UK government launches plans to build trust in carbon offsetting strategies

The government is consulting on raising the integrity of voluntary carbon and nature markets (VCNMs) to give businesses more confidence to invest as part of their climate goals.

VCNMs support the trading of carbon and nature credits, where a business can counter their environmental footprint by investing in projects such as tree planting, wind farms or nature restoration.

There have been widespread calls from businesses and organisations for greater clarity on how to use these markets as part of their plans to reach net zero. It also addresses poor practice in the use of credits, which impacts their effectiveness in delivering meaningful climate action.

Best practice framework

In response, the UK is establishing a global framework for VCNMs, with a set of principles to guide and support businesses on how to use carbon credits. This includes making clear what a good credit is, ensuring they are delivering environmental benefits and encouraging businesses to fully disclose what they are being used for in annual sustainability reporting.

This consultation builds on the government’s “Six Principles for Voluntary Carbon and Nature Market Integrity”, published in November 2024. The consultation invites views on how these principles will be implemented:

1. Use credits in addition to ambitious actions within value chains

The Voluntary Carbon Market Integrity initiative (VCMI) has developed best practice guidance for organisations wishing to use carbon credits as part of their overall decarbonisation strategy. The government is seeking views on:

• Endorsing VCMI’s Claims Code of Practice as representing international best practice
• How to recognise organisations taking interim steps to meet the best practice. There is particular mention of the challenges of Scope 3 and supporting the VCMI’s “Beta Scope 3” framework for the temporary use of high integrity carbon credits until barriers to reducing Scope 3 emissions are addressed.
• The application of insetting as a way to maximise high integrity value chain emissions reductions. 

2. Use high integrity credits

The Integrity Council for the Voluntary Carbon Market (ICVCM) has developed principles and a framework to assess carbon market programmes and the methodologies they manage so that buyers and investors can better identify high integrity credits from unregulated markets. The government seeks views on:

• a proposal to endorse ICVCM’s principles and framework as representing a minimum quality requirement for global VCM credits. This includes additionality, no double counting, verified outcomes.
• the assurance of the BSI’s Nature Investment Standards, which would apply to nature crediting programmes in the UK, and views on validation and verification.

3. Measure and disclose the planned use of credits as part of sustainability reporting

The government wants to encourage voluntary transparency/disclosure, and invites views on the extent to which respondents voluntarily disclose, the value and practicality of doing so, and on the incorporation of VCMI disclosure elements into voluntary UK guidance.  

4. Plan ahead

The government’s manifesto committed to mandating “UK-regulated financial institutions (including banks, asset managers, pension funds and insurers) and FTSE 100 companies to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement”, with a consultation due in the first half of 2025 on how best to take forward this policy. Views are sought on the role that credits could play in transition plans.

5. Make accurate green claims using appropriate terminology

The government wants credit buyers to be able to make claims with confidence. To support this, it is seeking views on proportionate steps to improve clarity — such as developing official definitions for key terms or commissioning a standard for claims.

6. Co-operate with others to support the growth of high integrity markets

The government invites views on steps that could support alignment internationally and domestically, as well as exploring the potential for enhanced clarity and confidence through regulatory regimes and applicable legal definitions.

In a final section, ‘Cross Cutting Enablers’, the government invites views on potential steps that could support UK project developers to access new VCNMs, as well as support the wider growth of the UK VCNM sector. 

The consultation is open until 10^th July.