New Rules: How to Implement and Communicate Climate Strategy for Companies
2023 was a big year for climate action. We saw major announcements of new global governance and regulations across the world:
- In the US, California passed SB-253 Climate Corporate Data Accountability Act and AB-1305 Voluntary carbon market disclosures.
- In Europe, the European Commission released its Proposal for a Directive on Green Claims.
- Globally, new rules for the quality and use of carbon credits were issued ICVCM (The Integrity Council for the Voluntary Carbon Market) and VCMI (The Voluntary Carbon Markets Integrity Initiative), both receiving significant praise from global leaders at the most recent COP28.
At Terrapass, we’re excited by these developments. The world recognizes the need to significantly scale all climate solutions including voluntary carbon markets. For this we must have globally aligned standards. This came together on multiple fronts in 2023.
So, what does this mean for sustainability professionals and everyday consumers?
For everyday consumers this is great news. These regulations ensure that any climate accomplishments promoted by a business will be supported with details that clearly show how those claims were achieved. The rules also ensure that companies are actively working to reduce their own carbon emissions in addition to offsetting their remaining emissions. Please visit Terrapass for more information about your personal or small business carbon footprint.
For sustainability professionals the list of new rules and regulations might seem daunting, but it is also good news. This is a sign of a maturing industry. Policy and consumer experts are contributing their expertise to help make climate action impactful and understandable to both sustainability professionals and everyday customers.
Historically, professional sustainability terms like carbon neutral and net-zero often made their way into marketing and product messaging. Consumer advocates rightly recognized that everyday customers can’t evaluate these phrases on their own. Additionally, vague phrases like green, eco, and sustainable are often used to promote sustainability without any supporting information. Consumer advocates also recognized that customers must be able to see why a product is green. These new regulations in California and Europe ensure that climate communications are always factual and transparent. They ensure that companies can promote their sustainability accomplishments with confidence and that customers have information to evaluate those accomplishments.
New global governance, VCMI in particular, ensures that companies apply sustainability solutions in the most effective way. Terrapass has long promoted the principle of 1. Calculate, 2. Conserve, and 3. Offset in our sustainability guidance to customers. This approach prioritizes:
- First, understand where carbon emissions are in your business,
- Second, disclose your plan to reduce the carbon emissions of your business and regularly report progress, and
- Third, balance your remaining emissions with carbon credits that fund global emission reduction projects.
When companies describe their climate strategy, they sometimes combine these different elements into one term like “carbon neutral.” Phrases like this do reflect an important environmental achievement. However, they hide the distinction between your company’s emission reductions vs. global emission reductions funded through carbon credits. Emission reduction and offsetting must be separate elements of your sustainability strategy and they should also be separate elements of your climate communications. Key elements for your climate communications include:
Steps and priorities:
- Measure your carbon emissions, reduce emissions on a science-based trajectory, and disclose your progress publicly.
- Address your remaining emissions by funding high-quality carbon credits that help reduce greenhouse gases globally.
Tell two different stories in your climate communications:
- Business Emission Reduction: Our carbon footprint was 5,000 mT in 2023, a reduction of 500 mT vs. 2021 and 5% ahead of plan.
- Global Climate Contribution: We purchased 5,000 mT of carbon credits in 2023 to fund global carbon reductions equal to our remaining emissions.
Other considerations:
- Climate communications should be factual, specific and detailed; provide evidence of all environmental claims made.
- Talk about carbon credits as a way to balance your remaining emissions by funding global carbon reduction.
- Talk about carbon credits as a way to support other global sustainability goals (UN SDGs) when applicable.
- Avoid using vague, generic terms like green, eco, climate friendly, sustainable, etc. that are not substantiated.
- Avoid terms that combine your company’s emission reduction and carbon offsetting into one phrase like carbon neutral, climate neutral, etc.
Highlights from each of the new rules and regulations are provided below. Please contact a Terrapass sustainability advisor to help your company navigate its specific needs.
California SB-253 Climate Corporate Data Accountability Act
- For entities with total annual revenues in excess of $1,000,000,000 that do business in California:
- Starting in 2026: Report Scope 1 and Scope 2 greenhouse gas emissions
- Starting in 2027: Report Scope 3 greenhouse gas emissions
- Other requirements:
- For the reporting entity’s prior fiscal year
- Reporting is due annually on a date to be determined by the state board.
- Reporting follows the Greenhouse Gas Protocol
- Reporting entity must obtain an assurance engagement, performed by an independent third-party assurance provider, of the entity’s public disclosure as provided.
California AB-1305 Voluntary Carbon Market Disclosures
- Entities operating in California and making climate-related claims:
- Must publicly disclose information documenting how the claim was determined to be accurate or accomplished, and the measurement of interim progress.
- Applies to claims of net-zero emissions, carbon neutrality or similar, as well as claims of significant reductions in greenhouse gas (“GHG”) emissions,
- Entities operating in California and using voluntary carbon credits to support a climate-related claim.
- Must publicly disclose detailed information related to the credits purchased, the underlying offset projects and any independent verification of the climate-related claims made.
EU Green Claims Directive
- Applies to EU companies and non-EU companies making environmental claims aimed at EU consumers.
- Aims to eliminate greenwashing across EU markets by setting out detailed rules for how companies should market their environmental impacts and performance. It targets “vague, misleading or unfounded information on products’ environmental characteristics. “
- The current list of commercial practices that are banned in the EU is updated to include generic environmental claims – such as ‘environmentally friendly’, ‘natural’, ‘biodegradable’, ‘climate neutral’ or ‘eco’ – unless they can be properly evidenced.
- On the use of carbon credits specifically, the Green Claims Directive allows companies to make “carbon neutral” claims supported by carbon credits, but only if the carbon credits are disclosed correctly:
- Clearly state that carbon credits are being used to offset emissions.
- Disclose sources of emissions and amounts addressed with carbon credits.
- Identify carbon offset project types and distinguish between Reduction and removal offsets (requested, not required)
ICVCM (The Integrity Council for the Voluntary Carbon Market)
- New global quality standards for voluntary carbon credit projects; “regulatory-like”
- Program will be fully implemented over the course of 2023-2024.
- Rules for each carbon credit Category (Methodology/Project Type) were released in June 2023
- CCP-Eligible Programs (Registries) and CCP-Approved Categories (Project Types) will be announced in 2024.
- Not a one-time rule, standards will continuously evolve.
- First revision process for the CCPs in 2025, aimed at implementation starting in 2026.
- ICVCM points to VCMI for guidance on how businesses should use carbon credits.
VCMI (The Voluntary Carbon Markets Integrity Initiative)
- VCMI was established in 2021 to help ensure that voluntary carbon markets make a significant, measurable, and positive contribution to achieving the Paris Agreement goals.
- The VCMI Claims Code addresses market integrity on the demand side by guiding companies on:
- How they can credibly make voluntary use of carbon credits as part of their climate commitments, and
- The associated claims they can make regarding the use of those credits.
- The VCMI program should be followed together with ICVCM rules for high-integrity carbon credits.
Note: The above article provides introductory information only. Every organization must independently evaluate these rules and regulations, and determine specific actions needed for its own compliance.
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Written by Sam Tellen
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Nature-based carbon investments deserve consideration when they address a specific business dependency and produce outcomes you can measure. Imagine Moonbucks, a global coffee roaster planning next season’s espresso blend. It is considering natural Grade 4 coffee from Jimma, in southwestern Oromia, Ethiopia. Its sourcing decisions affect the roasting schedule and the cash tied up in coffee purchases. Moonbucks needs to understand which measures could protect that supply, what they would cost and how it would judge the results.
1. Define the sourcing problem before choosing a project
Moonbucks needs a dependable component for its espresso blend. Its procurement team wants continuity of volume and an agreed cup profile. Replacing a shipment at short notice could require new sample approval and changes to the blend, and given the schedules for cultivation, processing, and freight delivery, is practically impossible. Moonbucks needs to get this right, and its initial concern is inconsistent deliveries. It commissions an assessment of the supplying farms and post-harvest chain. The questions cover land condition, harvest availability and whether drying or storage problems are affecting saleable lots.
This distinction changes the investment brief. A tree-planting proposal cannot be assumed to fix drying problems. Better storage cannot restore eroded land. The team must establish which problem exists before selecting the response.
CCC’s guide to finding nature-based solutions in your supply chain explains where to look. Here, the next task is to turn a broad concern into a testable proposal.
2. Develop nature-based carbon investments around the actual supply chain
The assessment would trace Moonbucks’ purchases back through the exporter and supplying producer groups. Which farms supply the contracted lots? Who controls land-management decisions? How long does the buyer expect to maintain the purchasing relationship?
Furthermore, Jimma natural Grade 4 cannot be treated as interchangeable with every Ethiopian coffee. Moonbucks would need to test any substitute against its own blend and quality requirements.
Suppose Moonbucks’ assessment identifies an opportunity to maintain shade trees and restore vegetation along exposed streambanks. The IPCC describes agroforestry as a way to store carbon in vegetation and soil, with potential benefits for erosion control and water quality.1 Moonbucks would need local advice on species, growing conditions and maintenance before deciding how these measures fit its sourcing plan.
The proposal now has a defined sourcing connection and a candidate intervention. The next steps are to test its effect on production, assess carbon eligibility and build the financial case.
3. Compare the proposal with other ways to protect supply
WBCSD’s Nature-based Solutions Blueprint recommends comparing nature-based options with other responses across their benefits and costs.2 For Moonbucks, that means evaluating the landscape proposal alongside drying improvements, storage controls and alternative sourcing arrangements.
The product’s natural-process designation matters. Moonbucks should examine the drying and dry-milling chain alongside land conditions. Its team would check storage practices, contamination risks and incoming-lot quality to see whether problems arise before or after the coffee leaves the farms.
The revised proposal might combine land stewardship with separate post-harvest controls. Each component needs its own purpose and budget. A sustainability label should not obscure which activity is expected to solve which problem.
The project develops as the evidence improves. Its scope should follow the diagnosis rather than preserve the first idea unchanged.
4. Establish what the carbon outcome could count toward
Moonbucks’ sustainability team now tests the proposed carbon case separately from the sourcing case. Is the objective a measurable change in Moonbucks’ value-chain emissions, verified credits for separate voluntary use, or distinct outcomes under carefully defined arrangements?
Scope 3 covers value-chain emissions. A purchasing relationship alone does not prove that a farm intervention can be included in Moonbucks’ inventory. The team needs an applicable accounting method, defensible boundaries and evidence supporting attribution.
SBTi’s FLAG Guidance (forest, land and agriculture), version 1.2, says purchased credits used as offsets cannot meet near-term FLAG or energy and industry targets. Eligible land-based removals are subject to accounting requirements.3 Moonbucks needs to test its proposal against those rules before including an outcome in its targets.
For Moonbucks’ Jimma proposal, maintaining existing trees and establishing new vegetation could involve different carbon questions. Specialists must examine the baseline and additionality, meaning what changes because the project proceeds. They must also assess measurement and the risk that stored carbon is lost. CCC’s MRV and additionality article introduces those tests.
Until that work is complete, Moonbucks should not budget an assumed Scope 3 reduction or credit-sale receipt. Direct emissions reductions remain the priority.
5. Build a financial case that survives weaker assumptions
Moonbucks’ finance team would now build a multi-year budget. UNEP’s State of Finance for Nature 2023 compares current finance with the investment needed to meet climate, biodiversity and land-restoration goals.4 The company would cost its proposed activities, farmer participation and ongoing monitoring. Verification, where required, is a separate expense. Maintenance and responsibility for replacing failed plantings must remain visible after the initial establishment budget ends.
Operational benefits need equally careful treatment. If fewer rejected lots reduce emergency purchasing, count that saving once. Do not add “supply resilience” as another financial benefit when it represents the same avoided cost.
Moonbucks should compare a base case with slower benefits, higher implementation costs and no carbon revenue. It should also distinguish production outcomes from quality and shipment outcomes. A single good harvest would not prove that the landscape intervention caused better delivery performance.
A project can remain worth funding even when its carbon case needs more work. That decision must rest on the operational evidence and the company’s objectives, without unsupported environmental claims.
6. Fund a pilot with a clear expansion decision
Moonbucks’ first approval would fund a bounded pilot, rather than commit the entire sourcing program. Before spending, Moonbucks would agree on participating farms, responsibilities and the evidence needed at review.
Its scorecard could track farmer participation, implementation costs and plant survival, alongside accepted coffee volumes and lot-quality results. Carbon measurements would follow the selected method. Farm-level traceability must connect the intervention to the actual sourcing relationship.
Suppose Moonbucks’ review later finds that storage changes explain most quality improvements, while the land measures need longer observation. Those findings would shape the next decision: expand the proven component, adjust the landscape work or pause further spending. They would not justify crediting all improvements to tree planting.
This gives nature-based carbon investments a practical place in a multi-year strategy. Funding increases as the evidence supports it, and the project can change direction before a larger commitment.
Discuss a sourcing opportunity with CCC
Carbon Credit Capital’s nature-based supply-chain investment service uses its Dual-Value Model to examine supply-chain economics alongside potential sustainability outcomes.
Schedule a consultation to discuss your sourcing exposure and the questions to resolve before allocating capital.
Sources
- Intergovernmental Panel on Climate Change (IPCC), Climate Change 2022: Mitigation of Climate Change, Chapter 7, Agriculture, Forestry and Other Land Uses, section 7.4.3.3 (Agroforestry).
- World Business Council for Sustainable Development (WBCSD), Nature-based Solutions Blueprint, 5 June 2024.
- Science Based Targets initiative (SBTi), Forest, Land and Agriculture Science-Based Target-Setting Guidance, version 1.2, March 2026, section 3.1.4, pp. 37–38.
- United Nations Environment Programme (UNEP), State of Finance for Nature 2023, 2023.
A plastic credit funds the collection of plastic waste in places where no formal system exists to collect it. Each credit represents a measured, independently audited quantity of plastic taken out of the environment or returned to use, tracked on a public registry.
EU carbon credit claims changed on 27 September 2026, the day the Directive (EU) 2024/825 began to apply across the European Union. The change is narrow. It changes how a company can talk about the credits it buys. A product can no longer be called neutral on the strength of compensation alone; however, every specific, evidenced statement about what a company measured, reduced, and funded stays fully available.
