Contribution vs Offsetting Claims

Contribution vs Offsetting Claims

How a company describes the role of carbon credits in its climate strategy matters as much as which credits it buys. The vocabulary of "offsetting," "neutralisation," "contribution," and "net zero" carries materially different implications for stakeholders, regulators, and the scientific integrity of climate claims. A new generation of frameworks, led by the VCMI Claims Code of Practice and the Oxford Offsetting Principles (revised 2024), has emerged to distinguish credible claim language from misleading equivalences.

The Problem with "Carbon Neutral"

For most of the 2010s, companies claiming to be "carbon neutral" or to offer "carbon neutral" products typically meant they had calculated an emissions footprint and purchased a corresponding quantity of carbon credits, often including cheap avoidance credits with no co-benefit verification. This approach treated carbon credits as a direct mathematical offset: one tonne emitted minus one credit retired equals zero net impact.

The problem is that this arithmetic does not hold scientifically, legally, or ethically when the credit represents an avoided emission with reversal risk, an outdated baseline, or a disputed additionality claim. If the REDD+ forest that generated the credit is later deforested, the avoided emission was never actually permanent, and the buyer's "neutral" claim was never accurate. Regulatory bodies from the UK Advertising Standards Authority (ASA) to the European Commission have increasingly challenged carbon neutral claims on these grounds.

The VCMI Claims Code of Practice

The Voluntary Carbon Markets Integrity Initiative (VCMI) published its Claims Code of Practice to provide a structured, verifiable framework for corporate claims about carbon credit use. The VCMI Code distinguishes three tiers of claims, each with increasingly stringent eligibility requirements:

VCMI Platinum: The company has met its current SBTi-validated near-term science-based target and purchased high-quality credits equivalent to 100% or more of its remaining Scope 1, 2, and 3 emissions in the relevant year. This represents the highest level of ambition: genuine near-term target attainment combined with full credit coverage of residual emissions. The permitted claim language is: "This company is making a VCMI Platinum claim."

VCMI Gold: The company has an SBTi-validated near-term science-based target and purchased high-quality credits equivalent to 50-99% of its remaining Scope 1, 2, and 3 emissions. Permitted claim language: "This company is making a VCMI Gold claim."

VCMI Silver: The company has an SBTi-validated near-term science-based target and purchased high-quality credits equivalent to 20-49% of its remaining Scope 1, 2, and 3 emissions. Permitted claim language: "This company is making a VCMI Silver claim."

The Contribution Model vs the Compensation Model

Underlying the VCMI's framework is a fundamental philosophical shift from the compensation model (where credits "cancel out" equal quantities of corporate emissions) to the contribution model (where credits represent a company's financial contribution to broader climate mitigation that it is not responsible for).

Under the compensation model, a company buying one credit to "offset" one tonne of its own emissions is claiming that the transaction leaves it with zero net impact. This claim is only defensible if the credit is verifiably additional, permanent, and precisely equivalent in atmospheric impact to the company's emission. Given the uncertainties in carbon accounting, this standard is rarely met with certainty.

Under the contribution model, the company is not claiming equivalence. It is saying: "We are reducing our own emissions as fast as technically and economically feasible, and we are additionally financing this mitigation elsewhere as a contribution to the global effort." The contribution model is both more intellectually honest and more defensible under regulatory scrutiny because it does not require the fiction of precise atmospheric equivalence.

Oxford Principles: Claim Language Guidance

The Oxford Offsetting Principles (revised 2024) provide specific guidance on how organisations should describe their use of carbon credits. The Principles distinguish between two types of claim permitted under different credit use scenarios:

Compensation claims relate to using carbon removal credits to counterbalance genuine residual emissions at or near net zero. These claims are defensible where the company has achieved the deep reductions required by science, the credits are durable removal credits, and the claimed offset is for truly residual emissions that cannot be further reduced. Even here, the Principles caution against language implying the emission "never happened."

Contribution claims relate to all other credit purchases, including buying avoidance credits during the transition phase. The Principles recommend language such as "we finance climate mitigation beyond our value chain" or "we invest in high-quality climate projects" rather than "we offset our emissions" or "we are carbon neutral through offsets."

SBTi BVCM and Claim Language

The SBTi's guidance on Beyond Value Chain Mitigation (BVCM) provides a parallel framework for claim language. Under BVCM, companies can make claims that describe their contributions to global climate action beyond their own target boundaries, without conflating these contributions with their science-based reduction targets. Permitted language includes "contributing to global climate action" or "financing beyond value chain mitigation," with explicit disclosure that these activities are separate from and additional to the company's SBTi-validated targets.