On 1st of February 2023, the Finnish Government published a guide to good practices for voluntary carbon markets. In the guide, the more traditional practice known as offsetting is referred to as the use of climate units, carbon units or credits. The guide includes, among other things, guidelines, and good practices for buyers of voluntary carbon credits and companies making sustainability claims. The guide states that organizations should not only comply with all legal requirements in their sustainability communications, but also strive to follow good practice wherever possible. The guidelines will be updated in the near future, as the EU´s preparing Green Claims Directive and a new ISO 14068 standard on carbon neutrality is on the way. Both of these will affect what kind of sustainability claims a company can make and how it must be able to substantiate these claims.
The first instruction in the guide for organizations making climate claims based on the use of carbon credits is that they should calculate all their own direct and indirect (scope 1, 2 and 3) emissions before using credits (buying offsets) and making claims. This means that many companies will have to change the content of their sustainability reports. For example, company’s carbon neutrality claims when they have only included scope 1 and 2 emissions in the calculation and purchased voluntary carbon credits for these emissions, must be revised.
If a climate claim is made for a product or service, a life cycle emissions calculation must be carried out for that product or service, unless the claim is specified for a specific life cycle stage.
In addition to a reliable calculation, an organization making climate claims based on the use of voluntary carbon credits should prioritize its own emission reductions. The company should have a climate roadmap and targets for reducing its own emissions. The use of credits should only complement the company's own emission reduction efforts. A good climate roadmap includes the company's climate target, the emission reduction measures already taken, those currently planned and those still needed, and a plan for monitoring and updating the roadmap.
The publication also gives an interesting example from France, where the climate and resilience law determines the type of climate claim that is allowed. The law allows carbon neutrality claims only for companies that have publicly reported how the product's emissions have first been avoided, then reduced and only then offset. In addition, an organization must remove the carbon neutrality claim if the product’s emissions increase two years in a row. It will be interesting to see whether France will set an example for other countries in developing legislation on carbon neutrality claims.
In addition to emission reduction targets and emission calculations, the new guide provides guidance on which types of voluntary carbon credits to use. Under the proposed EU Commission regulation, organizations should only use units that are certified by an EU approved certification scheme and that meet the minimum criteria set out in the proposal.
There is a risk of double counting offsets when the carbon units purchased by a company are included in the national emissions accounting. This is the case, for example, for forest planting in Finland, where both afforestation and forest fertilization are included in the national GHG inventory. If a company purchases carbon units that are included in the national emissions inventory, it can communicate that it has purchased carbon units that will contribute to the national target. Due to the risk of double counting, it is not recommended to communicate that this action would reduce the company's own carbon footprint or offset the emissions produced.
Companies that have calculated either their company’s or product’s emissions according to the standards, actively made emission reductions and has a plan for future emission reductions, and then offset their emissions through a reliable service and made a climate pledge, need to not worry. Things have then been done carefully, and if new guidelines come along, the old ones will be on a strong footing and will probably only need a little tweaking. If, on the other hand, the climate statement has been made based on loose calculations and offsetting without active emission reductions, it is a good idea to familiarize yourself with the new guidelines, either yourself or with the help of an expert, calculate your carbon footprint according to the standard and take emission reduction measures. After that you can communicate the climate activities with good conscience.
We are actively following the progress of the EU's Green Claims initiative and the ISO 14068 carbon neutrality guidelines and will also open up the impact of these decisions on business in the articles section of OpenCO2.net.
OpenCO2net helps its customers avoid greenwashing by providing tools, training, and consulting services for reliable standards-based carbon footprint calculation. Our services cover both scope 1, 2 & 3 emission calculations for companies and carbon footprint calculations for products. In addition, we offer the implementation of customized carbon footprint calculators, which are a particularly cost-effective alternative for the emissions calculation of a wide range of products.
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