart ecosystem restoration projects and jurisdictional avoided deforestation projects that will utilize new methodologies. The phase-out requirement for carbon credits must be relaxed to prevent cutting off funding to projects primed to produce higher-quality carbon credits. 

What’s Next?

Despite these concerns, we applaud VCMI for taking the positive, practical step of adding more flexibility to the Claims Code of Practice. We expect the discussion to continue as the new claim undergoes beta testing in 2024, so we look forward to engaging more throughout that process.