Greenhouse gas (GHG) accounting is a rapidly evolving field, and as a sustainability consultancy, we work hard to keep our clients abreast of the upcoming changes to standards and trends we are seeing, but to be honest, it is no easy task, so for the sake of context here’s a brief history of GHG accounting:
A Brief History of GHG Accounting
- CDP was established as the ‘Carbon Disclosure Project’ in 2000, asking companies to disclose their climate impact.
- The Greenhouse Gas Protocol, which created in 2001 set the standards to measure and manage greenhouse gas emissions.
- Up until 2020, it was acceptable to measure and purchase carbon offsets/credits for your company’s scope 1, 2 & 3 greenhouse gas emissions and claim carbon neutrality.
- In 2021, the definition changed of ‘carbon neutral’ changed and the focus was on achieving net-zero emissions with the introduction of the Science-Based Targets Initiative (SBTi) and the Corporate Net-Zero Standard when it became clear that in order to avoid catastrophic effects of climate change, we must halve global GHG emissions by 2030 and achieve net-zero emissions by 2050. Basically, it became self-evident that we must significantly REDUCE GHG emissions, not rely on carbon credits/offsets.
- Beginning in 2025, the SEC, the State of California and the EU will begin regulating GHG emissions based on whether the company is publicly traded or the size of the company. The SEC will only regulate scope 1 & 2 emissions, and the State of California and EU will regulate scope 1, 2 & 3 emissions.
If you are unfamiliar, “Science-based targets give companies a clearly-defined path to reduce greenhouse gas emissions in line with limiting global warming to 1.5°C. They define how much and how quickly a business must reduce its emissions to be in line with the Paris Agreement goals.”
The Change Climate Project’s new 2025 Standard and The Climate Label certification
The Change Climate Project is a nonprofit whose mission is to “eliminate greenhouse gas emissions by creating the world’s most recognized and trusted climate label, paired with accessible, action-focused tools and resources.” Originally, they were called “Climate Neutral” and were the administrators of the Climate Neutral Certification, but changed have a new 2025 Standard and with it comes the new “The Climate Label” certification. I believe the change from Climate Neutral Certified to the Climate Label has a lot to do with increasing regulations related to greenwashing, which is “the act or practice of making a product, policy, activity, etc. appear to be more environmentally friendly or less environmentally damaging than it really is”, but the two big changes coming in 2025 are:
- Certified companies will now demonstrate that they meet the threshold of total funding for climate projects, which means The Change Climate Project is moving away from a ‘carbon neutrality’ model, and
- Starting in 2025, Climate Neutral Certified will be called The Climate Label.
You may be asking why they have changed, but that has more to do with how GHG accounting is rapidly evolving, in my opinion. Here’s what The Change Climate Project CEO Austin Whitman had to say on the subject, “We considered dozens of approaches before we concluded that our path forward should employ a well established concept: carbon pricing, which has been hailed for decades as a potentially game-changing tool for climate policy. We landed on carbon pricing’s close cousin, the voluntary flavor commonly known as an “internal carbon fee.”
Across the many articles, conversations, sustainability reports, and disclosures that come out each year on the state of global progress to net zero, one thing is consistently missing: dollar signs. Not just how much money a company spent on a flashy new climate project, but how much money a company puts into all projects together — and how that money ties to the company’s emissions….
The 2025 Standard identifies eligible projects across a certified company’s value chain and beyond it. Instead of getting too crafty about nuance, we look at total qualified funding by the certifying entity.
We’ll explore the guardrails and thresholds and details in the weeks ahead, but today we’re excited to be introducing the 2025 Standard and The Climate Label. If you’re an individual consumer or employee, and you’re trying to identify climate leadership by companies, The Climate Label will be the first-of-its-kind certification mark based on an examination of active corporate funding for the net-zero transition.”
More information and details about the updated Standard will be coming soon, so stay tuned.
At Your Service!
Emerger Strategies is a member of The Change Climate Project’s Service Provider Network, so should you need assistance in measuring, reducing, and compensating for your company’s GHG emissions, please contact us today!