As more businesses look to improve their ESG and sustainability ratings, the potential for greenwashing looks set to increase. The Provisional Claims Code of Practice developed by the Voluntary Carbon Markets Integrity Initiative (VCMI) is a new initiative designed to combat the act of greenwashing. But could this ‘new code’ that companies like Unilever and Google have signed up for end greenwashing for good?

The problem with Greenwashing

The term “greenwashing” was coined back in the mid 1960s by an environmental activist who spotted a card in his hotel room encouraging the re-use of towels. The card suggested that using hotel towels more than once, instead of sending them to be washed after each use, was a good way to protect the environment. After doing some digging, the activist noted that while the hotel’s request was framed as an environmental concern, the hotel wasn’t particularly environmentally friendly in other areas of its operations.This raised the activist’s suspicions.

Greenwashing is more about creating a positive image as opposed to actually making a positive improvement. So the various schemes and initiatives that companies market as “sustainable” warrant a closer inspection. Are these measures actually reducing emissions? What’s the wider social impact of these moves? And are their net-zero claims legitimate?

Only with a macro lens approach can questions like these be answered effectively.

Companies like Google and Unilever have set incredibly ambitious targets:

• Google: operating 24/7 carbon free by 2030
• Unilever: net zero emissions for products by 2039

The aim of the new code is two-fold:

1. To provide a clear guidance to companies on when they can credibly make voluntary use of carbon credits as part of their net zero commitments and
2. To ensure the claims made by the companies (like those above) are using their carbon credits with the utmost legitimacy.

Carbon credits have a commendable intention, but can unfortunately be gamed within the system. So the new code follows a 4-step program to rigorously audit the claims made by these companies.

The Four Steps

Step 1: Meeting the prerequisites.

Companies must make a public commitment to achieve science-aligned, long-term net zero emissions by 2050. The crucial element here is that it must be across scopes 1,2 and 3. Companies could greenwash by choosing to focus on only scopes 1 and possibly 2 because of the sheer magnitude of emissions that scope 3 covers. Only with all three scopes can a full emissions audit take place.

Step 2: Identifying claims to make.

Businesses need to represent their achievements across their brand, product and service level claims on an enterprise-wide level. This effectively means their achievements will be tracked across the complete value chain. Not just the areas a company would ideally like the focus to be on.

Step 3: Purchasing high quality carbon credits.

All carbon credits are not made equal. VCMI hasn’t provided any specific detail on what defines a high-quality carbon credit. Alternatively, they do ask that a carbon credit:

• Is associated with a credibly governed, standard-setting body
• Be of high environmental quality
• Come from activities that are compatible with human rights
• Promote equity with social safeguards, demonstrating positive impacts
• And originate from activities that enhance environmental quality

Step 4: Report transparency on the use of carbon credits.

This is arguably the most important step in the process. If companies are not fully transparent with their emissions, commitments and carbon credits then any sustainability initiative could potentially fall like a house of cards.

This means a full disclosure on the number of credits purchased and retired to make a claim. How much is being used to cover the emission targets (including scope 3) and how many credits go beyond these targets? Then a full audit of the certification details including: name, project name ID, issuing registry, host country, credit vintage, methodology and whether the carbon credits are associated with any corresponding adjustments.

All in all, the new VCMI code will certainly make it harder for greenwashing practices to game the system. Yet this will only be the case for companies that have chosen to sign up to it. After all, the “V” in VCMI stands for voluntary.

Is your company looking to sign up to the VCMI code?

Or do you mainly require assistance with gathering transparent data in preparation?

Perhaps the STAR Index platform can help you?