ISO Standard for Carbon Neutrality – all you need to know so far

The International Organization for Standardization (ISO) is a worldwide federation of national standards bodies. The ISO 14060 family sets a standard for transparent quantification, monitoring, reporting, and verification of GHG emissions and removals. The latest addition, ISO 14068 - Carbon Neutrality, builds upon existing ISO standards. The first draft of the Carbon Neutrality standard was open for public consultation until the end of March. Overall, the draft is quite ambitious about increasing disclosure and transparency. Hopefully, the final version will be kept from being watered down under the pressure of market players who might disagree with the strict disclosure requirements.

GHG hierarchy approach

ISO 14068 established a hierarchy for carbon neutrality where direct and indirect GHG emissions should be reduced through changes in consumption (energy efficiency or cutting activities) and substitution with low-carbon materials, energy, and fuel and smart use of natural resources, e.g., the circular economy approach. Next, the company should prioritize removal enhancement within its boundaries and only after that turn to offsetting to neutralize the remaining unabated emissions. If removal is reversed in one of the following carbon neutrality reporting periods, it should be counted as an emission. Entities should follow a continual improvement approach to minimize offset use in the future.

Demonstrating commitment to carbon neutrality

In addition to assembling a carbon neutrality team and active communication on the importance of emission reduction across companies' supply chains, companies should also establish a carbon neutrality management plan. The plan should include the baseline, intermediate targets, carbon removal, offset types to be used, indicators for monitoring the effectiveness of the carbon neutrality management plan, and the timeline for when only residual emissions will remain.

The entity should also document how the carbon neutrality management plan considers climate science, climate change mitigation potential, international and national policy measures, and voluntary sector commitments. 

Transparency

Companies must publicly disclose a long list of information in the Carbon Neutrality Report, incl. the carbon neutrality management plan, which emissions are covered by the claim - unabated or residual emissions, a baseline for the footprint, and reference to footprint quantification methodologies. 

Concerning carbon credits used, entities should disclose the GHG program, projects name and ID number, methodology, and the number of credits used.

Suppose a company decides to include only a fraction of its emissions in the carbon neutrality claim. In that case, the company should explain its rationale and present the footprint of its other activities not covered by the claim so that the carbon neutrality claim can be put into context. For instance, if only the product's packaging is carbon neutral, the company should provide information about the product's footprint and emissions from logistics too. This helps put the carbon neutrality claim into perspective and helps prevent misleading claims.

Criteria for carbon credits

While the draft lists the usual carbon credit criteria, such as real GHG emission reductions and removals, additional, measurable, and permanent, the voluntary carbon market is flooded with low-quality credits. The existing carbon standards need to be revised to guarantee quality.

The final draft should also differentiate removals based on their permanence and uncertainties and guide companies to prioritize permanent carbon removal towards 2050 following the Oxford Offsetting Principles .

Concerning permanence, no offset program or project developer could currently guarantee 100 years of permanence or a system in place to compensate for reversal over such a long period.

The draft also suggests that eligible vintage is limited to 2020 and newer. However, this poses serious challenges as credits issued in 2021 and onwards face double claiming under countries' NDC (the land use sector usually is included as the lowest-cost abatement option). So limiting the vintage requirement to 2020 means that the only eligible credits for offset claims are from 2020, or credits issued in 2021 and onwards receive a corresponding adjustment to avoid double claiming. No country has yet implemented a corresponding adjustment in practice, even though forerunners like Indonesia, Ghana, Paraguay, Kenya, and Tanzania are developing frameworks. To provide a transition period, allowing countries to implement corresponding adjustments, the vintage should also be extended to pre-2020.

Double claiming and corresponding adjustments

The draft could be more precise when it comes to avoiding double claiming . It is first stated that "achievement of carbon neutrality can help support countries to fulfill their NDCs and to meet the goals of the Paris Agreement." And later in the criteria for carbon credits, it is stated that credits should be additional, i.e., the activity represents climate change mitigation that exceeds regulatory requirements and business as usual.

Text: Eftimiya Salo

Read more:

The EU Green Claims Directive – a missed opportunity to end greenwashing

What is double counting and why is it such a big deal?