The UK Government has announced ‘Principles for voluntary carbon and nature market integrity‘ and a process to ensure their implementation. A public consultation next year will determine how to strengthen market integrity and consider the use of carbon offsets within company scope 3 greenhouse gas emission targets.
It has been estimated that voluntary carbon markets could channel an additional $50 billion in finance for climate action from the private sector by 2030. However, the market has been rocked by scandals in recent months, with reports of “worthless” credits leading to companies pulling their investment from carbon offsetting schemes. The EU is to ban carbon neutral claims that are made by offsetting emissions, for example.
A major overhaul of the market and verification of carbon credits is underway in a bid to restore faith in the market. Some fear this won’t be enough. Indeed, talks are ongoing at COP29 about a deal on trading carbon credits: “A UN-backed global market for creating and trading carbon credits has been discussed for at least 10 years,” reported Reuters this week. “In its absence, a patchwork of voluntary standards has led to a number of situations where credits were found to not be delivering the climate benefits they claimed.”
VCMI, the Voluntary Carbon Markets Integrity Initiative, said this week that the groundwork has been laid by its recent work alongside the Integrity Council for the Voluntary Carbon Market (ICVCM) but government support is “essential for ensuring a move to high-integrity market participation and ensuring impact of voluntary carbon markets”.
The new UK principles include a focus on biodiversity integration, claims integrity and mandatory reporting. There is also reference to those wanting to make green claims, like ‘carbon neutral’ or ‘biodiversity positive’. Claims involving the use of credits should, in addition to being consistent with the principles, accurately communicate an organisation or product’s overall environmental impact, including by using appropriate and accurate terminology, the government explained.
A consultation in early 2025 will look at proposed implementation of the principles, through guidance, standards and regulatory oversight by the UK Government, which sees “a clear and appropriate role for the responsible use of high-integrity carbon and nature credits by companies or other organisations that wish to do so as part of their climate and nature strategies”.
In particular, the government will be looking for evidence on the “market architecture that could embed and scale high-integrity practice” and the conditions that could apply to the limited use of high-integrity carbon credits towards a proportion of Scope 3 emissions, for example through VCMI’s beta Scope 3 claim.
VCMI said the government’s principles are “well aligned” with its own claims code. “Companies and investors need clear signals that taking action and being ambitious on climate using voluntary carbon markets is supported and recommended by policy makers, and that is what the UK Government is providing today,” said VCMI executive director Mark Kenber.
He said the new principles could help raise the bar by directly tackling misleading claims terminology, like carbon neutral, mandating sustainability reporting for credit use and requiring detailed project-level disclosure.
