techUK responds to voluntary carbon market consultation
The government has just concluded a consultation on Voluntary Carbon and Nature Markets (VCNM or simply the VCM) with proposals to strengthen the integrity and effectiveness of voluntary carbon markets. For the unitiated the VCM is a mechanism to purchase credits for carbon removal projects, including peat-bog restoration, reforesting projects, sea grass and a host of other types of ways to reduce carbon from the atmosphere and promote biodiversity. These are global and have attracted interest from firms, but there have been controversies too as some projects are not delivering the carbon savings promised. It is this controversy and reticence from many sectors that saw the government consult following a promise from the Chancellor in the 2024 Mansion House speech.
The consultation specifically on six principles to ensure a robust VCM and they were all things techUK and members supported and tese are:
- Using credits only in addition to ambitious internal emissions reductions.
- Ensuring credits are of high integrity, aligned with standards like the ICVCM’s Core Carbon Principles.
- Disclosing credit use in sustainability reporting.
- Planning ahead for credit use in transition strategies.
- Making accurate green claims with clear terminology.
- Collaborating internationally to build robust market infrastructure.
techUK (and thanks to members for giving us the content) put in a response to this consultation calling for maximum interoperability of UK policy with other legislation and also emphasising the need for VCMs to be 1) affordable 2) easy to understand and 3) trusted if the government wanted to achieve the aim of making the UK the world leader in green finance.
It is also really important that tech firms can buy into schemes and participate with ease. It is all well and good having policy designed for the financial services sector, but ultimately it is techUK members who do all the work and pay the money so 'real economy' has to be the focus. The 6th principle on international alignment was the message that came out most strongly with members, as the tech sector tends to think globally on these issues and it does no favours to have slightly different taxonomies or definitions from one country to the next.
In terms of how the sector currently approaches there is a real mix of approaches. Some won't go near credits or offsetting due to cost and reliability (even 'high integrity' credits have been identified as dodgy), some will not out of principle (they want to spend money on decarbonissation), but for many (especially those with no leverage in supply chains) carbon credits are a great way to get money into nature and carbon removal projects while making a difference to their net zero strategies now. Another cohort of members are keen to participate in VCMs, butt don't for complexity reasons or fears it will jeopardise their SBTi status or contravene the GHG Protocol.
In conclusion it was good to see proposals to make the VCM work; it is clearly a tool in the net zero toolbox for businesses and in general people want their tools to work and be reliable when needed. Members can login to see or request a copy of our response and we'll be speaking to DESNZ and DBT as this evolves further.
Craig Melson
Craig is Associate Director for Climate, Environment and Sustainability and leads on our work in these areas ranging from climate change, ESG disclosures and due diligence, through to circular economy, business and human rights, conflict minerals and post-Brexit regulation.