Climate Impact Partners’ CarbonNeutral Protocol is intended to help companies and products achieve the CarbonNeutral certification, a 20-year-old standard recognised globally. The 2023 update of the protocol requires companies to increase transparency in their disclosures and have their claims verified by external entities to reduce the risk of greenwash.
- Climate Impact Partners (CIP) has released the annual update to its CarbonNeutral Protocol.
- Companies need to adhere to the protocol to receive the CarbonNeutral certification, which reflects the latest best practices in carbon accounting and the voluntary carbon market.
- The protocol is updated yearly based on evolving market and regulatory expectations.
Carbon Neutral Protocol helps companies achieve decarbonisation goals
The CarbonNeutral Protocol provides companies with a blueprint for climate action in order to achieve CIP’s CarbonNeutral certification. The firm has managed this standard, which is globally recognised as a way to demonstrate that a certain product is carbon neutral, for two decades.
For example, it is used by Amazon (NASDAQ:AMZN) as part of its Climate Pledge Friendly programme, to recognise products listed on its website as meeting high sustainability standards. These include various brands including Brooks Running, HP DesignJet and Bulldog.
The protocol has been updated annually since it was first developed in 2002, reflecting the latest developments in climate science, international policy, standards and business practice. It outlines a five-step process for entities to achieve CarbonNeutral certification. While all are mandatory, they do not need to be carried out sequentially.
These steps include: defining the carbon footprint of the product or entity being certified; measuring its climate impact; setting targets to become carbon neutral (including specifying the use of credits or offsets); taking action to abate or reduce emission; and communicating their progress to stakeholders. CIP believes the fifth step is important as companies need to keep climate action groups, NGOs, investors and other stakeholders apprised of their progress towards achieving their carbon-neutral goals.
CIP was formed in May 2021 through the merger of ClimateCare and Natural Capital, both of which operated in voluntary carbon markets (VCMs). Together they claimed to be responsible for the reduction of over 100 million tons of CO2 equivalent. The firm helps businesses to become carbon neutral and says it has worked with over 300 clients in 33 countries.
Jonathan Shopley, managing director of external affairs at CIP, said: “Against a backdrop of increasing complexity, The Protocol provides companies with a blueprint to deliver quality carbon neutral programs, delivering finance to carbon reduction projects available today, and making real change possible.”
New update requires increased transparency to mitigate greenwash claims
As explained in the 2023 update, CIP will require companies to provide more transparency on their carbon-neutral claims, while also requiring them to drive internal transformation. It will provide a grace period for previously certified entities to implement the new requirements.
The need for increased transparency is intended to help entities pursuing certification to better deal with heightened scrutiny over climate-related claims, and potential greenwash allegations. They are recommended to disclose external verification of their carbon footprint, have an absolute emissions reduction strategy, disclose carbon credits purchased, and align with external reporting frameworks.
To drive internal transformation, the protocol requires companies with over 100,000 tons of carbon emissions per year across all three scopes and to have an externally approved internal emissions reduction strategy, which it plans to extend to companies with lower emissions, over time. The update also presents several recommended disclosures that are above the minimum requirements of the protocol.
Scope 3 emissions disclosure requirements likely to increase in the future
According to a company spokesperson, the protocol “is a pragmatic, open framework that encourages action and immediate impact. It enables companies to step in at different stages of their climate action journey – from small companies using the easily accessible five-step process, to larger firms conducting life cycle assessment carbon footprints of their products.”
They added: “With many companies not yet measuring their scope 3 footprint, all scope 3 cannot yet be included – to do so would deter action for many, and we want to get businesses on board with measuring their footprint and considering their reduction strategy.”
CIP expects that future versions of the CarbonNeutral Protocol will evolve with market and regulatory expectations and best practices, to incorporate any increase in the requirements for Scope 3 emissions disclosure.