The COP29 climate conference is underway in Baku, with the Compensate Foundation actively participating to influence corporate climate claims. These claims are closely tied to international carbon markets, whose regulations are currently being negotiated at the conference. Compensate Foundation has supported and signed an upcoming statement in support of the Beyond Value Chain Mitigation model. Representing the foundation in Baku from November 14–18, 2024, is the Chairman of the Board, Niklas Kaskeala.
Corporate climate claims are at a turning point. With increasing regulatory pressure and rising public expectations, companies are being called upon to communicate their climate responsibility in more precise and transparent ways. Statements like ”carbon neutrality” or other offset claims are no longer sufficient—or even accurate. It’s time to renew these claims and ensure they reflect genuine accountability rather than offering new paths to greenwashing.
What’s Changing?
For years, companies have been able to center their climate strategies around carbon credit purchases without a clear mitigation hierarchy that would require them to prioritize reducing their own emissions before relying on offsets. This has led to a situation where climate claims are sometimes built entirely on carbon credits, even if companies lack solid plans for reducing their own emissions.
Recently, trust in the quality of carbon credits has eroded, thanks in part to researchers, NGOs, and media uncovering systemic issues within these markets.
Experts, including the Compensate Foundation, have raised concerns about carbon credit quality and recommended that even high-quality credits be used with significant overcompensation. The EU and voluntary standards are now setting stricter limits on how carbon credits can support climate claims.
A particularly problematic issue has been ”double counting”: if carbon credits are used to offset a company’s emissions while also contributing to the host country’s climate goals, it counts as double counting, and the company cannot legitimately claim to have offset its own emissions.
From Offset Claims to Contribution Claims
Offset claims like “carbon neutrality” and “climate neutrality,” which rely on carbon credit purchases, have become increasingly problematic, as their true climate impact is often questionable and seen as misleading. This has led the EU to ban certain claims under new regulations. Some pioneering companies are now adopting more transparent “contribution claims,” in which they commit to supporting climate action without claiming their own emissions are canceled out. This allows companies to take responsibility for emissions they can’t yet avoid without making misleading claims.
The goal of these new claims is to build trust, but they must be rooted in real accountability. This means that the climate actions companies support must be high-quality, additional, and transparent. Simply shifting from offset claims to contribution claims isn’t enough if the supported projects are low-quality or lack effectiveness. Climate projects funded by companies need to meet rigorous standards to truly make an impact rather than merely enhance corporate image.
Beyond Value Chain Mitigation (BVCM)
Despite criticism of carbon neutrality models and their flaws, few companies have fully embraced alternative ways to fund climate action outside their value chains. This may stem from a misconception that no viable alternative ”model” exists. However, an alternative does exist. The Beyond Value Chain Mitigation (BVCM) model offers companies a way to take responsibility without misleading offset claims, linking science-based emissions reductions to an internal carbon price that funds climate actions outside their value chain.
Five Principles for a Credible BVCM Model
The Compensate Foundation has helped develop and supports the model promoted by Carbon Market Watch for credible BVCM usage. This BVCM approach offers companies an opportunity to communicate their climate responsibility credibly. By setting an internal carbon price, companies create a budget to support high-quality climate projects, contributing meaningfully to climate work beyond their own value chain.
According to the model, companies should first focus on reducing emissions within their operations by setting science-based targets aligned with a 1.5°C pathway.
Additionally, companies should:
- Calculate and disclose its GHG footprint, including scope 1, 2 and 3 emissions;
- Determine a budget to be allocated to beyond value-chain climate action (e.g. through an internal carbon price, a share of revenues, etc.);
- Undertake due diligence to decide on a beyond value-chain climate portfolio that will direct finance to the most impactful climate initiatives;
- Finance the identified initiatives;
- Publicly communicate about each of the first 4 steps, clearly separating beyond value-chain funding from internal decarbonisation efforts.
This final step means that a company’s communications must avoid implying that its emissions have been offset through support for climate work outside its value chain.
Responsible Climate Claims at the Core
BVCM is not just a technical solution but a comprehensive accountability model that combines science-based emission reductions with genuinely responsible climate action. This is a step away from misleading communication and toward more trustworthy and honest climate claims.
Transitioning to such a model is essential if corporate climate claims are to reflect real accountability. Achieving this requires broad collaboration with EU legislators, voluntary climate standards, and companies working together to create a new era of climate communication. Credible contribution claims, where climate units complement science-based emissions reductions instead of acting as offsets, can build a more sustainable market foundation and help prevent greenwashing.
The shared goal for businesses and society must be genuine accountability. Only in this way can we build a culture of sustainable climate claims that truly support climate crisis mitigation and strengthen trust between companies and society.
Interested in learning more about the decisions made in COP29 regarding carbon markets and climate claims? Join Compensate Foundation’s webinar ”COP29 – Key Takeaways for Companies” on Dec 3rd 2024 – read more and sign up here. The webinar will be held in English and a recording is available afterward.
Niklas Kaskeala
Chairman of the Board
Compensate Foundation