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首页文档碳中和资料研究报告【推荐】世界经济论坛-扩大自愿碳市场：企业行动手册（英）

【推荐】世界经济论坛-扩大自愿碳市场：企业行动手册（英）VIP专享VIP免费

Scaling Voluntary
Carbon Markets:
A Playbook for
Corporate Action
WHITE PAPER
SEPTEMBER 2023
In collaboration with
Bain & Company
Contents
Images: Getty Images
© 2023 World Economic Forum. All rights
reserved. No part of this publication may
be reproduced or transmitted in any form
or by any means, including photocopying
and recording, or by any information
storage and retrieval system.
Disclaimer
This document is published by the
World Economic Forum as a contribution
to a project, insight area or interaction.
The findings, interpretations and
conclusions expressed herein are a result
of a collaborative process facilitated and
endorsed by the World Economic Forum
but whose results do not necessarily
represent the views of the World Economic
Forum, nor the entirety of its Members,
Partners or other stakeholders.
Foreword
Executive summary
Introduction
1. The VCM in 2024 and beyond – a vision for future carbon markets
1.1 A new narrative
1.2 Strategy, not philanthropy
1.3 Pragmatic recognition of efforts
1.4 Transparent disclosure and claims
1.5 Mature risk management
1.6 Convergence on a global carbon market
2. Playbook: How corporations can navigate carbon markets
2.1 Define net-zero role for credits
2.2 Create value and recognition
2.3 Tailor a portfolio
2.4 Orchestrate the effort
Conclusion: The imperative for action and incentives
Contributors
Endnotes
3
4
5
9
10
11
11
12
14
15
16
17
23
27
34
39
40
42
Scaling Voluntary Carbon Markets: A Playbook for Corporate Action 2
Foreword
Carbon markets are not new – in fact, they have
existed for more than 20 years – yet they remain
far from mature. Even as market infrastructure
continues to evolve, the voluntary carbon market
(VCM) represents an important lever to help
accelerate high-impact climate action, protect
nature and drive the energy transition towards net
zero. Market growth in recent years has attracted
scrutiny by critical observers and raised important
concerns about the potential abuse of the VCM
for corporate greenwashing. This, and the
ambiguity inherent in any emerging market, has
limited further corporate adoption of the VCM as
expected. Yet if participation can be expanded to
a wider set of global corporate leaders, the VCM
could provide a valuable and immediate tool for
climate finance.
To unlock the VCM’s potential positive impact on
nature and the environment and to foster increased
corporate participation, the World Economic Forum
and Bain & Company have convened a working
group of high-ambition corporate partners in
collaboration with existing market initiatives and
stakeholders. Since it was first convened in April
2023, this group has worked to address key market
barriers and codify corporate best practices for
high-impact participation in VCMs. To complement
this work, the Forum and Bain & Company
have developed this white paper as a playbook
to support the next wave of companies on the
verge of entering the VCM. The report reflects
surveys, interviews and working sessions with
corporate members of the working group as well
as representatives from key market initiatives. While
this document reflects a faithful representation of
the learnings derived from participants engaged in
that work, it does not necessarily reflect the beliefs
of any one organization.
This report has four main objectives:
1. Articulate the urgent need for carbon markets
to scale up capital allocation in support of the
climate transition.
2. Propose ways in which the VCM could evolve
to reach its potential as a tool for channelling
climate finance.
3. Provide an actionable guide for companies new
to the VCM that helps mitigate common risks
and provides practical examples from leading
corporations with experience of carbon markets.
4. Declare a call to action directed at encouraging
private, public and civil society actors to take
the steps needed to unlock the VCM’s full
potential to accelerate climate action.
While the VCM is imperfect and guardrails need to
be set and enforced to avoid misuse, the climate
crisis is too urgent to continue underusing this
source of transition finance. Now is the time to act.
Pedro Gomez
Head, Climate; Member of the
Executive Committee, World
Economic Forum, Switzerland
Dale Hardcastle
Head of Carbon Markets, Bain
& Company, Singapore
Scaling Voluntary Carbon Markets:
A Playbook for Corporate Action
September 2023
Scaling Voluntary Carbon Markets: A Playbook for Corporate Action 3
/45
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ScalingVoluntaryCarbonMarkets:APlaybookforCorporateActionWHITEPAPERSEPTEMBER2023IncollaborationwithBain&CompanyContentsImages:GettyImages©2023WorldEconomicForum.Allrightsreserved.Nopartofthispublicationmaybereproducedortransmittedinanyformorbyanymeans,includingphotocopyingandrecording,orbyanyinformationstorageandretrievalsystem.DisclaimerThisdocumentispublishedbytheWorldEconomicForumasacontributiontoaproject,insightareaorinteraction.Thefindings,interpretationsandconclusionsexpressedhereinarearesultofacollaborativeprocessfacilitatedandendorsedbytheWorldEconomicForumbutwhoseresultsdonotnecessarilyrepresenttheviewsoftheWorldEconomicForum,northeentiretyofitsMembers,Partnersorotherstakeholders.ForewordExecutivesummaryIntroduction1.TheVCMin2024andbeyond–avisionforfuturecarbonmarkets1.1Anewnarrative1.2Strategy,notphilanthropy1.3Pragmaticrecognitionofefforts1.4Transparentdisclosureandclaims1.5Matureriskmanagement1.6Convergenceonaglobalcarbonmarket2.Playbook:Howcorporationscannavigatecarbonmarkets2.1Definenet-zeroroleforcredits2.2Createvalueandrecognition2.3Tailoraportfolio2.4OrchestratetheeffortConclusion:TheimperativeforactionandincentivesContributorsEndnotes34591011111214151617232734394042ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction2ForewordCarbonmarketsarenotnew–infact,theyhaveexistedformorethan20years–yettheyremainfarfrommature.Evenasmarketinfrastructurecontinuestoevolve,thevoluntarycarbonmarket(VCM)representsanimportantlevertohelpacceleratehigh-impactclimateaction,protectnatureanddrivetheenergytransitiontowardsnetzero.MarketgrowthinrecentyearshasattractedscrutinybycriticalobserversandraisedimportantconcernsaboutthepotentialabuseoftheVCMforcorporategreenwashing.This,andtheambiguityinherentinanyemergingmarket,haslimitedfurthercorporateadoptionoftheVCMasexpected.Yetifparticipationcanbeexpandedtoawidersetofglobalcorporateleaders,theVCMcouldprovideavaluableandimmediatetoolforclimatefinance.TounlocktheVCM’spotentialpositiveimpactonnatureandtheenvironmentandtofosterincreasedcorporateparticipation,theWorldEconomicForumandBain&Companyhaveconvenedaworkinggroupofhigh-ambitioncorporatepartnersincollaborationwithexistingmarketinitiativesandstakeholders.SinceitwasfirstconvenedinApril2023,thisgrouphasworkedtoaddresskeymarketbarriersandcodifycorporatebestpracticesforhigh-impactparticipationinVCMs.Tocomplementthiswork,theForumandBain&CompanyhavedevelopedthiswhitepaperasaplaybooktosupportthenextwaveofcompaniesonthevergeofenteringtheVCM.Thereportreflectssurveys,interviewsandworkingsessionswithcorporatemembersoftheworkinggroupaswellasrepresentativesfromkeymarketinitiatives.Whilethisdocumentreflectsafaithfulrepresentationofthelearningsderivedfromparticipantsengagedinthatwork,itdoesnotnecessarilyreflectthebeliefsofanyoneorganization.Thisreporthasfourmainobjectives:1.Articulatetheurgentneedforcarbonmarketstoscaleupcapitalallocationinsupportoftheclimatetransition.2.ProposewaysinwhichtheVCMcouldevolvetoreachitspotentialasatoolforchannellingclimatefinance.3.ProvideanactionableguideforcompaniesnewtotheVCMthathelpsmitigatecommonrisksandprovidespracticalexamplesfromleadingcorporationswithexperienceofcarbonmarkets.4.Declareacalltoactiondirectedatencouragingprivate,publicandcivilsocietyactorstotakethestepsneededtounlocktheVCM’sfullpotentialtoaccelerateclimateaction.WhiletheVCMisimperfectandguardrailsneedtobesetandenforcedtoavoidmisuse,theclimatecrisisistoourgenttocontinueunderusingthissourceoftransitionfinance.Nowisthetimetoact.PedroGomezHead,Climate;MemberoftheExecutiveCommittee,WorldEconomicForum,SwitzerlandDaleHardcastleHeadofCarbonMarkets,Bain&Company,SingaporeScalingVoluntaryCarbonMarkets:APlaybookforCorporateActionSeptember2023ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction3ExecutivesummaryTheurgencytoreduceemissions,protectcriticalecosystemsanddeploynewtechnologiesatscaletoremovecarbonfromtheatmospherehasneverbeengreater.Withoutmeaningfulaction,theimpactofclimatechange,includingextremeweatherandrisingseas,couldreduceglobalGDPbyaround14%1andresultin1.2billionclimaterefugeesby2050.2Despitethesepotentiallydevastatingconsequences,annualflowsofclimatefinanceinvestmentin2021wereamere20%orsooftheestimated$4.3trillionrequiredby2030.3Thevoluntarycarbonmarket(VCM)isoneofthefewtransitionfinanceoptionsthatcouldaccelerateaction,scaleupnewtechnologiesandconnectprivatecapitaltohigh-potentialprojectsinthelimitedtimeavailable.Investmenttodayiscritical,notonlytomitigatecarbonemissionsimmediatelybutalsotobuildmarketcapacityaheadof2030ambitions.However,theVCMhasfailedtosecurethefinancialinvestmentnecessarytoscaleupandinnovate.Currentgovernmentpoliciesandmarketstandardshavefailedtoprovideadequatestrategicinducementtomotivateboardsandinvestorstodeploycapitalatscale.TheVCMmarket,estimatedat$1.3billionin2022,4couldgrowtomorethan$50billionby2030,5ifcompaniesbegininvestingmorestrategicallytoday.FortheVCMtomature,growandcontributemeaningfullytothemitigationofclimatechange,governmentsmustcreateregulatorymandatestocompelcorporateactionwhile,intheirabsence,marketstandardsettersmustprovidealternativerecognitiontoincentivizecorporations.Theseincentivescanencouragecompaniestoembracecarboncreditsasanadditionallevertocomplementdedicatedmitigationeffortsandfurthersupporttheirnet-zerostrategies.Whileearlyadoptersandmarketbuildersinvestedheavilytocreatethenecessarycapabilitiestonavigateacomplexlandscape,thenextwaveofcompaniesneedsasimplifiedstructure,tangibleincentivestoparticipate,clearguidanceforcrediblemarketparticipation,andmarketinfrastructurethatprovidestransparencyoncreditqualityaswellasde-riskingpurchase.Thiswilltaketime,butregulatorsandstandardsettersneedtoinitiatebothindependentandcoordinatedactionnow.Severalstakeholders,includingregulators,standardsettersandcorporationsarealreadyworkingtogethertoaddressobstaclesintheVCMandpromoteengagement.Buttheplanetcannotaffordfortheprivatesectortoawaittheperfectsolution.Whilechallengesarebeingresolved,companiescanstartusingcarbonmarketstodeliverclimateactionnowandpositionthemselvesandsocietytoachievenet-zeroambitions.ThisreportaimstoprovideguidancetocompanieswhorecognizetheclimateimperativeandpossessthewilltoparticipateintheVCM,butwhoremainonthesidelinesduetomarketchallengesandothercomplexities.Forcompanieslessinclinedtoact,thereportseekstomakeacaseforthestrategicvalueoftheVCMandtheurgencytoactnow.Fourtracksofactionhavebeenidentifiedforthenextwaveofcorporationstoembracethevoluntarycarbonmarket:1.Defineanet-zeroroleforcredits:Definethecomplementaryroleofcarboncreditswhilemaintainingdedicationtodirectabatementinachievingscience-basedtargets,consistentwiththemitigationhierarchyandreflectiveoftechnological,financialandotherconstraintsondecarbonization.2.Createvalueandrecognition:Identifytangibleoutcomesresultingfromcarbonmarketactivityandcommunicatetokeyinternalandexternalstakeholderstoenhanceforward-lookingriskmanagement,brand-buildingandemployeeengagement.3.Tailoraportfolio:Prioritizehigh-quality,high-impactcarboncreditportfolioswhereavoidancecreditsremainimportantinitiallyandpermanentcarbonremovaloutcomesarerampedupovertime.4.Orchestratetheeffort:Integratethecarboncreditstrategyintothecompany’swidernet-zeroapproachandorganizationalstructure;carboncreditsshouldbecloselyconnectedtothebroaderdecarbonizationpathandoverallsustainabilitystrategy.AlthoughthispaperwillbrieflyidentifyafewkeychallengesfacingtheVCMtoprovidecontext,itwillnotfocusondetaileddiagnosesofthoseissuesbut,rather,offeraflexibleframeworkforactionthatcanempowercompaniestoactdespitethesemarketlimitations.6Thereportisalsoacalltoactionforothers.Corporationsthathavenotyetbuiltacomprehensiveclimatestrategymustdoso.Civilsociety,standardsetters,regulatorsandothermarketactorsmustcollectivelyacknowledgethemarketneedsimprovement,learnopenlyanddriveeffortstofacilitatehigh-integrityclimateaction,withoutdistractingfromordiscouragingthecentralpriorityofdecarbonizingvaluechains.Whenpursuedascomplementarytodecarbonization,anenvironmentallyrobustapproachtotheVCMcandeliverclimatemitigationbothwithinandbeyondvaluechains7tohelpacceleratetheglobaltransitiontonetzero.ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction4IntroductionVoluntarycarbonmarketsofferanimportanttooltoclosetheclimatefinancinggap,buttheyarefallingshortoftheirpotential.Currentpoliciesputtheworldontrackfor2.7°Cwarming,8significantlyovershootingtheParisAgreementgoaltolimittemperaturerisestowellbelow2.0°Candpursuebesteffortstokeepwarmingbelow1.5°C.9Thepresentglobalsurfacetemperatureof~1.1°Cabovepre-industriallevelsalreadyposessignificanteconomicrisks,10whichareexpectedtocompoundlossesifthewarmingtrajectorycontinues.By2040,anadditional2.8billionpeoplewillexperiencehighorextremewaterstress.11By2050,therecouldbe1.2billionclimaterefugees.Urgentactionisrequiredtohaltclimatechange:limitingglobalwarmingto1.5°Cwillrequirea45%12reductionofglobalcarbonemissionsandannualinvestmentsofover$4trillioninglobalclimatefinanceby2030,anincreaseofnearlyfivetimes2021levels.3Thepreservationofbiodiversityandnaturalcarbonsinksisanothercriticalelementofclimateaction.Between1970and2018,wildlifepopulationsdeclinedbyanaverageofnearly70%,13withhabitatlossidentifiedasamainthreatto85%ofspeciesontheInternationalUnionforConservationofNature’sRedList.14Thesenegativetrendsmaybeirreversiblewithoutimmediate,meaningfulclimateactionfromcorporations.TheVCMcanhelpscaleupandallocatecapitalflowstopartiallyaddresstheclimatefundinggapby2030.In2022,theVCMchannelledaround$1.3billion20ininvestmentflowstomitigatecarbonemissionsandcouldgrowtomorethan$50billionby2030.21Additionally,theVCMcancreateandprotectnaturalcarbonsinks,developtechnologiesthatwillremoveCO2andsupportlocalcommunities.Forexample:–Protectingnaturalcarbonsinks:45%ofthecarboncreditsavailablethroughVCMstodayarenature-basedsolutions,accordingtocarbonratingsproviderSylvera.Ofthesecredits,98%areissuedintheGlobalSouth,providingfundstofinancethetransitionwheretheyaremostcriticallyneeded.22–Supportinglocalcommunitiesandbiodiversity:ThemostpopularnatureconservationprojectsshortlistedonSylvera’splatformshowcasebothcommunityandbiodiversitybenefits.Thethreemostcommonbenefitsseenacrossnatureconservationprojectswerefoundtobe“DecentWorkandEconomicGrowth”,“GenderEquality”and“QualityEducation”.ThecaseforvoluntarycarbonmarketsLimitingglobalwarmingto1.5°Cwillrequireannualinvestmentsofover$4trillionby2030,anincreaseofnearlyfivetimes2021levels.UrgentactionrequiredtomitigatetheimpactsofclimatechangeandachievetheParistargetsFIGURE1Upto14%reductionin2050globalGDPiftemperaturesriseby2.6°C2.6°C-2.9°Criseinglobaltemperaturefrompre-industriallevelsprojectedby2100~132millionpeopletobepushedintopovertyduetoclimatechangeby2030~1.2billionclimaterefugeesdisplacedbynaturaldisastersandsealevelrisesby2050~30%declineinaverageagriculturalyieldsby2050Sources:ClimateActionTracker,15SwissRe,16WorldResourcesInstitute,17WorldBank2020,18Zurich19ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction5Thedemand-sidedescription“voluntarycarbonmarket”usuallyreferstoamarketbasedonverifiedcarboncreditsoriginatingfromcarbonstandardsmanagedbyorganizationslikeVerraandtheGoldStandard.Thistermwascoinedinthe2000stodifferentiatethevoluntaryuseofcarboncreditsfromtheiruseincompliancemarkets,suchastheEuropeanUnionEmissionsTradingSystem,whichatthetimeallowedthelimiteduseofcreditsfromtheCleanDevelopmentMechanism(CDM)tooffsetcomplianceobligations.However,inthe2020stheworldhasbecomemorecomplexandcompliancemarketsrelyonmarketinfrastructurefromtraditionalvoluntarymarketsforseveralpurposes,forexample:–Corporationsandindividualsbuycarboncreditstovoluntarilyoffsettheircarbonfootprints.–Severalcapandtradesystems(e.g.California)andcarbontaxes(e.g.SouthAfrica,Singapore,Colombia)allowforthe(limited)useofcarboncreditstooffsetobligations.–CORSIA,thecompliancecarbonmarketforinternationalaviation,pricesaviationcarbonemissionsthroughthemandatoryuseofcarboncreditsfromalistofstandards(e.g.Verra,theGoldStandard,AmericanCarbonRegistryandTheClimateActionReserve).–GuidanceonArticle6.4oftheParisAgreementfromCOP27allowsfortheuseofemissionreductionstoachievecountries’commitmentsundertheAgreement(NationallyDeterminedContributions)orforotherpurposes,suchasresults-basedclimatefinance.ThecommonalityoftheseapproachesisnottheirvoluntarynaturebuttheiruseofverifiedcarboncreditsthatcertifythereductionortheremovalandstorageofCO2.Therefore,thesupply-sideterm“verifiedcarbonmarket”,convenientlyalsoabbreviatedtoVCM,couldbeanalternativetorefertoamarketbasedonverifiedcarboncredits,irrespectiveoftheirintendeduseasvoluntarycontributions,offsetsorretirementagainstacomplianceobligation.TheSBTi’scorporatenet-zerostandardforsettingcorporatenet-zerotargetsinlinewith1.5°C:1.Near-termscience-basedtargets:Emissionreductionplansfor5-10yearsinlinewith1.5°C.2.Long-termscience-basedtargets:Mostcompaniesarerequiredtocutemissionsbyatleast90%nolaterthan2050.3.Beyond-value-chainmitigation:Companiesareexpectedtotakeactiontomitigateemissionsoutsidetheirvaluechains,suchaspurchasinghigh-quality,jurisdictionalREDD+creditsorinvestingindirectaircapture.4.Neutralizeresidualemissions:Remainingemissions,i.e.thefinal10%orless,mustbeneutralizedwithpermanentcarbonremovals.VoluntaryCarbonMarketorVerifiedCarbonMarket?SBTi’scorporatenet-zerostandardBOX1BOX2Since2018,thecorporateappetiteforclimateactionhasgrownrapidly,withproliferatingcommitmentsto,forexample,theScienceBasedTargetsinitiative(SBTi),RE100andothers.However,increasedcorporateactionandcommitmenttowardsnetzerohasnottranslatedintoincreasedinvestmentsincarboncreditsandmitigationbeyondthecorporatevaluechainduetoalackofaclearroleforcarboncreditswithintheSBTicorporatenet-zerostandard(seeBox2).23WhilesignatoriestotheSBTigrewbyafactorof55.8between2018andJune2023,24theretirementofcarboncreditsonlygrewbyafactorof3.2overthesametimeframe–anunderperformanceofmorethan90%(seeFigure2).25VoluntarycarbonmarketsarefallingshortoftheirambitionNote:REDDstandsfor“Reducingemissionsfromdeforestationandforestdegradation”indevelopingcountries.The‘+’standsforadditionalforest-relatedactivitiesthatprotecttheclimate,namelysustainablemanagementofforestsandtheconservationandenhancementofforestcarbonstocks.JurisdictionalREDD+referstoagovernment-led,comprehensiveapproachtoREDD+acrossoneormorelegallydefinedterritories(e.g.states,provinces).Sources:UnitedNations,WorldResourcesInstitute.ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction6GrowthinSBTisignatoriesnotmatchedbyretirementofcarboncreditsThecostofinactionishigherthanthecostofactionFIGURE2FIGURE3201820192020202120222023YTD282358463644829901100263560163338395580CumulativenumberofcompanieswithcommittedorvalidatedSBTitargetsCumulativeretiredcredits(milliontCO2e)Fundingtoprotect/restore/createnewcarbonsinksPositiveimpactthroughco-benefitsSupportachievementofglobalclimateambitionComplexlandscapeofstandardsandlowtransparencyRiskofgreenwashingaccusationsLackofsupplyofhigh-integritycreditsUnclearincentivesMarketriskforspecificcredittypes(strandedassetrisk)PotentialunlockingofnewbusinessopportunitiesNostrong“alternativeplan”toreachnetzeroiftargetsaremissedRiskofmissingaccesstohigh-qualitycreditsupplyLowerabatementcostsastechnologiesmovedownexperiencecurveBetterclarityonregulationsandstandardsDemonstratedexamplesfromearlyadoptersDelayedprotectionandrestorationofnatureAcceleratingclimatechangecompoundsecosystemdegradationAtacorporatelevel,thehighcostofactionisholdingcompaniesback…ActingnowActinglater…butatacollectivelevel,thecostofinactionishigher;corporationsshouldACTNOWRisksandBenefitsforCorporationsRisksandBenefitsforNature&ClimateIftheVCMremainsunderutilized,theworldwillmissanopportunitytofunnelpotentiallybillionsofdollarsintoclimateaction.Inthecurrentenvironment,risksandbenefitsfortheVCMaremisaligned.Therisksofinactionfornaturearetoohigh,whiletheincentivesforcorporationstoactnowaretoolow(seeFigure3).Aswithallinvestmentdecisions,companiesmustallocatescarceresources.Resourcesavailableforbeyond-value-chainactionarelimitedfurtherascorporationsprioritizedecarbonization.IftheVCMremainsunderutilized,theworldwillmissanopportunitytofunnelpotentiallybillionsofdollarsintoclimateaction.Sources:SBTi,TroveResearch26Source:Bain&CompanyScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction7Tocontributemeaningfullytothetransitionahead,theVCMneedstomoveuptheadoptionS-curveandreachthe“take-offpoint”forwidespreadcorporateadoption.Theinitialwaveofearlyadoptersinvestedheavilyinbuildinginternalcapacityandtookconsciousriskswhenenteringthemarket,howeverbroaderadoptionhasstagnated.Broaderadoptionrequiresamoreeasilyaccessiblemarket,clearincentivestoact,andmanageablecorporateandindividualrisks.Thenextwaveofcorporateadoptersrequiresastrategicrationaleforcarboncredituse,explicitincentivesforparticipation,clearmarketrules,acceptedclaimsrecognitionprocessesandinfrastructuretosupportriskmanagement.AmongthekeychallengesfacingtheVCMistheriskofcriticism,evenwhenactingwithintegrityandstrivingtoadoptindustrybestpractices.Healthyscepticismismeritedandhelpshighlightpastmistakestoavoidtheminthefuture.Toavoidcriticism,corporationsmustactwithrenewedvigilanceandintegrityratherthanwithdrawing.Themarketcansupportthisbycollectivelyinvestinginmechanismstoensurethehighqualityandintegrityofcarboncredits.Waitingpassivelyfortheperfectsolutionisnotanoption.Consumers,customers,employeesandsocietiesdemandclimateaction–socorporationshavenochoicebuttonavigatetheuncertaintyandlearnintheopen.Whilesomeuncertaintydoesremain,therehasbeensignificantprogressmadeinthelastyearortwotobringstandardsintoalignment.CoreframeworksfrommarketstandardsetterssuchasSBTi,theVoluntaryCarbonMarketsIntegrityInitiative(VCMI)andtheIntegrityCouncilfortheVoluntaryCarbonMarket(ICVCM)havebeencoordinatedandbroughtintoalignmentwithgreenhousegasaccountingandCDPdisclosures.Whilethesecanbemoretightlyintegrated,therearesufficientlyviablestandardsinplacetoenableactiontoday.Meaningfulactionisurgentlyneededtoavoidthedireconsequencesforecastedonourcurrenttrajectory.AlthoughtheVCM’scurrentimperfections–suchaslackofstrategicincentivesorcomplexityofstandardswithlimitedqualitytransparency–makeparticipationchallenging,theworldcannotaffordnottouseanyandallviabletoolstomitigatetheconsequencesofclimatechange.Corporationsmustactnow,whilesimultaneouslycollaboratingwithregulatorybodies,standardsettersandeachothertomakestructuralimprovementsandhelpthemarketreachitsfullpotentialintime.VCMyettoreachthe“take-offpoint”inS-curveofcorporateadoptionFIGURE4Nascentproduct–proofofconceptGrowingappeal,butcomplextonavigatePassesthetake-offpoint,i.e.whenVCMparticipationbecomescoretocarbontransitionstrategyWidespreadadoptionacrossallsegmentsaidedbyclearbusinesscaseLimitedchange;marketatpeakpenetrationInnovationHighEarlyadoptionRapidgrowthScalepenetrationMaturemarket/ILLUSTRATIVEPenetrationLowCURRENTSTATESource:Bain&CompanyWaitingpassivelyfortheperfectsolutionisnotanoption–corporationshavenochoicebuttonavigatetheuncertaintyandlearnintheopen.ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction8TheVCMin2024andbeyond–avisionforfuturecarbonmarkets1TheVCMmustevolvetoprovidemorerobustsystemicguidelinesforengagement,butcompaniesneedtoactnowtosupportthatevolutionratherthanwaitforit.ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction9AvisionforthefutureoftheVCMseenthroughsixlensesFIGURE5AvisionforthefutureoftheVCMseenthroughsixlensesStrategy,notphilanthropyMatureriskmanagementPragmaticrecognitionofeffortsTransparentdisclosureandclaimsAnewnarrativeConvergenceonaglobalcarbonmarketCarboncredits(andmarkets)arealittleovertwodecadesold,howeverthemarketisstillevolvingrapidly.Manyregulators,standardsettersandmarketinitiativesareworkingtoresolvefundamentalchallenges,butbroadercorporateengagementmustaccelerateinparallel.Growingthemarketwillimproveitseconomics,fungibilityandliquidity.Standardizationandtransparencywillimprovethequalityofsupplyandintegrityofclaims.Thischapterpresentsavisionfortheevolutionandgrowthofthevoluntarycarbonmarketthroughsixthematiclenses(seeFigure5).Source:Bain&CompanyCarboncreditpurchasingbycorporationsisoftenseenasalow-costshortcuttoavoidtakingmeaningfulactiontoabatetheirvalue-chainemissionsinthefaceoftheclimatecrisis.Somecompaniesareevenfacinglegalactionformakingmisleadingmarketingclaims(“greenwashing”).Fearingthispublicityrisk,companiesmayhidetheirparticipation(“greenhushing”).Inthefirstfivemonthsof2023,45%ofallcreditretirementsissuedbyVerradidnotlistacorporatebeneficiary,comparedto40%inthesameperiodofthepreviousyear,suggestingadeclineinthenumberofcorporationspreparedtotakeownershipoftheirVCMactivities.27Carboncreditsshouldnotserveasasubstitutefordirectabatementandcorporationsneedtobeaccountablefortheirclaims.28However,companiesshouldbeincentivizedtoadoptbeyond-value-chainmitigation(BVCM)activitiesinadditiontodeepin-value-chaindecarbonization.Anewnarrativemustacknowledgeandrewardtheuseofhigh-integritycarboncreditsasasupplement,ratherthananalternative,tootherdecarbonizationactivities.Reframingthenarrativearoundcarbonmarketsasacriticaltoolforcompaniestoallocatecapitaltoecosystemconservationandthedevelopmentanddeploymentoftechnicalclimatesolutionsisnotatrivialgoal.Toachievethisintheshorttimeframerequiredwillrequirethecollaborationofamultitudeofstakeholders.Regulators,standardsetters,companiesandcivilsocietyneedtoacknowledgetheurgencyoftheissueandthewideningfinancinggap,therolethatcarbonmarketscanplaytocloseit,andtheresponsibilitythatcorporateshavetocontribute.Withoutthisnewnarrative,boardsandinvestorslacktherationaleforprovidingcapitaltotheglobalclimatetransitionatsufficientscale.Tohavetherequiredimpact,thisnewnarrativemustbemirroredbyregulatoryguardrailsandsocialexpectationsforcorporationstoact.Whatisneededisanewwaytoprovideincentivesandrecognitionforcompaniestochanneltheircreativity,innovationandcapitaltoaddressthemosturgentandfar-reachingissueofthe21stcentury.Anewnarrative1.1Regulators,standardsetters,corporatesandcivilsocietyneedtoacknowledgethewideningfinancinggapandtherolethatcarbonmarketscanplaytocloseit.”ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction10Today,theVCMisprimarilyusedbycorporationsphilanthropicallyortoachievetheircorporateresponsibilityagenda.Voluntaryambitionsofnetzeroandbiodiversitycommitmentsmaybemadetoenhancebrandperceptionoraddressshareholderandcustomerpressure.ThisresultsindiscretionaryVCMparticipationwithlimitedintegrationintocommercialobjectivesorstrategicvision.However,astrategicapproachtotheVCMcanhavenumerousbenefits,includingmanaginginvestmentriskincreditprojects,beinginvolvedinthedevelopmentofcutting-edgetechnologiesfordecarbonization,havingaccesstohigh-qualitycredits,andbeingresilientintheenvironmentofevolvingstandardsandregulations.Theapproachshouldconsiderallaspectsofcorporatestrategy:fromtheimportantprice-signallingimpactofcarboncreditprocurement,throughasourcingprocessthatoptimizesriskandrewards,tothestrategiccommunicationandorganizationalset-upneededtosupportexecution.Anintegrated,strategicperspectiveoncarboncreditsemphasizestheuseofcarbonmarketstosteercorporatedecision-makingandcanmitigatemanyoftheclimatetransitionrisksthatcorporationsface.Consequently,corporationsneedtoimplementcarboncreditsasanintegralcostofdoingbusiness,ratherthanviewingsuchcreditsasdiscretionaryspendingthatisunlikelytosecuresignificantcommittedcapital.Corporationshavedifferentemissionsprofiles,unequalaccesstodecarbonizationlevers,andareatdifferentstagesofthejourneytonetzero.Whilesomepathwaystonetzeroarestraightforward,somecompaniesandsectorsrelyontechnologiesorbusinessmodelsthathavenotyetbeenadoptedatscaleorthatcurrentlylackeconomicviabilityformanyemissions.Acknowledgingthisvariabilityprovidesscopetotailor“whatgoodlookslike”basedonindustry-specificchallenges.Recognizingtheselimitationsanddifferencesacrosssectors,regulatorsandstandardsetterscandesignframeworksthatprovideincentivesforcompaniestoallocatecapitaltomitigationbeyondtheirvaluechainswhileretainingtheabate-firstmitigationhierarchy,forexample:–Incentivesforhighambition:Somecompanies–especiallyinsectorsbenefitingfrommaturedecarbonizationtechnologies–areontracktoachievetheircommitments.Therightincentives–whethercompulsorymandatesfromgovernmentsor,intheirabsence,sufficientlyvaluablerecognitionframeworksfrommarketstandardsetters–couldencouragecorporateactionsbeyondvaluechains,providingmuchneededcapitaltoacceleratetheglobaltransitionandexpeditethedevelopmentofcurrentlyunproventechnologies.–Pragmaticsolutions:Somecompaniesinhard-to-abatesectorslackviabletechnicaloptionsforimmediatedecarbonization.Thesecompaniesneedtocommittoabatementwherepossibleandinvesttosupporttechnologicaldevelopmentforthelongterm.Theycaninvestthroughbuyingcommitments,forexamplethe$12billionofpledgescommittedbymembersoftheWorldEconomicForum’sFirstMoversCoalitiontocommercializezero-carbontechnologiesinhard-to-abateindustries.29Alternatively,companiescandirectlyfundR&Dintorequiredtechnologies–therecentagreementforanR&Dhubforplasticwaste-processingsignedbysevenglobalchemicalscompanies,incubatedbytheWorldEconomicForum,isanexampleofthis.30Tosupportmoresuchinitiatives,regulatorsandstandardsetterscouldunlockadditionalcapitalbyofferingtangibleinvestmentincentives,whichinturncansupportthedevelopmentanddeploymentofnewtechnologiesandaccelerateflowsofcapitaltowardsmitigationactivitiesoutsidecompanyvaluechains.SincetheParisAgreement,regulations,stakeholderactivismandpressurefromcustomersandemployeeshavedrivenincreasedprivatesectorresponsibilityfordirectabatementandacommitmenttoremoveresidualemissionsatthenet-zeroendstage.Athrivingcarbonmarketinthefuturewillhavetofindsolutionstoprovideincentivesforparallelabatementandinvestmentsinbeyond-value-chainmitigation.Strategy,notphilanthropyPragmaticrecognitionofefforts1.21.3ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction11Potentialevolutionofthemitigationhierarchy31FIGURE62023carbonmarketsFuturecarbonmarketsAbatementBVCMNeutralizationRequiredtoachievenet-zeroRequiredatnetzeroendstageRecommendedbutoptional,accordingtoSBTiCarbonmarketsin2023stilllackarobustincentiveframeworktoscalecorporateparticipationAbatementBVCMNeutralizationRequiredtoachievenetzeroRequiredatnetzeroendstageClearlydefinednear-termincentivesfor:1.Scalingremovalcapacity2.FinancingemissionsavoidanceSource:Bain&Company,adaptedfromSBTiMarketinitiativesacrosstheglobearedevelopingclimatedisclosureframeworkstobringgreatertransparencyandaccessibilitytocarboncreditusage(e.g.InternationalSustainabilityStandardsBoard,EuropeanSustainabilityReportingStandards,theUSSecuritiesandExchangeCommission,UKTransitionPlanTaskforce).Concurrently,corporationsareundergreatpublicscrutinyandsometimeslegalpressure.Civilsocietyandthemediaareincreasinglyawareofmisleadingclimateclaimsandarecallingoutcorporategreenwashingthatremainswidespread.A2021EuropeanCommissionreportfoundthat42%ofcorporateenvironmentalclaimsonlineareexaggerated,falseordeceptive,demonstratingtheneedforcontinuedvigilancebycivilsocietyaswellastheneedforcorporatestomaintainhigh-integrityinternalpractices.32Somecriticshavealsoraisedconcernsaroundthedouble-claimingofcarboncreditsbycompaniesandhostcountries(seeBox3).Nuancedandpragmaticguardrailscontrollingtheuseofcarboncreditsarerequiredfromstandardsetterstobuildconfidenceandsupportgreateradoption.Transparentdisclosureandclaims1.4A2021EuropeanCommissionreportfoundthat42%ofcorporateenvironmentalclaimsonlineareexaggerated,falseordeceptive,demonstratingtheneedforcontinuedvigilancebycivilsocietyaswellastheneedforcorporatestomaintainhigh-integrityinternalpractices.ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction12Thediscussionofwhichclaimscorporationscanlegitimatelymakebasedontheprocurementandretirementofcarboncreditshasheatedupduring2023.Somestakeholdersarguethereisariskofdouble-claimingtheenvironmentalbenefitofcarboncreditswhenmakingoffsetting(orcarbonneutrality)claimswhileahostcountrysimultaneouslycountsthemitigation.Accordingtothisargument,boththehostcountryandthecorporatepurchaseraretakingownershipofthecarboncredit—thehostcountrybyaccountingfortheemissionreductionintheirnationalcarbonbalanceandthecorporationbymakinganoffsettingclaim.Anadditionalcritiquecontendsthatcorporatemarketingclaimsaroundcarbonneutralitycancreatethefalseimpressionofacompleteeliminationofthenegativeimpactsofharmfulactivities.Toavoidtherisksofdouble-claimingandmisleadingmarketingmessages,somemarketparticipantsandobserversarguefortheuseofa“contributionclaim”.Byclaimingacontributiontothehostcountry’sclimatetargetswithoutclaimingcarbonneutralityoranoffsetofemissions,corporationscanavoidbothpitfallsandensurefulltransparency.Othermarketparticipantsarguethatthesedoublecountingconcernsareunfounded.Accordingtothisargument,thesovereigncarbonaccountingsystemisseparatefromcorporatecarbonaccounting.Itisarguedthatforcingcompaniestouseaclaimofclimatecontributionsthatislessintuitiveandmoredifficulttoquantifyrisksunderminingtheappealofprovidingcapitalforclimateaction.Theverdictonwhichclaimsprovidethehighestlevelofintegritywithoutreducingthevalueofbuyingcarboncreditsforcorporatesisyettobedetermined.ContributionclaimsandtheneedfortransparencyBOX3Inthefuture,corporateclaimsbasedoncreditprocurementmustbestreamlined,transparentandstandardized(withfit-for-purposeassurance)toavoidconfusingconsumersandensurecreditprocurementisnotusedtomaskinsufficientdecarbonization.TheVCMI’sClaimsCodeofPractice33providesabasisforcommunicatingcorporateactioninastandardizedway(seeFigure7).However,furtherworkisrequiredtoensuretransparencyandaccuracyofreportingthroughoutthemarket.VCMI’sClaimsCodeofPractice–FoundationalcriteriaFIGURE7OverviewofVCMI’sClaimsCodeofPracticeMaintainanddiscloseanannualgreenhousegasemissionsinventoryEmissionsTargetsProgressPublicadvocacySetandpubliclydiscloseindependentlyvalidatedscience-basednear-termreductiontargets,andpubliclycommittoreachingnetzeroemissionsnolaterthan2050Demonstrateprogresstowardsmeetinganear-termemissionstargetandminimizingcumulativeemissionsoverthetargetperiodDemonstratethatthecompany’spublicpolicyadvocacysupportsthegoalsoftheParisAgreementanddoesnotrepresentabarriertoambitiousclimateregulationComplywithfoundationalcriteriaTheClaimsCodeofPracticesetsoutkeyfoundationalcriteriacompanieshavetomeettobeeligibleforclaimsregardingthevoluntaryuseofcarboncreditsIdentifyclaimstomakeMeetrequiredcarboncredituseandqualitythresholdsObtainthird-partyassuranceofreportedinformationFoundationalcriteriaSource:AdaptedfromVCMI’sClaimsCodeofPracticeScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction13Maturemarketshavemultiplelevelsofriskmanagementandqualitycontrol.Considercreditmarkets:capitalmarketregulatorsmanageinvestorriskviaregulationsoncorporategovernance,financialreporting,accreditedthird-partyauditsandratingsagencies,suchasSylvera,Calyx,BeZeroandRenoster.Beyondregulatorycompliance,insuranceandderivativesecuritiescreateliquidityinthemarkettode-riskparticipation.Thevoluntarycarbonmarketisacomplexecosystemwithevolvingguidelinesandnuances.Thenextwaveofcorporateparticipantswillrequireclearengagementguidelines(seeFigure8).Matureriskmanagement1.5Engagementguidelinesforthevoluntarycarbonmarket34FIGURE8ValidationofprojectsgeneratingcarboncreditsandemissionsoutcomesIssuanceandlistingofcarboncreditsonapprovedregistriesExchangeofverifiedcarboncreditsbetweenbuyersandsellersGuidanceandstandardizationofusageofcarboncreditsandclaimsGuidanceandstandardizationofcorporateclimatetargetsReportingofemissionsanduseofcarboncreditssupportingtransparencyKeyactivitiesCertificationPlayersCommercializationVerifyRegister/issueTrade/resellUseandclaimTarget-setting&standardsAccounting&disclosureSupply-sidecertificationstandardsSetstandardsforclaimspurchaserscanmakeregardingcarbonmarketactivitiesProvideguidance/validatecorporatenet-zerotargetsEstablishaccountingguidanceformeasuringandmanagingemissionsDemand-sideguidanceandstandardsettersEmissionsaccountingMaintainregistriesofenvironmentalimpactandcarboncreditsDisclosureplatformsDevelopintegritystandardsforqualityofcarboncreditprogrammesandmayprovideregistriesofqualifiedcreditsCorporationsCompaniesorotherentitiespurchasingcreditstooffsettheiremissionsandfacilitatetheirpathtonetzero;corporationsareabletoengagewithallelementsofvaluechainDisclosureandmarketingregulatorsRegulatepublicdisclosuresmadeoncarboncreditusageArticulateintegritystandardsforqualityofcarboncreditsSupply-sideintegritystandardsRegulateandcreatestandardsfortradingoncarboncreditmarketsMarketRegulatorsEvaluateDefinecriteriaforcarboncreditportfoliobasedonguidanceandstandardsStandardsappliedasminimumthresholdqualitycriteriaDefineemissionscalculationmethodDefinelegalrequirementsProvideguidanceandstandardsforcorporateclimatetargetsandcarboncreditclaimsDiscloseSource:Bain&CompanyScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction14Greenhousegas(GHG)emissionscreateclimatechangeataglobalscale,yetthereisnointegratedsystemofglobalcarbonpricing.TomeettheirNationallyDeterminedContributions(NDCs)–thesovereignclimateactionplansundertheParisAgreement–countriesdevelopindependentclimatepoliciesthatoftenimplementregional,nationalandsubnationalcarbonpricingsystemsthatco-existwithinvoluntaryandcompliancemarkets.Thesedifferentmarketsandtradableunitsarelikelytocontinuetocoexistfortheforeseeablefutureandaddcomplexitytothelandscape.Througheligibilityacrossdifferentcompliancesystems,suchasCORSIA,35thecapandtradesysteminCalifornia,36orcarbontaxesinSouthAfrica37andSingapore,38carboncreditstradedinVCMscouldprovideanearly,albeitweaklinkagebetweencomplianceandvoluntarymarkets.ThedevelopmentofaglobalmarketbasedonArticles6.2and6.4oftheParisAgreement39isonthehorizonandwillstrengthenthelinkageovertime.Somecountries(e.g.Malaysia)havealreadybegunregulatingtheVCM.40Asprices,marketsandstandardsevolve,winningplayerswillcontinuouslymonitordevelopmentsandadjusttheircarbonmarketstrategiesaccordingly.Convergenceonaglobalcarbonmarket1.6Article6oftheParisAgreementdescribestheupcomingcarbontradingmechanism,authorizedbytheUNFrameworkConventiononClimateChange(UNFCCC),whichallowscountriestotradeinternationalcarboncreditsagainsttheircommitments.ThecruxofArticle6isthe“CorrespondingAdjustment”(CA)–orsaidsimply,theassuranceofnodouble-countingwherebycountriesmustapplycarbondebitsforcarboncreditsexported.WhilethiscreatesunificationinbalancesandqualitiesunderParisaccounting,countriesmaintaindiscretionintheirengagementaswellasthetypesofunitstheywillpurchasefromthecentralizedUNFCCCregistry.Sovereignsmayfavoursomeoriginsorprojecttypes,inmanywaysmirroringthepreference-drivenheterogeneitythatexiststodayintheVCMbutunderaParis-alignedframework.WhileArticle6wasdesignedforsovereignactors,theUNFCCChasalreadypreparedforcorporateengagementspecificallyenabling“MitigationContribution”emissionreductions,whichcanbepurchasedbytheprivatesectorforresults-basedclimatefinance.Theseemissionreductionswillnotbeauthorizedforsovereignusethroughacorrespondingadjustment,butwillbeallocatedtothehostcountryledgerforrobustaccountingunderParis.41TheVCMwillinevitablybeintertwinedwithArticle6duetoitslargeoverlapincreditsupply.RegistrieslikeGoldStandardandVerra’sVerifiedCarbonStandardarealreadypreparingforArticle6authorizationlabelsontheirstandardunits,42,43andtheUNFCCCregistrywillprovidebuyerswithyetanotheroption.AllofthesecancoexistundertheParis-alignedframeworkforimprovedtransparencyandintegrityundertheParisAgreement.Article6BOX4Futurecarbonmarketsshouldemulatematuresystems.Forexample,projectsissuingcarboncreditsshouldcomplywithrequirementssetbymarketstandardsetters,whicharethemselvessubjecttoevaluationagainstqualitycriteria.Datafromprojectsandregistriesshouldbegovernedindistributedledgerstoguaranteetransparencyandimmutability.Projectsshouldundergofrequentauditsandratingsagencyevaluationstogivebuyersconfidencebeforemakinglargeinvestments.Thisinfrastructurewillhelpcorporationsmanagecarbonliabilitiesthrougheffectiveriskdistributionandefficientallocationofcapitalwhileacceleratingglobaldecarbonization.ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction15Playbook:Howcorporationscannavigatecarbonmarkets2AsystematicapproachforcorporationstodelivermeaningfulclimateimpactthroughtheVCMScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction16Effortstodevelopawell-definedmarketstructureareunderway,butnewentrantscanlearnfromearlyadopters.ThisplaybooklaysoutasystematicapproachforcorporationstodelivermeaningfulclimateimpactthroughVCMparticipation,basedaroundfourtracksofwork(seeFigure9):1.Defineanet-zeroroleforcredits2.Createvalueandrecognition3.Tailoraportfolio4.OrchestratetheeffortVCMPlaybook:FourtrackstoaddresscarbonmarketchallengesFIGURE9Howcorporationscannavigatecarbonmarketswithafour-trackapproachDefinenet-zeroroleforcreditsCreatevalueandrecognitionTailoraportfolioOrchestratetheeffortHowtodefineaclearroleforcarboncreditsonthepathtonetzero,complementarytodecarbonizationSectionASectionBSectionCSectionDHowtorealizetangiblevalueandgainrecognitionfromkeystakeholdersthroughuseofcarboncreditsHowtobuildandtailoraportfolioofcarboncreditstomaximizeimpactonthepathtonetzeroHowtoalignandmobilizein-houseexpertiseforeffectiveVCMparticipationaspartofawidersustainabilityagenda+GuidanceonstrategicengagementwithrelevantorganizationsCorporationsshoulddefineaclearroleforcarboncreditsonthepathtonetzero,complementarytodecarbonization.Thisrequiresquantifyingbaselineemissions,settingscience-basedtargets,developingadecarbonizationpathwayanddefiningtheroleofcreditswithinthispathway,bothduringthetransitionandatnetzero.Achievingnetzeroisamulti-decadejourneyrequiringastructuredapproach.Carbonabatementshouldlead,complementedbycarboncredits.Tocreateanet-zerostrategy,companiesmustfirstbaselinetheirfullemissionscope(Scopes1,2and3).Then,companiesmustsetnear-andlong-termtargets(e.g.emissionreductiontargets,net-zerocommitments,orscience-basedtargetsinalignmentwiththeParisAgreement).Corporationsneedtoconsiderbothconcreteambitionandaspirationalgoalswithnear-termquantifiableoutcomes.Aspartofthisprocess,theyshouldincorporateco-benefitsintodecisionframeworksthatfacilitatetheexecutionoftheirclimatecommitments.TheVCMIClaimsCodeofPracticefoundationalcriteriaprovideguidanceforsettingandusingtargetswhichincludetheVCM(seeFigure7).Definenet-zeroroleforcredits2.1ClimateactiondepartureCorporationscanemploystrategic,operationalandcompensationandneutralizationleverstorealizetheirambition(seeFigure10).DecarbonizationpathwaysSource:Bain&CompanyScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction17Toassesstheeffectivenessandactionabilityofthesedecarbonizationlevers,corporationscanevaluatethemagainstthefollowingcriteria(seeFigure11):–Leverimportance(abatementpotentialforScopes1,2and3)–Financialconsiderations(e.g.costs,returnoninvestment)–Operationalconsiderations(e.g.disruption,timetodeployment,gaptotechnologicalmaturity,relianceonexternalpartners)OperationalleversareexecutedatlinelevelInvolveassetupgrades,processadjustmentsandenhancedrequirementsforsupplychainpartnersCompensateorneutralizeresidualemissionsatacompanylevelInvestmenttypicallyinavoideddeforestation,reforestationandrenewableenergydevelopmentprojectsOperationalStrategicCompensation/NeutralizationStrategicleversimpactentiretyofbusinessTypicallymoretransformativeinnatureandincludesignificantchangestoproduct/assetportfolioThreetypesofleverstoreducecorporateemissions44FIGURE10Source:Bain&CompanyLeverimportanceFinancialconsiderationsOperationalconsiderationsOperationaldisruptionROIScope1impactEvaluationdimensionCriteriaDescriptionAbatementpotentialonindustryScope1-2-3emissionsbypullingtheleverThelevelofoperationalimpactordisruptioncausedbypullingtheleverTheextentthattheleverreliesontheactionsofpartiesoutsideofthetargetcompany’scontrolThetimeitwouldtaketofullyimplementandoperationalizetheleverThegapinavailabilityofthetechnology,goingfromcommerciallyavailableatscaletopurelynascentstageWhetherthecostofpullingtheleverisprimarilyOpEx-orCapEx-drivenDirectionalreturnoninvestmentforeachleverScope2impactScope3impactOpExheavyCapExheavyRelianceonexternalpartnerTimetodeploymentGaptotechmaturityCriteriatoevaluateeffectivenessofdecarbonizationleversFIGURE11Source:Bain&CompanyScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction1850%40%30%20%10%0%1251020501002005001.0002.0005.00010,00020,00050,000100,00010-yearaveragenetmarginEmissionsintensity(tCO2e/$millions)AABBCCSocietalroleCarboncreditsmostlyusedas“sword”Companiescandoalotmorebeyonddecarbonizingandcompensatingfortheirown/currentemissions.Includesmostlyfinancialservices,technologyandprofessionalservices.Selectiveroleintransition,mostlyusedatnetzeroMixof“sword”and“shield”Companiesfocusondecarbonizationandconsidercarboncreditsalong-termsolutiongiventheirlimitedabilitytopurchasecreditsintheinterim.Theymightusecreditsintheneartermforbranding/regulatorypurposes.Mostlyincludescompanieswithinretail,foodproducts,electronic&technologyhardwaremanufacturing,automobiles,mining,oil&gas(integrated,storage&transportation,refining&marketing)anddiversified&agriculturalchemicals.MeaningfulroleintransitionandatnetzeroCarboncreditsmostlyusedas“shield”Companiesneedtoshowcleareffortstowarddecarbonizationwhilealsoprovingtheyarecompensatingforsomeoftheirremainingemissionsinthemeantime.Mostlyincludescompanieswithinspecialtychemicals,tobacco,diversifiedmetals&mining,oil&gasexplorationandproduction.ConsumerEnergyFinancials&ITIndustrialsMaterialsOthersCorporationscantailortheirimplementationofleverstoachievenetzerodependingontheirindustry.DifferingScope1,2and3emissionsprofilesofvarioussectorsrequireuniqueconsiderations.Scope3oftenconstitutessignificantbutdifficult-to-controlcategoriesofemissionsalongcorporatevaluechains.CorporationscouldfollowSBTi’s“expansiveboundary”45approach(orsimilarframeworks)forScope3emissions,withtheobjectivetoaccelerateScope3decarbonizationeffortsovertime.Inthenearterm,corporationscanprioritizeabatementleversbasedontheirreturnoninvestmentandabilitytoimplement.Theoverallroleofcarboncreditsdiffersbyindustry,ultimatelydependingoncorporations’emissionintensityandprofitability(seeFigure12).CompaniesincategoryA,primarilyfinancialandinformationtechnology(IT)sectors,benefitfromhighprofitabilityandrelativelylowemissionsintensity,suggestingtheyhavethemeanstoinvestmoreambitiouslybeyondtheirvaluechains.Bycontrast,companiesincategoryB,primarilyindustrialsandenergy&materialssectors,experiencehighprofitabilitybutwithhighemissionsintensity.Theyshouldthereforefocustheireffortsondecarbonization,whilealsoprovingtheyarecompensatingforsomeoftheirremainingemissionsinthemeantime.CompaniesincategoryC,primarilyretailandconsumerproductssectors,haverelativelylowprofitabilityandvaryingemissionsintensity.Theyaremorelikelytousetheirconstrainedfinancialresourcestofocusondecarbonizationandviewcarboncreditsasalong-termsupplementtomeetthenet-zeroendstate.RoleofcarboncreditsFIGURE12Source:Refinitiv,BainanalysisCorporateemissionsintensityandprofitabilitybysector46ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction19Inthiscontext,corporationscanintegratecarboncreditsaspartoftheirrecurringinvestmentdecisionprocess.Internalcarbonpricingisastrategictoolthatcaninforminvestmentswhiledeliveringmultiplecorporatebenefits(seeFigure13).AllocatefinanceforcarbonreductionEnableprioritizationofgreeninvestmentsDrivebehaviouralchangeBoostsustainabilityinvaluepropositionHelpnavigateregulatorychangesGeneratenecessaryfundstofinancelow-carbonalternativetoachievecarbonreductiontargetComparealternativesforsustainableinvestmentsandenableprioritizationbasedonexpectedimpactHelpmaketrade-offsbyputtingafinancialweightonCO2savingsandinfluencingdecisionmakingthatgoesfarintofutureIncludeincustomervaluepropositiontoeducatecustomersandmonetizeUseinternalcarbonpricingtobetterunderstandshort-andlong-termrisksandcostsassociatedwithclimateregulationFIGURE13Source:Bain&CompanyBenefitsofinternalcarbonpricingScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction20High-integrityuseofVCMdrivesinnovationandacceleratesdecarbonizationinkeyindustries(suchasagriculture)forsocietalnetzero.Thecapacityofsustainableagriculturetocaptureandstorecarboninthesoilrepresentsoneofthebiggestandmostrapidlyscalablesolutionstocombatclimatechange.Thissolutionhasthepotentialtoremoveupto4gigatonnesofCO2eannuallyby2030,equatingtoapproximately7%ofglobalnetanthropogenicGHGemissions.47TheworkofIndigoAg,aUS-basedagriculturaltechnologycompany,isanexampleoftheroletheVCMcanplayinacceleratingthedecarbonizationofacrucialglobalsupplychain.Realizingthispotentialrequiresdurableannualfinancialincentivesforgrowerstoadoptandsustainpracticechanges.Asafarmergrowsdifferentcrops(whichmostlyhavedifferentoff-takers)inthesamefieldoverthecourseofthecroprotationcycle,securinganassuredannualreturnforadoptingpracticesiscriticalforbothfarmearningsanddurabilityofthechange.In2019,IndigoAgpioneeredaprogrammetoengageUSfarmersinscalingtheadoptionofregenerativegrowingpractices,includingtheconsistentuseofcovercrops,cropdiversityandthereductionofsoildisturbancethroughreducedornotillage.Fromtheonset,IndigoAgworkedwithregistriesliketheClimateActionReserveandVerratoenablefarmerstomonetizeadoptionofthesepracticesthroughhigh-qualitycarboncredits,independentlyverifiedandcertified,withtherequiredmonitoringandassuranceprocesses.Throughthiswork,IndigoAghasusedtheVCMtoprovideconsistentearningstofarmersatscale,becomingthefirstcompanyintheworldtogeneratehigh-integrityagriculturalsoilcarboncredits.Astheprogrammescalesup,itprovidesasignificantopportunityforScope3decarbonizationforfood,feedandfibrecompanies.SwissReleveragesinternalcarbonpricingtodriveemissionreductionsandfundthetransitionto100%high-qualityremovals.TheglobalreinsurerSwissReiscommittedtoachievingnet-zeroemissionsacrossthecompanyby2050.Foritsownoperations,thecompanyisfocusingonadualstrategyofreducingemissionstothegreatestextentandasswiftlyaspossiblewhilegraduallymovingfrom100%carbonavoidancecertificatesin2020to100%carbonremovalcertificatesby2030tocompensateremainingemissions.Carboncertificatesarefundedbyraisingarealinternalcarbonprice,whichincreasesfrom$100to$200pertonneofCO2between2021and2030.Atthistriple-digitlevel,thecarbonsteeringlevy,asSwissRecallsit,fostersemissionreductionsinthefirstplace.SwissRe’semissionscompensationstrategyreliesonthetimelyavailabilityandaffordabilityofhigh-qualitycarboncertificates.Earlyengagementinthevoluntarycarbonmarkethelpsunlocktheinvestmentsthatarenecessarytoscaleupsupply.Bysecuringthefundingfortheirownengagementviaamulti-yearcarbonpricingpolicy,SwissRecanplanaheadonhowtosourcecertificatesmeaningfullyandefficiently.Forexample:1.Byenteringlong-termpurchaseagreementswithstrategicpartners,suchasdirectaircaptureproviderClimeworks.2.Byparticipatinginthebuyers’clubNextGen,whichSwissRehelpedtoestablish.Buyers’clubsaggregatedemandfromseveralsmallerbuyersandplaceitinthecarbonmarket,yieldingbetterpricesanddiversificationatlowertransactionalcost.3.Byconductingover-the-countertransactionsinmarketplacessuchasPuro.earthorCarbonfutureatyear-endtomatchremainingfundswiththeactualcompensationneed.CASESTUDY1IndigoAgCASESTUDY2SwissReScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction21Long-termofftakeagreements,tomaximizebusinessimpactBuyers’clubs,tominimizetransactioncostsOverthecounter,toflexiblycoverremainingcompensationneedsatyearendFIGURE14Source:Bain&CompanyinterviewswithcompanySwissRe’schannelstosourcecarboncreditsThissectionhasexaminedthethreedimensionsofacompany’snet-zeropathway.RecommendationsaresummarizedinFigure15.ClimateactiondepartureAlignyourpointofdeparturewiththefourfoundationalcriteriaofVCMI’sClaimsCodeofPractice-Maintainanddiscloseanannualgreenhousegasemissionsinventory-Setandpubliclydiscloseindependentlyvalidatedscience-basednear-termreductiontargetsandpubliclycommittoreachingnet-zeroemissionsnolaterthan2050-Demonstrateprogresstowardsmeetinganear-termemissionstargetandminimizingcumulativeemissionsoverthetargetperiod-Demonstratethatthecompany’spublicpolicyadvocacysupportsthegoalsoftheParisAgreementanddoesnotrepresentabarriertoambitiousclimateregulationDecarbonizationpathwaysDefineyourpathwaytonetzero(acknowledgingpathwaysmaydifferdependingonindustryandgeography)-Deployacombinationofstrategic,operationalandcompensationlevers-Choosethoseleversbasedondifferentassessmentcriteria(e.g.Scope1-2-3importance,financialandoperationalconsiderations)RoleofcarboncreditsEnsureclearmessagingofthedifferentpurposescarboncreditswillserveintransition(compensationforpartoftheemissions)andatnetzero(neutralizationofresidualemissions)Createacarboncreditstrategyforusageduringtransitionbasedonindustryandgeographyspecifics,emissionintensity,profitabilityandwillingnesstousecreditsFurtherincentivizeparticipationinvoluntarycarbonmarketsacrossstakeholders(e.g.requiringsupplierstotakeclimateaction,linkingsalestocustomerstocreditpurchase)Establishcreditsasanofficialpartoftheregularbudgetingprocess(e.g.throughuseofaninternalcarbonprice)tosupportachievementofcommittedtargetsandpotentiallybringnewinvestmentopportunitiesFIGURE15Definenet-zeroroleforcredits–SummaryofrecommendationsScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction22Companiesfaceuncertaintyregardingthelong-termvalueofcarboncreditstotheirbusinesses,aswellasconcernsaboutthecredibilityofcarboncreditprojects.Facingpotentialaccusationsofmisrepresentationorlegalchallenges,somecompanieshavepausedorreducedengagementwiththeVCM.Thissectionlooksathowcorporationscanusehigh-integritycarboncreditstocreatetangible,recognizablevalueforkeystakeholders.Realizingthefullvalueofcarboncreditsrequirescorporationstoadoptastrategicapproachtocarboncreditsratherthansimplymanagingcost.Thiscanbefacilitatedthroughtheintegrationofcarboncostsintofinancialplanningprocesses,andestablishingtransparentcommunicationabouttheroleofcarboncreditswithinacompany’soverallnet-zeropathway(emphasizingthecomplementarityofcreditswithemissionsreduction).Aligningclaimstoanestablishedrulebook(suchastheVCMI’sClaimsCodeofPractice)providesfurtheropportunityforexternalrecognitionandcredibility.TheVCMcangeneratevalueforcorporations,theirstakeholdersandthebroaderecosysteminanumberofways(seeFigure16).Highlightingthevaluecarboncreditscanbringiscriticaltoscalingupthemarket.Createvalueandrecognition2.2ValuecreationthroughVCMactivitiesRegulationriskmitigationBuildcarboncapabilityinanticipationoffutureregulatorychanges(e.g.forpotentialcarbontax/capandtradeschemes)Valueforcorporations/businessValueforstakeholdersValueforthebroaderecosystemCarboncreditsasfinancialinvestmentsForwhichtherecanbepricediscoveryandvalueassignmentBuildcapabilitytosourceand/ordevelopandmanageportfolioofcredits/projects(i.e.analogoustofinancialinstrumentsoroperationalassets)LowertangiblevaluetodayStakeholdersalongthevaluechainCreatebothtangibleandintangiblebenefitsinstakeholderengagementSuppliersSupportsuppliers’emissionreductiontosecuresupplyandimprovebrandimageCustomersSatisfynature-consciousclientsthroughenhancedvalueproposition,upliftsalesandpremiumizationEmployeesOffersenseofpurposeforemployees,improvingacquisition,retentionandproductivitySustainablegrowthEnsuretheavailabilityofnaturalcapitalresourcesandsustainabletechnologycriticalforlong-termeconomicgrowthCo-benefitsPreventbiodiversityloss,createsustainablejobsandspurinnovationnecessaryforasustainableeconomyClimateactionRemoveGHGemissionsfromtheatmosphereandsupportlimitingglobaltemperatureincreaseto1.5°CHighertangiblevaluetodayFIGURE16Source:Bain&CompanyAttributingmoretangiblevaluetocarboncreditsHowever,thisvaluecanbedifficulttoquantifyandtranslatingitintoaclearfinancialincentiveforthecompanyremainsachallenge.Andwhilethecostisbornebyaspecificcorporateentity,thebenefitssuchastheclimateactionorenvironmentalandsocialco-benefitsareoftenenjoyedbyalargergroupofstakeholdersandviewedascorporatephilanthropy.Meanwhile,evenwell-intentionedeffortsmayprovokecriticismformistakesmadeinenvironmentswithnascentregulationifnotcommunicatedtransparently.Manyobstaclesholdcompaniesbackfromrealizingvalueforcarboncredituse–frommediaandNGOcriticismaroundgreenwashingtoinconsistenciesbetweenregulatorsandstandardsettersastohowcarboncreditscanbeused(seeFigure17).ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction23Recognizingtheriskofoperatinginanunregulatedenvironment,regulatorsandindependentstandardsettershavebeguntomovetowardsprovidingmoreexternalclarity,includingVCMI,SBTi,theUSSecuritiesandExchangeCommission(SEC)andtheInternationalOrganizationofSecuritiesCommissions(IOSCO).Allareworkingtoclarifymarketguardrails.Yet,itisimportantforcorporatestomanagepartoftheriskofgreenwashingaccusationsthemselves.Onlythroughtransparentcommunicationontheuseofcarboncreditsandtheeducationoftheirstakeholderscantheycreatebuy-infortheiractivitiesandgivestakeholderspeaceofmindthattheirinvestmentsarenotgreenwashing,butwell-intendedclimateaction.Thiswillnotonlymitigatetheriskofconfusionand–intheworstcase–accusationsofgreenwashinginanuncertainexternalenvironment;itwillalsocreatethebasisfortangiblerecognitionafterregulatorsandstandardsettersprovidemorerobustframeworks.EmergingguidancefromstandardsettersCorporatesdon’thavesufficientincentivestoinvestincarboncreditsduringthetransition.However,recentlypublishedwork(e.g.VCMIClaimsCodeofPractice)isbeginningtoaddressthisRegulators/countriesholdvaryingpositionsInconsistenciesbetweenjurisdictionshaveimplicationsforbroaderadjustments(e.g.EUETSstoppedallowinginternationalcarboncreditsafter2020,whileCanadaallows80%GHGreductionobligationtobecompensated)Manycompaniesfear“frontpagerisk”Intheabsenceofclearlegaldefinitionsforclaimslikenetzero,carbonneutral,etc.somecompanies’lackofintentionandprudenceinpurchasingcarboncreditsresultsin“greenwashing”criticismsfromthepressandNGOs,keepingothercompaniesonthesidelinesMixedconsumerperceptionofcreditsManyconsumersarescepticalaboutcarbon-neutralproductsandhavenegativeimpressionsoftheuseofcarboncreditsUnderdevelopedincentivesCompaniesworryaboutgreenwashingaccusationsFIGURE17Source:Bain&CompanyObstaclespreventingcompaniesfromrealizingvalueforcarboncredituseAmexGBThasdemonstratedhowtheVCMcanbeusedtocreatecustomervalue,broadeningtherangeofsolutionsandenablingclimateactionfromkeystakeholderstoadvancesocietalnet-zeroambitions.AmericanExpressGlobalBusinessTravel(AmexGBT)isaleadingcorporatetravelmanagementcompany,specializinginend-to-endbusinesstravelsolutionsinapproximately140countriesacrosstheglobe.Itoffersarangeofsolutionstohelpreduceemissionsfrombusinesstraveland,throughengagementwiththeVCM,tocompensateforemissionswhereabatementisnotpossible.AmexGBTacknowledgesthataviationisahard-to-abatesector.InpartnershipwithShell,AmexGBTallowsclientstoinvestinSustainableAviationFuel(SAF).SAFofferssignificantpotentialfordecarbonizationwithouttheneedtomodifyexistinginfrastructure–whenusedneatitcanreducelifecycleemissionsbyupto80%comparedtoconventionaljetfuel.48WhileSAFisahigh-potentialemergingtechnology,itwillrequireadditionalinvestmentbeforedeployingatscale.AmexGBTactivelyengageswiththeVCMintwoways.First,thecompanyhascompensatedforitsownbusinesstravelemissionssince2019,purchasingcarboncreditsthatpredominantlysupportforestconservationprojects.Second,AmexGBToffersitscustomerstheopportunitytoimplementtheirowninternalcarbonpriceonbusinesstravelbookedthroughAmexGBT,andtoinvestthosefundsinmitigationbeyondtheirsupplychainsviaindependentlyverifiedcarboncreditsthatpromotewiderecosystemandsocio-economicbenefits,contributingtotheadvancementoftheUNSustainableDevelopmentGoals.49CarbonoffsetcreditsaremadeavailablethroughCHOOOSE,apartnerthatofferstechnologysolutionsforintegratingclimateactionwithcustomerexperience.Byfacilitatingcarboncreditpurchases,AmexGBTispavingthewayforamoresustainablefuturethroughinitiativestoreduceitsowncarbonfootprint,aswellasgeneratingvalueforclientsandtheindustryatlarge.CASESTUDY3AmericanExpressGlobalBusinessTravel(AmexGBT)ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction24OverviewofVCMI’sClaimsCodeofPractice-OntracktomeetinterimScope1–3targets-High-qualitycarboncreditsusedtoaddress100%ormoreofremainingemissionsinthelatestreportingyearVCMIPlatinumVCMIGoldVCMISilverOther-OntracktomeetinterimScope1–3targets-High-qualitycarboncreditsusedtoaddress60%–100%ofremainingemissionsinthelatestreportingyear-OntracktomeetinterimScope1–3targets-High-qualitycarboncreditsusedtoaddress20%–60%ofremainingemissionsinthelatestreportingyearPendingrelease:-AdditionalVCMIClaimstiersandupdatedclaimsnames-Rulesforclaimsmadeattheproduct,service,orbrandlevelComplywithfoundationalcriteriaTheClaimsCodeofPracticeprovidesclearguidanceonwhenvoluntaryuseofcarboncreditscancrediblybeusedaspartofacompany’snet-zerocommitmentsIdentifyclaimstomakeMeetrequiredcarboncredituseandqualitythresholdsObtainthird-partyassuranceofreportedinformationEnterprise-levelclaimClaimsavailableCompaniesneedtocommunicatetransparentlywithallstakeholdersanddisclosedetailsonthecarboncreditspurchased,includingemissionsimpact,carbonfinancingandco-benefits.AnexampleofthetypeofguideavailabletoenhancecommunicationanddisclosureistheVCMIClaimsCodeofPractice,referencedinChapter1.LaunchedinJune2023,theClaimsCodeisarulebookfororganizationsnavigatingthecomplexlandscapeofcarbonmarkets.Itfocusesonhowcompaniescanusecarboncreditsandmakecredibleclimateclaimsinvolvingthosecreditsaspartoftheirnet-zerocommitments.TheClaimsCodeallowsentitiestoclaimoneofthreeenterpriseleveldesignations:silver,goldorplatinum.Toqualifyforanyoftheselevels,organizationsmustfirstbeontracktomeettheirinterimScope1-3carbonabatementtargets.Eachlevelthenrecognizesanorganization’seffortstoaddressremainingemissionsusinghigh-qualitycarboncredits.Forsilver,thebarissetat20-60%ofremainingemissions,forgolditis60-100%andforplatinumitis100%ormore(seeFigure18).TheVCMI’sClaimsCodeofPracticecanthereforehelpcorporationscommunicatetheireffortsandderivevaluefromthevalidationoftheirprogress.CompaniesareexpectedtobeabletomakeaVCMIclaimbyNovember2023,whenVCMIwillreleaseadditionalguidancespecificallyontheVCMIMeasurement,ReportingandAssurance(MRA)framework,additionalclaimtiersandclaimnames.NewnarrativeFIGURE18VCMI’sClaimsCodeofPractice–IdentifyclaimstomakeSource:AdaptedfromVCMIClaimsCodeofPracticeScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction25ValuecreationClearlydefinetheroleofcarboncreditsonyourjourneytonetzero,tocreatemeaningfulvaluefororganization,stakeholdersandthebroaderecosystem-Ensurecarboncreditsareanadditionaltoolonthescience-alignedpathwaytodecarbonizationOvercometheobstaclesinrealizingvalueby:-Collectivelyadvocatingforaclearerregulatoryenvironmentaroundhigh-qualitycarboncreditsandagreeingonguardrailstoavoidgreenwashing-Collaboratingwiththeexistingecosystem(regulators,financialinstitutions,marketinitiativesandothercorporations)ratherthanreinventingthewheelNewnarrativeTotheextentfeasible,leveragetheVCMI’sClaimsCodeofPracticetodesignhigh-integrityprocessesandderivevaluefromthevalidationandclearcommunicationofprogress-Complywithfoundationalcriteria-Identifyclaimstomake-Meetrequiredcarboncredituseandqualitythresholds-Obtainthird-partyassuranceofreportedinformationCorporationscandrivepositivevaluecreationandgainrecognitionbyclearlycommunicatingspecific,tangibleoutcomesofVCMactionwithstakeholders.Salesforceisaglobalcustomerrelationshipmanagement(CRM)softwareprovider,offeringcloud-basedsolutionsforbusinesses.Thecompanyhasarobustclimateactionplanthatspansitsproducts,services,operations,supplychain,capitalandinfluence.Theplanincludesambitiousshort-andlong-termdecarbonizationtargets,whichaimtoreducefullvaluechainemissions(Scopes1,2and3)iby50%in2030andtonearzeroby2040.Since2022,Salesforcehascompensatedannuallyfor100%ofunabatedemissions,throughacombinationofrenewableenergyandhigh-qualitycarboncreditpurchases.Salesforceevaluatesthesecreditsagainstitsownqualitycriteria(alignedwithICVCM’sCoreCarbonPrinciples)andalsoassessesthemusingprojectqualityratingsandinsightsprovidedbyindependentcompaniessuchasSylvera,BeZeroandCalyxGlobal.iiThecompanyemphasizesthatitsdecarbonizationandcompensationtargetsarelinkedbutseparate,whichmeansthatitsmeasurestocompensateforemissionsdonotdiminishitsfocusondecarbonization.However,thechallengingmediaandpublicdiscoursearoundcarboncredits,includinginstancesofcarboncreditabuseandjustifiedcriticismofothercompanies,hasmeantthatcommunicatingtheimpactofSalesforce’shigh-integritycompensationactionshasnotbeenstraightforward—particularlygiventhedebatearoundnet-zeroandcarbon-neutralterminology.Thecompanycommunicatesitsimpactthroughpublications,includingitsclimateactionplanandannualstakeholderreport,50usingthephrase“netzeroresidualemissions”,whichitcontinuestoevaluateasguidanceevolves.Salesforcehasfoundthat,whiletherearedisagreementsaboutthehigh-levelnamegiventotheuseofcarboncredits,thereiswidespreadsupportforthecompany’sapproachtoreducingemissionsandcompensatingforunabatedemissionsaspartofaholisticclimateactionstrategy.Tryingtofindtheperfectclaimorcommitmentshouldnotholdcompaniesback.InSalesforce’sexperience,itsdecade-longjourneyofreportingclimatedisclosures,engagingsupplierstoreduceemissionsandestablishingsustainabilityasacorecompanyprinciplehasfosteredvalueacrossallstakeholders,includingemployees,customers,investorsandregulators.iVialocation-basedcarbonaccountingiiSalesforceonCarbonCredits:AJustTransitiontoaNetZero,Nature-PositiveWorld,https://www.salesforce.com/content/dam/web/en_us/www/assets/pdf/reports/carbon-markets.pdf.CASESTUDY4SalesforceThissectionhasexaminedhowcompaniescancreatevalueandrecognitionthroughengagingwiththeVCM.RecommendationsaresummarizedinFigure19.FIGURE19Createvalueandrecognition–SummaryofrecommendationsScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction26Tocomplementtheirprimaryabatementefforts,corporationscanbuildaportfolioofcarboncreditsthatmaximizestheimpactontheirtransitionstrategy.Thisinvolvesdesigningaportfolioofhigh-qualitycreditstailoredtotheirbusiness,withashort-termfocusonavoidedemissionsthattransitionstowardscarbonremovalinthelongterm.TheOxfordOffsettingPrinciplesillustratehowbeyond-value-chainmitigationislikelytoevolveasglobaleffortstransitionfromavoidingemissionsintheshorttomediumtermtowardsnature-basedandengineeredcarbonremovalinthelongterm(seeFigure20).Tailoraportfolio2.3Avoidedemissionsincludeprojectssuchasthedeploymentofrenewableenergytoreplaceplannedfossilfuelpowerplants,programmestoupdateinefficientcookstoves,andthedestructionofpotentgreenhousegaseslikemethaneandnitrousoxidebeforetheyreachtheatmosphere.Incontrast,carbonremovalsareoffsetsgeneratedbyprojectsthatremovecarbondioxidedirectlyfromtheatmosphere.Examplesincludebiologicalcarbonsequestration(e.g.plantingtrees,soilcarbonenhancement),bioenergywithcarboncaptureandstorage(BECCS),directaircapturewithgeologicalstorage(DACCS),orconvertingatmosphericcarbonbackintorockthroughremineralization.AvoidanceandremovalBOX5Source:OxfordOffsettingPrinciples/ILLUSTRATIVE100%80%60%40%20%0%2050204020302020Carbonremovalwithlong-livedstorage(e.g.engineeredremovalsorafforestation/reforestationifreversalcanberuledout)Carbonremovalwithlong-livedstorageShifttheportfoliotowardsnature-basedremoval,(e.g.afforestation/reforestation)Carbonremovalwithshort-livedstorageCutemissionsand,intheshortterm,usehigh-qualityavoidancecredits(e.g.fromconservation)Nature-basedandengineeredavoidance010203010203RemovalAvoidance/reductionFIGURE20Proposedpercentagebreakdownofcarboncreditportfolio(2020-2050)Source:AdaptedfromtheOxfordOffsettingPrinciples51ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction27Whenbuildingaportfolioofhigh-impactcredits,corporationscanapplyamulti-layerapproachtofollowthelatestguidanceonthequalityofcreditsandmitigaterisksfromindividualprojects:–Categorylevel:Inanincreasinglycomplexlandscapeofcarbonstandards,methodologiesandmitigationactivities,notallcarboncreditsaresuitableforeverybuyer.Acategorylevelapproachinvolvesassessinggroupsofcreditswithconsistentmitigationactivities,quantificationmethodsandgeographicortechnicalfeatures.TheICVCMhasrecentlypublisheditsfirstiterationoftheCoreCarbonPrinciples(CCPs),52whichcontainsguidelinesforqualityassuranceatthecategorylevelthatcanbeusedasabaselineforthisassessment.–Projectspecific:Project-levelriskprofileswithinaparticularcategoryvarysignificantly.Buyerscanperformproject-specificdiligenceorrelyonthird-partydiligence.Thegrowthofcarboncreditratingagenciesprovidesanoptionfordiligenceandqualitycontrolthatsimplifiestheprocessforcorporatebuyersandmitigatestheriskofprocuringlow-qualitycredits,particularlyforcorporationswithoutextensivein-housecarbonexpertise.UntiltheICVCMissuesabroadrangeofcreditapprovalswithwidemarketcoverage,corporationsneedtouseothermeanstoassesscreditqualityfortheirportfolioconstruction,payingparticularattentionto:–Baselinesassociatedwithemissionsreductioncalculations–TransparencyaroundprofitdistributionbetweentheprojectdeveloperandintermediariesPortfoliodesigntoolsOverviewofICVCM’sCoreCarbonPrinciples(CCPs)•Identifycategoriesthat-FulfillICVCM’sCCPs-Arealignedwithcompany’sportfolioambitionandcorporateobjectivesIdentifyICVCM-compliantcategoriesDuediligenceandmonitoringofprojects•Takeresponsibilityforduediligenceandmonitoringofindividualprojects(internallyorwiththird-partysupport)•DetermineextenttowhichyourcompanywillapplymorestringentrequirementsEmissionsimpactTheCoreCarbonPrinciplesareaglobalbenchmarkforhigh-integritycarboncreditsthatsetrigorousthresholdsondisclosureandsustainabledevelopmentGovernanceSustainabledevelopmentImplementationwithinportfoliodesign•Additionality•Permanence•Robustquantificationofemissionreduction&removals•Nodoublecounting•Effectivegovernance•Tracking•Transparency•Robustindependentthird-partyvalidationandverification•Sustainabledevelopmentbenefitsandsafeguards•Contributiontonet-zerotransitionFIGURE21DesignportfoliosthatcomplywithICVCM’sCoreCarbonPrinciplesSource:AdaptedfromICVCM’sCoreCarbonPrinciplesScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction28Definecleargoalsandleverageexternalresourcestosourcehigh-qualitycredits,thenmaximizeportfolioimpactthroughforwardpurchasingagreementstoscaleupcarbonprojectsupplyandenablenewtechnologydevelopment.SalesforcecompensatesforitsresidualScope1,2and3emissionsonanannualbasiswithasignificantportfolioofhigh-qualitycarboncredits,totallingaround1MtofCO2ecreditsretiredin2022.53Creditsarecurrentlyfocusedonnature-basedprojectsthatalsodeliverco-benefits,includingreduceddeforestation,improvedforestmanagement,cleancookstoves,peatlandconservationandmangroverestoration.Salesforce’sexperiencedevelopingandmanagingthisportfoliohighlightsthreerecommendationsforcompanieslookingtoenterthemarket:1.Definecleargoals:Determinewhatyouwanttoachieve,suchascarbonsequestration,co-benefitsandotherfacetsofsustainabledevelopment.2.Useexternalspecialiststoprovidesupportinprocuringhigh-qualitycarboncredits:Salesforcehasbenefitedfromindependentthird-partyratingsagenciessuchasSylvera,BeZeroCarbonandCalyxGlobal.3.Aimforadiversifiedportfoliothatmitigatesconcentrationrisk:individualprojectsshouldtypicallyconstituteasmallproportionoftheoverallportfolio.Salesforcebelievescompaniescanmaximizetheimpactoftheircarboncreditportfoliobyutilizingvariouspurchasingapproaches,suchaslonger-termpurchases,forwardpurchaseagreementsandofftakeagreements.Theseapproacheshelpsecurefuturecarboncreditsupply,whileprovidingtheconsistent,sustainablefundingordemandsignalsrequiredtocatalysethedevelopmentofnewandhigh-qualityprojects.This,alongwithaprogressiveportfolioshifttowardsnature-andengineered-basedremovalcreditsinlinewithscience,canhelptoexpandhigh-qualitymitigationoutcomes,aswellasacceleratethedevelopmentofnovelCDRapproaches.CASESTUDY5SalesforceExamplehighambitionnet-zerojourney/ILLUSTRATIVE100500-50-1002021202020232024202220262025202820292027203120302033203420322036203520382039204020372025onwardsShiftfocustoremovalcredits—naturecredits(NbS)thenengineeredcredits(TbS);drivedevelopmentofTbSbycommitting$100millionby2030,topurchaseTbScarboncredits2020–2025Focusonavoidancecredits(NbSandrenewableenergy)EmissionsEmissionsPortfoliopriorities:ReduceouremissionsReduction/Avoidancecredits(Nature&Energy)Portfoliopriorities:FundnatureconservationsandrenewableenergydeploymenttodayRemovalcredits(Nature)Portfoliopriorities:Catalysenature’spotentialtoremovecarbonRemovalcredits(Engineered)Portfoliopriorities:SpurinnovationinengineeredcarbonremovalsFIGURE22Salesforcemaintainsadiversifiedportfolioandaimstoprogressivelyshifttoremovalsandtechnology-basedsolutionsSource:Salesforce54ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction29Heinekenrecognizesthestrategicimportanceofcarboncreditportfoliosandaimstousecreditsaspartofascience-basedapproachtomitigateemissionsanddrivepositivenatureandsocietaloutcomesinthecommunitieswhereitoperates.HeinekenisaglobalbrewingcompanybasedintheNetherlandswithoperationsinover70countriesandconsumersaroundtheworld.Heinekenhasembeddedsustainableinitiativesintoitscorporatestrategyformanyyears.In2009,itintroducedthe“BrewaBetterWorld”programme,dedicatedtoimprovingitsenvironmentalandsocialimpactandpromotingresponsibleconsumptionofitsproducts.HeinekenisasignatorytotheUN’s“BusinessAmbitionfor1.5°C”pledgeandin2021itannouncedits2030net-zerotargetstoreduceScope1and2emissionsby90%andScope3emissionsby21%(comparedto2018).TheDutchbreweraimstoreachnetzero“frombarleytobar”by2040.55Heinekenanticipatesthatfuturecarbonpricing,taxationandemissionstradingschemesarelikelytoaffectbusiness.Thecompanythereforeviewsitsclimatestrategyasbothanenvironmentalimperativeandakeyriskmitigationtactictominimizeeffectstothebusinessfromincreasedcarbonregulation.Inconjunctionwiththereleaseofits2022year-endresults,Heinekenannouncedthatin2023itplanstosubmitits2040targetstoSBTianddevelopanapproachtoidentifytherightcarbonremovalstrategythatgeneratescredible,meaningful,high-qualitycarboncreditstoaddressresidualemissions.Inplanningforitsfuturecarboncreditportfolio,Heinekenisdefiningasetofkeypurchasingcriteria(KPCs)toassesscarbonprojectsandavailablecredits.TheseKPCswillhelpHeinekendecidewhethertousecreditsfromprojectswithinitsownvaluechain(e.g.itsbusinesshasaccesstoagriculturallandwherecarboncreditprojectsarepossible)ortoinvestinexternalprojects,aswellashowtomaximizetheco-benefitsofsuchprojectsforlocalcommunities.Ithasmobilizedinternalandexternalresourcestodevelopdesignprinciplesthatincorporatecommercialconsiderationsandtailoredapproachesfordistinctcomponentsofitsfootprint,aswellasadynamicallyevolvingmixofsolutionstoshiftfromavoidancetofullremovalovertime.CASESTUDY6HeinekenEstablishgoalsforcarboncreditportfolio…leveragingprojectopportunitiesfromwithinHeineken’sownvaluechainandprioritizinglocalimpact…whileenablingalonger-termportfolioshiftfromcarbonavoidancetoremovalAssesscarbonprojectsandavailablecarboncreditsAvoidanceRemovalFIGURE23Heineken’sapproachtobuildingacarboncreditportfolioSource:Bain&CompanyinterviewswithcompanyScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction30Ownershipofownprojects:CorporationshavefullownershipovertheirlandandcanpartnerwiththirdpartiestoundertakedevelopmentofprojectsCorporationsneedtothoughtfullychoosefromportfoliosources……implementathoroughcreditprocurementprocess……andcarefullychoosehowtomonitorcreditstoensureintegrityInvestmentintoupstreamfunds:SeveralcorporationspooltheirmoneytogethertoinvestinchannelingresourcesintocreditretirementprojectsDuediligence:Abulletproofduediligenceneedstofollow5steps:1.Ensureethicsandlegalcompatibility2.Conductresearchusingpublicdataformarketintelligence3.Proactivelysolicitextrainputsfromdevelopersandintermediariesaboutprojectdevelopmentandmanagement4.Leveragetheserviceofcarbonratingsagencies5.MaintainaniterativeprocessthatevolvesintandemwithhowthemarketchangesCarbonregistries:Keepaledgerofcreditowners,withstrictcancellationofthecreditswhentheyareretiredIndependentauditors:Engagetoroutinelybe“ontheground”andmonitor,reportandverifytheemissionsreductionsusingscience-basedcalculationsPurchasing:4factorstooptimizeforwhenpurchasingcarboncredits:1.Fairprice&benefitsharing2.Long-termdemandsignal3.Fairsharingofriskandbenefits4.FairtradeNewtechplayers:Leveragetechnologysuchassatellitedata,LIDAR,ML/AIetc.toimprovequalitytransparencyviareal-timedashboardstoremotelytrackandratetheimpactsofprojectsInternalteams:Liaisewithdifferentexternalplayerstoconstantlyreviewandanalysehowtheportfolioevolves,aswellaskeepanup-to-dateviewofthecreditmarketOfftakeagreements:Corporationsengageinanagreementtopurchasecreditsfromdevelopersoveraspecifiedperiodoftime,typically5–10yearsPurchaseonspotmarket:Corporationspurchasecreditsfromotherinvestors/developersviamarketplacesorthroughbrokersetc.Thedegreeofsupportfrominternalteamsduringtheexecutionprocesswilldependoncorporations’chosenoperatingmodelSourcingProcuringMonitoringCorporationscanmanagetheirportfolioofcarboncreditscontinuouslytodeliveroptimalclimateimpactandderivemaximumvaluebyfocusingon:–Sourcing:Carefullyconsideropportunitiesincludingtheuseofcompany-ownedassets,investinginupstreamfunds,engagingofftakeagreementsandpurchasingthroughsecondaryexchanges.–Procuring:Setuprobustterms,conductthoroughduediligenceandenforceethicalpurchasing.–Monitoring:Observeprojectstoensurestandardsaremaintained;wherepossible,leveragecarbonregistries,independentauditors,techinnovatorsandinternalteamstoensureintegritythroughoutcreditlifecycle.Inadditiontocarboncreditprocurement,corporationscanexploreopportunitiestoinnovatecommercially,createadditionalvalueandaccelerateclimateaction.Theseopportunitiesincludeinvestinginthedevelopmentofnature-ortechnology-basedsolutions,drivingprojectdevelopmenttocreatecreditsandsupportingmarketliquiditythroughexchangeplatforms.PortfoliomanagementNewbusinessopportunitiesFIGURE24Carboncreditportfolios–lifecyclemanagement56Source:Bain&CompanyScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction31Intheabsenceofaclearmarketstandard,corporationsmustestablishtheirownhigh-integrityframeworkthattheycandefendandcommunicateclearly.SAPisaGermanmultinationalenterpriseandtheworld’slargestproviderofenterpriseapplicationsoftware,operatinginapproximately130countries.InJanuary2022,SAPcommittedtoachievingnetzeroacrossitsvaluechainby2030inalignmentwithSBTistandardsandthemitigationhierarchy:firsttoavoidemissions,secondtoreduceemissionsandthirdtocompensateforemissionsthatcannotyetbeavoidedorreduced.SAPsecuresfundingforcreditpurchasesthroughavarietyofinitiatives,includingafixedcarbonpriceforallbusinessflights.Byapplyingavariableinternalcarbonpriceofupto$400pertonneofCO2dependingonflightduration,SAPhelpsto“penalize”shorterflightswheremoresustainablealternativesareoftenavailable.Thisfacilitatesemissionreductionsbyinternalizingtheclimateimpactofaviationandencouragingtheuseofmoresustainablemobilityoptions.Thecompany’sengagementinbothvoluntaryandmandatorycarbonmarketsinfluencesitsinternalviewofthepriceofcarbon.Toconstructacredibleportfolioofhigh-qualitycarboncredits,ateamheadedbySAP’schiefsustainabilityofficerisresponsibleforconductingduediligencetoensurecreditsmeetdefinedqualitycriteria.Projectsmustprovideevidenceofremovalpermanence,monitoringandadditionality,andtheymustfulfilSAP’sportfolioobjectivesregarding,forexample,locationandprojectmaturity.Theportfoliofocusespredominantlyonhigh-qualitycreditsfromnature-basedsolutions,suchasthoseverifiedbyGoldStandardortheequivalent.However,SAPisalsoconductingduediligenceintowaysofshiftingtotechnology-basedsolutionsovertime.SAPviewscommunicationasakeypillarofportfoliomanagement,withahighdegreeofinternaltransparencyrequiredtoeffectivelyengagestakeholdersanddemonstratetheroleoftheircreditportfoliowithinawidersustainabilityagenda.Earlyengagementwithregulatorsandpurchaserscanfacilitatelong-termbusinesspartnershipsandadvancenewtechnologyatscale.Ørsted,aleadingDanishrenewableenergycompany,operatesinsixcountries.ThecompanyhassetSBTi-validatedtargetsfordecarbonizingitsvaluechainwhilealsocommittingtobecarbon-neutralinScopes1and2by2025byoffsettingresidualemissions.InadditiontoreducingitsScope1-3emissionsinlinewitha1.5°Cpathway,ØrstedhasbuiltinternalresourcesandcapabilitiesforVCMprojectdevelopmenttoprovidethecertifiedhigh-qualitysolutionstomeetitscarbonneutralcommitment.Aswellasdevelopingsolutionstomeetitsowngoals,Ørstedhasleverageditsinternalprojectdevelopmentcapabilitiesandexistingassetstobuildacarboncreditbusinessthatdevelopstech-basedprojectsincorporatingnewtechnologysuchasbioenergycarboncaptureandstorage(BECCS).ThekeyenablerforØrstedinestablishingandscalingitscarboncreditbusinessandnewtechnologyhasbeenearlyengagementwithregulatorsandpurchaserstobuildlong-termbusinesspartnershipsandfinancialcommitments.ThishasresultedintheØrstedKalundborgHubCarbonCaptureandStorage(CCS)projectannouncedinMay2023withlong-termagreementsforhigh-qualitycarbonremoval,includingapartnershipwiththeDanishEnergyAgencytoremove8.6milliontonnesofCO2eover20years,primarilyfinancedbycarbonremovalcertificates.CASESTUDY7SAPCASESTUDY8ØrstedScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction32Developingnature-basedcarboncreditswithpartnerstooffsetresidualemissionsaftermeetingscience-basedreductiontargetsBenefits-Reducesreputationalrisks-Securessupplyofhigh-qualitycreditsforfuture-Ensuresthattheprojectsdeliverbenefitsforclimate,natureandlocalcommunitiesBenefits-Leveragesexistingfacilities(e.g.bioenergyplants)-Providesfundingopportunity,throughcreditsales,toinnovatenascenttechnologyneededforthetransitionCreatinghigh-qualityengineeredsolutionsforsale,fromBECCSprojectsAsacompanywithprojectdevelopmentcapabilitiesandrelevantassets,Ørsted’stransitionstrategyincorporatescarboncreditsintwowaysPortfoliodesigntoolsBuild/enabledevelopmentofnet-zero-alignedcarboncreditportfoliosthatprogressivelyshiftfromavoidancetopermanentremovalsforbothengineeredandnature-basedsolutionswithvariationdependingonambition,needsandabilitytobuyApplyICVCM’sminimumthresholdsforpurchase/supplyofhigh-impactcreditsthatincludecontributiontonet-zerotransition,quantification,additionality,long-termstorage,stringentprocurementprocessandco-benefitsCreateatailoredportfolioaccordingtoyouruniqueemissionsprofile(e.g.byscope,byoriginofemissions)andyouroverallcompanycharacteristics/strategy(e.g.activities,productionfootprint,brandvalues/customerbase)PortfoliomanagementCarefullysource,procureandmonitorcarboncreditsthroughouttheirlifecycletomaximizeimpactandmitigateriskNewbusinessopportunitiesRecognizesourcesofvaluebeyondprocurement(e.g.technologydevelopment,creditsaleandtradingsupport)orinvestininternalprojects(e.g.climatetechnology,naturepositiveprojects,orinsettingprojects)thatcreatenewsourcesofvalueinthevoluntarycarbonmarketThissectionhasexaminedhowcompaniescanbuildaportfolioofcarboncreditsthatmaximizestheimpactontheirtransitionstrategy.RecommendationsaresummarizedinFigure26.FIGURE25FIGURE26Ørsted’stwinapproachtotheVCMgeneratesnewbusinessopportunitiesTailoraportfolio–SummaryofrecommendationsSource:Bain&CompanyinterviewswithcompanyScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction33CorporationscanmobilizetheirorganizationalexpertiseforeffectiveVCMparticipationinamannerconsistentwiththeirwidersustainabilityagenda.TheiroperatingmodelshouldbedesignedforthedesiredlevelofVCMparticipationandbesupportedbyengagementandincentivizationoftherelevantemployeepopulations.Orchestratetheeffort2.4PurchaserExternalizedInternalizedPurchasecreditsfromthemarketviabrokersPartnerStrengthenandsecureoffsetsupplybyforgingstrategicallianceswithdeveloperstomeetorganizationaldemandsAll-inbusinessbuilderBuildnewbusinesses,e.g.throughlarge-scaleprojectdevelopmentandactivetradingengagementfocusingonpurchasinghigh-qualityoffsetsviaexchanges,resellersandforwardcontractsfocusingonbuildingstrategicpartnershipsandsharingcapabilitiesbesidespurchasingbuildingalarge-scalebusiness,generatingvaluefromtradingandfromcompany-ownedprojectpipelineOnlyexternalsourcing,throughtradingbrokersAmixofexternalsourcingviadirectpurchasesandinternalsourcingTrading,bothpurchaseanddevelop-mentofcarboncredits<10FTEs~10–20FTEs20+FTEsVCMambitionWhatyougetSecuresupplySupportmarketbuildRealizeupsideSizeofastartingteam(ExcludingtechnicalimplementationFTEs)Note:FTE(full-timeequivalent)isaunitofmeasurementthatindicatestheworkloadofanemployedperson(Optionalitybuildingonly)FIGURE27DifferentoperatingmodelsforengagingwiththeVCMSource:Bain&CompanyinterviewswithmarketparticipantsTherearedifferentoperatingmodelsforengagingwiththeVCM.Corporationscanchooseaccordingtotheirambitionandtheextenttowhichtheyexpecttoexternalizeorinternalizetheircarbonmarketcapabilities(seeFigure27).Basedontheirmodel,corporationsrequiredifferentin-housecapabilitiestodelivertheircarbonmarketsambition.Theroleofacentralteamasopposedtoseparatebusinessunitswillvaryaccordingtotheoperatingmodel,internalcarbon-relatedcapabilitiesandcompany-specificidiosyncrasies(seeFigure28).OrganizationalstructureScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction34Strategy&partnermanagementFunctionsIn-housecarboncapabilitiesPurchaserVCMoperatingmodelsPartnerAll-inbusinessbuilderCommunicatecompensationtarget,approach,activitiesandprogress(internallyandexternally)FinanceCommunications/publicaffairsProcurementProjectdevelopment&projectpartnershipmanagementCreditcommercializationTradingDevelopanddelivercompensationstrategyalongsidekeypartnersAlignESGstrategywithcorporatestrategyCarbonaccountingCommunicatewithgovernmenttoshaperegulationDefine,projectandvalidatepotentialcompensationdemandProcurecarboncredits,includingpriceandqualityreviewSetandadheretoguidelinesforcarboncreditdevelopmentIdentifyandscopecarboncreditprojectsIdentifyandestablishcommercialpartnershipsandcoalitionsDeliverandtrackcarboncreditprojects,includingpartnershipsCreateandapprovebundledproductsSellandtrackoffsetssoldasproductbundlesTradecarboncreditsthroughregistriesandthirdpartiesIdentifyproductdevelopmentopportunitiesOptionalRequiredcapabilityCarbonassetmanagementFIGURE28Requiredin-housecarboncapabilities,byVCMoperatingmodelSource:Bain&CompanyScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction35CEOStrategydevelopment&dataTracksustainabilityinitiatives,designsustainabilityprocessesanddevelopdatastrategyandtrainingplanResponsiblebusinessDefinesustainabilitystandardsandvalidatetheirimplementationCorporate&investmentbankingClientsolutionsRetailBusinessfunctions(e.g.finance,risk,communications)SustainabilitytransitionDevelopinnovativetoolstofostersustainablebusinessChairSustainabilityexpertsandspecialistsareembeddedwithineachofthethreebusinessunitsandthebusinessfunctionverticals,aswellaswithineachgeography,providingdecentralized,matrixcoverageCentralizedDecentralizedHeadofGlobalSustainabilityAreaGeographiesCentralizingVCMexpertiseandqualitystandardswhileempoweringthebroaderorganizationwithembeddedsustainabilityexpertsandtoolstoleveragethesecapabilities(e.g.throughinternalcarbonpricesandmonitoringtools)facilitatesexecutionanddrivescommercialoutcomes.BBVAisamultinationalbankinggroupofferingawiderangeoffinancialservicesinmorethan25countriesacrossEurope,theAmericasandAsia.Thegrouphasidentifiedsustainabilityasastrategicprioritybothintermsoftheservicesitofferscustomersaswellasitsownbusinessoperations.BBVAhasdevelopedend-to-endcarboncapabilitiesandagovernancestructuredesignedtoexecuteinternalcarbonstrategyaswellastodrivecommercialopportunitieswithclients.BBVAhascreatedaglobalsustainabilityarea,whosegroupheadreportsdirectlytotheCEOandChair,elevatingthestrategicmandatetothehighestcorporatelevelandprovidingsufficienttop-downorganizationalsupporttoenableeffectiveexecution.Meanwhile,sustainabilityexpertsandspecialistsareembeddedwithineachbusinessunitandfunctionalverticalandacrosseachgeography,providingdecentralized,matrixcoverage(seeFigure29).BBVAhasalsoimplementedapilotinternalcarbonpricingprogrammetotrackthecarbonfootprintofeachbusinessunit.Throughthisprogramme,thecentralsustainabilityareaprovidestrackingandreportingtoolswhiletheindividualbusinessunitsretaintheautonomytomanagetheircarbon“budget”.Theycanselectcarboncreditsassociatedwithhigh-integrityprojectsthatmeetcentrallydefinedqualitystandardswhileofferingthemostcompellingco-benefitswithintheirspecificgeographicregion.Thisstructurebalancestheneedfortechnical,centralizedexpertiseandguidelineswiththedesiretoembedsustainabilityexpertswithinbusinessfunctionsandacrossindividualgeographies.Themodelgiveseachbusinessunitownershipofitssustainabilityinitiativeandtheflexibilitytodevelopitscarboncreditpurchasingcriteriawithintheguidelinessettoensurehighintegrityacrosstheorganization.Asanall-inbusinessbuilder,BBVA’sorganizationalstructuresupportsitseffectiveengagementintheVCMwhileprovidingitwiththeexpertisetocreatefurthervalueforitsclientsbyhelpingthemparticipateintheVCM(seeFigure30).CASESTUDY9BancoBilbaoVizcayaArgentaria(BBVA)FIGURE29BBVA’ssustainabilitystructure–centralizedleadershipanddecentralizedspecialistsSource:Bain&CompanyinterviewswithcompanyScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction36…decentralizedsustainabilityexpertsdeploytheirbudgetandpurchaseeligiblecreditsintheirregionBLeadershipsetscarbonqualitycriteriaandcarbonoffsetbudgetcentrally...A…bestpracticescentralizedanddeployedatscaletooptimizecommercialtermsCClientsbenefitfromBBVAexpertiseCo-benefitsmaximizedbasedonlocalknowledgeFIGURE30BBVA’sorganizationalstructureenhancesimpactsandbenefitsclientsSource:Bain&CompanyinterviewswithcompanyUnlockingnewopportunitiesandde-riskingthesustainabilityagendaarecompellingargumentsforbuildingprojectdevelopmentcapabilitiesin-house.Iberdrolaisaglobalenergyleadercommittedtocleanenergyformorethan20yearsandsupplyingenergyto~100millionpeopleindozensofcountries.Thecompanyhasavisionforsustainableenergy,underpinnedbytwokeygoals:–SBTi-approvedtargetstoachievenet-zeroemissionsbefore2040–Net-positiveeffectonbiodiversityby2030Thecompanyestablishedanewbusinessventurein2023,Carbon2Nature,withtheambitionofgeneratinghigh-qualitycarboncreditsbyeitherdevelopingitsowncarbonnature-basedprojectsorco-investinginexistingprojectswithintheVCMecosystem.AswellasenablingIberdrolatobettercontrolcarbonprojectsandcarboncreditquality,thisbusinessharnessessynergiesbetweenIberdrola’sclimateandbiodiversitytargetsbybuildingonitsinternalnaturerestorationprojects.Carbon2Naturewilloperateasaseparatebusinessline,developingnature-basedprojectswithhighsustainabilityimpactbasedoncarbonfinance,enablingCarbon2Naturetooffergreensolutionstocustomersthroughcarboncredits.Byidentifyingsynergiesandbringingprojectdevelopmentcapabilitiesin-house,Iberdrolahasbeenabletode-riskitsinvolvementintheVCMandsourceamechanismtoexpandandfinanceitsnaturerestorationprojects,makingthemmoreviablewhiledevelopinganewbusinesslinetomaterializeopportunitiesinthegreeneconomy.CASESTUDY10IberdrolaThissectionhasexaminedhowcompaniescanorchestratetheirin-housecarboncapabilitiesaccordingtotheoperatingmodeltheyusetoengagewiththeVCM.RecommendationsaresummarizedinFigure31.ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction37OverallsustainabilityagendaOrganizationalstructureDesignandimplementacomprehensivesustainabilityoperatingmodelthatclearlyoutlinestheroleofcarbonmarketsinyourcorporation’snet-zerotransitiontosuccessfullyorchestrateparticipationinVCMsSelectcarboncreditoperatingmodelarchetype,choosingyourVCMambitionandindustry/geographiccontextasaninputtothebalancebetweeninternalizationandexternalizationofcarbon-relatedactivities-Assessopportunitytotransitionfrombeingapurchaser(externalized)toprojectdeveloper(internalized)asthemarketmaturesDeterminerequiredinternalcapabilitiesandroleofcentralleadershipversusbusinessunitstomanagecarbon-relatedactivitiesFIGURE31Orchestratetheeffort–SummaryofrecommendationsScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction38Conclusion:TheimperativeforactionandincentivesToday,thevoluntarycarbonmarketisanestablishedleverthatcouldrapidlymobilizebillionsofdollarstofinanceprojectsthatprotectnatureandreduceemissionsorremovecarbonfromtheatmosphere.Theurgentdemandsofdireclimatechangeandnaturelossrequiresolutionstoday,nottomorrow.TheVCMisoneofthefewviablefinancingleversthatcouldbeactivatedandscaledupquickly.Itsroleisadirectcomplementtocarbonabatement,itcanhelpsupportcommunitiesandecosystemsinneed,anditprovidesafinancingtooltochannelfundstowardsemergingclimatetechnologieswiththehighestpotential.Ifimplementedwell,theVCMcouldunlockmanybenefitsanddelivertheimpacttheworldneeds.Currentframeworkssupportearlyadoptersandcompaniesalreadyonanacceleratedtrajectorytonetzero,buttheydonotprovideclearguidanceorincentivesforhard-to-abateindustries,limitingtheirabilitytopromotegrowth.Todrivechangeattherequiredscaleandtospurcorporatedecision-makersintoaction,theVCMwillneedclearbusinessincentivesthatprovideastrategicrationaleforuseofcarboncredits.Currentincentivesthatrelyonenhancinglicence-to-operateorsocietalvaluewillnotdriveactionatscaleintoday’smarket.Thisisnotasimpleissuetosolve.Thepotentialforabuseexists,marketstructuresarefluidandevolvingandtheprimaryfocusonabatementdemandsclearguardrailsandsectorspecificityforanyincentives.Yet,withoutchangestoday,corporateboardsandinvestorslackarationaletoinvestatthescalerequired—billionsperyear,notmillions—andnaturalcapitalwillbelost,communitiesfurtheraffectedandearlyinvestmentinsolutionsneededfortheroadtonetzerowillnotbemade.Putsimply,movingthecarbonmarketuptheS-curveofwidercorporateadoptionrequiresrethinkingincentivesandrecognition,asthecatalyststhatmotivatedearlyadoptersarenotsufficienttodrivethewidercorporatecommunityofthenext500or1,000companiestoinvestandactatscale.Thepublicsector,privatesectorandcivilsocietyallhaveaconstructiveroletoplayinfindingasolution.Frommarketinfrastructureproviders,thereisaneedtodriveintegritythroughincreasedtransparencyandaccessibility.Fromstandardsettersthereisaneedfornuancedandpragmaticguardrailstoallowcorporationstoallocategreatercapitaltourgentprojectsandbuildtangibleincentivesinavoluntaryenvironment.Fromregulators,thereisaneedtoprovideincentivesforthenet-zerotransitionwhilemaintainingalevelplayingfield.FromNGOsandmediacommunities,thereisacontinuedneedforconstructivecriticismthatbuildsintegritywhilerecognizingtheambitionofthoseactingingoodfaith.Finally,fromcorporations,thereisaneedtosetambitiousscience-basedclimatetargets,actthroughallavailablechannelsandbewillingtolearnintheopentoenableotherstotakesimilaractionatscale.ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction39ContributorsBain&CompanyAcknowledgmentsWorldEconomicForumPedroGomezHead,Climate;MemberoftheExecutiveCommittee,WorldEconomicForumNasimPourLead,CarbonRemovalsandMarketInnovation,WorldEconomicForumDaleHardcastleHeadofCarbonMarkets,Bain&Company,SingaporeHenningHuentelerExpertAssociatePartner,Bain&Company,TheNetherlandsAnnSimlSeniorManager,Bain&Company,UnitedKingdomNicholasForemanManager,Bain&Company,UnitedKingdomSaraMcLoughlinFigelConsultant,Bain&Company,UnitedKingdomIniAdelajaSeniorAssociateConsultant,Bain&Company,UnitedKingdomDanieleAgostiniHeadofEnergyandClimatePolicies,Enel,ItalyPedroAhlersInnovationArchitectforSustainability,SAP,GermanyKevinBartlettGlobalHeadofEnvironmentalSustainabilityandRisk,TakedaPharmaceuticals,UnitedStatesAliceChangAssociateManager,SustainabilityStandards,IndigoAg,UnitedStatesKenChiuHeadofCarbonandESGProducts,HKEX,HongKongSARNicolasClergetNetZeroStrategyLead,Heineken,TheNetherlandsBarbarosCorekogluSeniorRelationshipManager,Rabobank,TheNetherlandsAraceliDeCarlosSebastiánSeniorClimateChangeAnalyst,ClimateChangeandAlliancesDivision,Iberdrola,SpainDavidEichbergVicePresident,ESGStrategy,Mastercard,UnitedStatesElliotFormalChiefExecutiveOfficer,AgoroCarbonAlliance,NorwayJonathanGrantChiefAdvisor–ClimateChange,RioTinto,UnitedKingdomHannahHaumanGlobalHeadofCarbonTrading,Trafigura,SwitzerlandAngelaHepworthCommercialDirector,VCMandCarbonStandards,Drax,UnitedKingdomHannahHislopGlobalSustainabilitySeniorManager,Unilever,UnitedKingdomHannahHuntLead,CarbonPolicy,Heineken,UnitedStatesRaffaellaInfantiEngagementManager,VCMI,SwitzerlandJenniferJenkinsChiefScienceOfficer,RubiconCarbon,UnitedStatesScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction40InekeKeersHeadofBusinessDevelopmentatAcorn,Rabobank,TheNetherlandsJoachimKunzSeniorExpert–Sustainability,DHLGroup,GermanyNoraLovellMarchantVicePresident,GlobalSustainability,Risk,ComplianceandESG,AmericanExpressGlobalBusinessTravel,UnitedStatesMartaMartinezHeadofAnalysisandSpecialProjects,ClimateChangeandAlliancesDivision,Iberdrola,SpainShailendraMishraGlobalHeadofClimate,Environment&NaturalCapital,OlamAgri,SingaporeCampbellMooreManagingDirector,CarbonMarkets,TheNatureConservatory,UnitedStatesLucyPalairetDirectorCarbonMarketsDevelopment,StandardChartered,SingaporeAnshariRahmanDirector,GenZero,SingaporeIngoRammingHeadofCarbonMarkets,BBVA,SpainBenRattenburyVicePresidentofPolicy,Sylvera,UnitedKingdomHarshaReddyVicePresident&GlobalHeadofSustainabilityDevelopment,IndoramaVentures,ThailandMischaRepmannSeniorSustainabilityRiskManager,SwissRe,SwitzerlandBeatrizRoaTejeroGlobalSustainabilityDirector,BBVA,SpainGiuliaSartoriGlobalHeadofCarbon,AgoroCarbon,UnitedStatesNicoleSautterSeniorManager,GlobalSustainability,AmericanExpressGlobalBusinessTravel,UnitedKingdomMaxScherSeniorDirector,SustainabilityStrategyandInnovation,Salesforce,UnitedStatesLydiaSheldrakeDirectorofPolicyandPartnerships,VCMI,UnitedKingdomGlendaSoGroupHeadofEmergingBusiness&FIC,HKEX,HongKongSARTomSpencerEnvironmentalManagementSpecialist,SwissRe,SwitzerlandJenniferStackGlobalPortfolioLead,CargillEnvironmentalMarkets,Cargill,UnitedStatesRomanTarnovskyGlobalHeadofSustainabilityMarketsandInternationalization,IndigoAg,SwitzerlandDavidAndersenThingLeadBusinessDeveloper,CarbonMarketsandCCS,Ørsted,DenmarkDawnWhitworthHeadofInternationalAdvocacyandPartnerships,Drax,UnitedKingdomEllisWongAssistantVicePresident,EmergingBusinessandFIC,HKEX,HongKongSAREditingandDesignJonathanWalterEditorAlbertBadiaCostaDesignerJean-PhilippeStanwayDesignerThereportauthorswouldalsoliketothankBain&Company’seditorialteamfortheircontribution.ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction41Endnotes1.SwissRe,Theeconomicsofclimatechange:noactionnotanoption,April2021,https://www.swissre.com/dam/jcr:e73ee7c3-7f83-4c17-a2b8-8ef23a8d3312/swiss-re-institute-expertise-publication-economics-of-climate-change.pdf.2.Zurich,Therecouldbe1.2billionclimaterefugeesby2050.Here’swhatyouneedtoknow,June2023,https://www.zurich.com/en/media/magazine/2022/there-could-be-1-2-billion-climate-refugees-by-2050-here-s-what-you-need-to-know.3.EuropeanParliament,BackgroundinformationfortheBUDG-CONTjointworkshopon‘TheRoleoftheEUBudgetinInternationalClimateFinance’,January2023,https://www.europarl.europa.eu/cmsdata/263452/Briefing%20-%20Climate%20Finance.pdf.4.TroveResearch,TroveResearchWebinar:VCM2022inReview,YouTube,18January2023,https://www.youtube.com/watch?v=NZePdMVgulM.5.TaskforceOnScalingVoluntaryCarbonMarkets,FinalReport,January2021,https://www.iif.com/Portals/1/Files/TSVCM_Report.pdf.6.Additionalinformationonchallengesdelayingthevoluntarycarbonmarketfromachievingscaleisavailablehere:WorldEconomicForum,TheVoluntaryCarbonMarket:ClimateFinanceatanInflectionPoint,January2023,https://www.weforum.org/whitepapers/the-voluntary-carbon-market-climate-finance-at-an-inflection-point/.7.“Beyond-value-chain-mitigation”(BVCM)referstoactionorinvestments(e.g.atmosphericcarbonremovals)thatoccuroutsideacompany’sowndirectvaluechain.8.ClimateActionTracker,WarmingProjectionsGlobalUpdate,November2022,https://climateactiontracker.org/documents/1094/CAT_2022-11-10_GlobalUpdate_COP27.pdf.9.UnitedNationsFrameworkConventiononClimateChange(UNFCCC),ReportoftheConferenceofthePartiesservingasthemeetingofthePartiestotheParisAgreementonitsthirdsession,heldinGlasgowfrom31Octoberto13November2021,8March2022,https://unfccc.int/sites/default/files/resource/cma2021_10a01E.pdf.10.IntergovernmentalPanelonClimateChange(IPCC),SynthesisreportoftheIPCCsixthassessmentreport(AR6),LongerReport,March2023,https://report.ipcc.ch/ar6syr/pdf/IPCC_AR6_SYR_LongerReport.pdf.11.InstituteforEconomicsandPeace,Overonebillionpeopleatthreatofbeingdisplacedby2050duetoenvironmentalchange,conflictandcivilunrest,[Pressrelease],9September2020,https://www.economicsandpeace.org/wp-content/uploads/2020/09/Ecological-Threat-Register-Press-Release-27.08-FINAL.pdf.12.UNFCCC,ReportoftheConferenceofthePartiesservingasthemeetingofthePartiestotheParisAgreementonitsthirdsession,heldinGlasgowfrom31Octoberto13November2021,8March2022,https://unfccc.int/sites/default/files/resource/cma2021_10a01E.pdf.13.WWF,LivingPlanetReport2022:BuildingaNature-PositiveSociety,2022,https://wwflpr.awsassets.panda.org/downloads/lpr_2022_full_report_1.pdf.14.WWF,Losingtheirhomesbecauseofthegrowingneedsofhumans,2020,https://wwf.panda.org/discover/our_focus/wildlife_practice/problems/habitat_loss_degradation/#:~:text=Habitat%20loss%20poses%20the%20greatest,other%20hallmarks%20of%20industrial%20development.15.ClimateActionTracker,Addressingglobalwarming:2100warmingprojections,November2022,https://climateactiontracker.org/global/temperatures/.16.SwissRe,Theeconomicsofclimatechange:noactionnotanoption,April2021,https://www.swissre.com/dam/jcr:e73ee7c3-7f83-4c17-a2b8-8ef23a8d3312/swiss-re-institute-expertise-publication-economics-of-climate-change.pdf.17.WorldResourcesInstitute,ClimateResilientandTransformativeAdaptationforAgriculture,https://www.wri.org/initiatives/climate-resilient-and-transformative-adaptation-agriculture.18.WorldBank,COVID,climatechangeandpoverty:Avoidingtheworstimpacts,October2020,https://blogs.worldbank.org/climatechange/covid-climate-change-and-poverty-avoiding-worst-impacts.19.Zurich,Therecouldbe1.2billionclimaterefugeesby2050.Here’swhatyouneedtoknow,June2023,https://www.zurich.com/en/media/magazine/2022/there-could-be-1-2-billion-climate-refugees-by-2050-here-s-what-you-need-to-know.20.TroveResearch,TroveResearchWebinar:VCM2022inReview,YouTube,18January2023:https://www.youtube.com/watch?v=NZePdMVgulM.21.TaskforceOnScalingVoluntaryCarbonMarkets,FinalReport,January2021,https://www.iif.com/Portals/1/Files/TSVCM_Report.pdf.22.Sylvera,TheStateofCarbonCredits2022,2023,https://www.sylvera.com/resources/the-state-of-carbon-credits-report.23.ScienceBasedTargetsinitiative,SBTiCorporateNet-ZeroStandard,Version1.1,April2023,https://sciencebasedtargets.org/resources/files/Net-Zero-Standard.pdf.24.ScienceBasedTargetsinitiativedatabase,https://sciencebasedtargets.org/companies-taking-action.ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction4225.TroveResearchdatabase,https://trove-research.com/intelligence-platform/carbon-projects-and-transactions/.26.1)ScienceBasedTargetsinitiativedatabase,https://sciencebasedtargets.org/companies-taking-action.2)TroveResearchdatabase,https://trove-research.com/intelligence-platform/carbon-projects-and-transactions/.27.VerraRegistry,https://registry.verra.org/.Tocalculate,downloaddatafromVCUtab,45%ofretirementsshowablankcolumn“retirementbeneficiary”,weightedbydatain“quantityissued”.Pivotfordataunder“retirementdate”.28.Emergingevidencesuggeststhatthisisinfactnotthecaseformanyofthecompaniesthatbuycarboncreditstoday.Seeforexample:https://www.sylvera.com/resources/carbon-credits-and-decarbonizationandhttps://trove-research.com/commentary/are-carbon-credits-worthless.29.WorldEconomicForum,FirstMoversCoalitionCommits$12billiontoCommercializeZero-CarbonTech,CutEmissions,[Pressrelease],7November2022,https://www.weforum.org/press/2022/11/first-movers-coalition-commit-12-billion-to-commercialize-zero-carbon-tech-cut-emissions/.30.WorldEconomicForum,GlobalChemicalCompaniesSignAgreementonR&DHubforPlasticWasteProcessingIncubatedbyWorldEconomicForum,[Pressrelease],8May2023,https://www.weforum.org/press/2023/05/global-chemical-companies-sign-agreement-on-r-d-hub-for-plastic-waste-processing-incubated-by-world-economic-forum/.31.Relativesizeofabatementeffortswillvarybyindustry,sectorandfeasibilityofin-value-chainmitigation.32.EuropeanCommission,Screeningofwebsitesfor‘greenwashing’:halfofgreenclaimslackevidence,[Pressrelease],28January2021,https://ec.europa.eu/commission/presscorner/detail/en/ip_21_269.33.VoluntaryCarbonMarketsIntegrityInitiative(VCMI),VCMIClaimsCodeofPractice,2023,https://vcmintegrity.org/vcmi-claims-code-of-practice/.34.AcademiadevelopsevidencesupportingVCMprogrammes,agenciesandgoverningbodies.35.CarbonOffsettingandReductionSchemeforInternationalAviation(CORSIA),https://www.icao.int/environmental-protection/CORSIA/Pages/default.aspx.36.CaliforniaAirResourcesBoard,https://ww2.arb.ca.gov/our-work/programs/cap-and-trade-program/about.37.SouthAfricanRevenueService,https://www.sars.gov.za/customs-and-excise/excise/environmental-levy-products/carbon-tax/.38.NationalEnvironmentAgency(Singapore),https://www.nea.gov.sg/our-services/climate-change-energy-efficiency/climate-change/carbon-tax.39.UNFCCC,ReportoftheConferenceofthePartiesservingasthemeetingofthePartiestotheParisAgreementonitsfourthsession,heldinSharmel-Sheikhfrom6to20November2022,March2023,https://unfccc.int/sites/default/files/resource/cma2022_10a02_adv.pdf.40.BursaMalaysia,IntroducingBursaCarbonExchange,12July2023,https://bcx.bursamalaysia.com/web.41.UNFCCC,Decision7/CMA.4,GuidanceonthemechanismestablishedbyArticle6,paragraph4,oftheParisAgreement,Article29(b),https://unfccc.int/sites/default/files/resource/cma2022_10a02_adv.pdf.42.GoldStandardhasintroducednewfunctionalityintoitsimpactregistry,whichwillenableitscarboncreditstobelabelledasauthorizedandcorrespondinglyadjustedunderArticle6.See:https://goldstandardhelp.freshdesk.com/support/solutions/folders/44001220827.43.VerrahasstartedtodevelopArticle6authorizationlabels.See:https://verra.org/programs/verified-carbon-standard/verified-carbon-units-labels/.44.AlllevertypescanimpactScope1,2and3emissions.Compensationreferstouseofcarboncreditsduringtransitiontonetzero.Neutralizationreferstocarbondioxideremovalcreditsatnetzero.45.ScienceBasedTargetsInitiative,SBTiCorporateNet-ZeroStandard,Version1.1,April2023,https://sciencebasedtargets.org/resources/files/Net-Zero-Standard.pdf.46.Figuresshownaretopcompanies(bymarketcap).Axesreferto10-yearaveragenetmargin(2013-2022)and2021emissionintensity(Scope1,2and3emissionsovertotalrevenue).Swordreferstoan“offensive”positionoftakingactionandproactivelyseekingopportunitiestoengageincarbonmarketstosupplementoveralldecarbonizationefforts.Shieldreferstoa“defensive”positionofprotectionandengagingincarbonmarketactivitiestomanagesignificantunabatedemissions.47.Basedonafigureof59gigatonsofglobalnetanthropogenicemissionsin2019,source:IPCCClimateChange2022,https://www.ipcc.ch/report/ar6/wg3/downloads/report/IPCC_AR6_WGIII_SPM.pdf.48.InternationalAirTransportAssociation(IATA),“DevelopingSustainableAviationFuel(SAF)”,https://www.iata.org/en/programs/environment/sustainable-aviation-fuels.49.PoweringProgress2022:AmericanExpressGlobalBusinessTravelEnvironmental,Social,andGovernanceReport,https://explorer.amexglobalbusinesstravel.com/rs/346-POJ-129/images/ESG%20Report%202022%20Final.pdf.50.SalesforceClimateActionPlan,2021,https://www.salesforce.com/content/dam/web/en_us/www/assets/pdf/reports/salesforce-climate-action-plan.pdf.51.UniversityofOxfordSmithSchoolofEnterpriseandtheEnvironment,TheOxfordPrinciplesforNetZeroAlignedCarbonOffsetting,2020,https://www.smithschool.ox.ac.uk/sites/default/files/2022-01/Oxford-Offsetting-Principles-2020.pdf.52.TheIntegrityCouncilfortheVoluntaryCarbonMarket(ICVCM),TheCoreCarbonPrinciples(CCP),https://icvcm.org/the-core-carbon-principles/.InitialCCP-eligibleandCCP-approvedcategoriespublishedbytheICVCMinQ32023.ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction4353.CDP(formerlyCarbonDisclosureProject),https://www.cdp.net/en/saml/new.54.Salesforce,SalesforceonCarbonCredits:AJustTransitiontoaNetZero,Nature-PositiveWorld,https://www.salesforce.com/content/dam/web/en_us/www/assets/pdf/reports/carbon-markets.pdf.55.Heineken,HeinekensharesitsNetZerocarbonroadmap,22September2021,https://www.theheinekencompany.com/newsroom/heineken-shares-its-net-zero-carbon-roadmap/.56.LIDARstandsfor“laserimaging,detectionandranging”;ML/AIrefersto“machinelearningandartificialintelligence”.ScalingVoluntaryCarbonMarkets:APlaybookforCorporateAction44WorldEconomicForum91–93routedelaCapiteCH-1223Cologny/GenevaSwitzerlandTel.:+41(0)228691212Fax:+41(0)227862744contact@weforum.orgwww.weforum.orgTheWorldEconomicForum,committedtoimprovingthestateoftheworld,istheInternationalOrganizationforPublic-PrivateCooperation.TheForumengagestheforemostpolitical,businessandotherleadersofsocietytoshapeglobal,regionalandindustryagendas.
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