The CarbonNeutral Protocol Index

The Protocol in the Context of Climate Action

A Proven Strategy for Corporate Climate Action, Momentum Around Carbon Neutrality Continues to Accelerate

Few would question that we are now in a race against time. In the last year alone, the evidence continues to mount about the impact of climate change and the toll it is taking on the planet, and on lives and communities. An abstract understanding of climate in terms of parts per million and fractions of degrees has been supplanted by more tangible evidence: habitat and species loss, extreme weather events, and human health impacts, among others. In 2018, CDP calculated the effects of climate change to cost business $1 trillion over five years (CDP, 2018, Global Climate Change Analysis 2018, link).

In response, business is seizing on this moment, turning risk to opportunity. For the second year in a row, we tracked climate commitments among Fortune Global 500 companies (Natural Capital Partners, 2020, Response Required, link). Since the Paris Agreement in December 2015, corporate climate commitments have increased five-fold. 30% of leading companies have now made at least one public commitment to carbon neutrality, net zero, RE100, or the Science Based Targets initiative (SBTi) by 2030. Those that have yet to take action are only at greater risk.

Figure 1: Percentage of Fortune Global 500 companies that have made a public commitment that they are, or will be by 2030: carbon neutral, meeting an RE100, Science-Based Target or net zero target

Source: Natural Capital Partners, 2020, Response Required, link

When time is of the essence to tackle climate change, carbon neutrality is a proven strategy for corporate action. The benefits are immediate, both for the business and for the climate. In the last year, companies including Kaiser Permanente, Oliver Wyman, and HP have joined the ranks of companies such as Logitech, Bain & Company and Sky, leading their industries with CarbonNeutral certification.

For nearly two decades, The CarbonNeutral Protocol has played a critical role in enabling our clients to confidently make clear and credible claims and navigate the complicated and fast- moving voluntary carbon market.

The role of business is clear. The United Nations has named this the Decade of Action (United Nations, 2019, Decade of Action, link) for us to deliver on the Global Goals, and business is proving to be one of the most effective and reliable levers for change, contributing innovation, finance, and ambitious commitments.

While the Paris Agreement is proving to be difficult to implement and the global coronavirus pandemic has further stalled progress, companies show no sign of relenting, filling a vacuum while sending a strong signal to policymakers that we cannot delay.

Carbon finance is increasingly recognised as a vehicle not only for climate action, but for sustainable development broadly. Corporate buyers are choosing to do more than simply offset their emissions, focusing on projects with attributes that align with their values and deliver value to communities and ecosystems. The Rimba Raya REDD+ project in Indonesia, which avoids destruction of forest coupled with livelihood programs that provide education and employment, became the first project to register to Verra’s Sustainable Development Verified Impact Standard (SD VISta) by advancing all 17 Global Goals.

Image: Rimba Raya Biodiversity Reserve REDD+, Indonesia: The project has established a scholarship fund to enhance educational access and provide writing books

Recognising that we need all the solutions available: including carbon finance projects to avoid emissions, reduce them, and remove them, several new initiatives have launched in 2020 to drive impact at scale. We are participating in groups led by Environmental Defense Fund, ISO, IETA and the Climate Registry, to contribute our experience and to ensure we continuously improve The Protocol, making it a practical and valuable resource in designing and delivering on corporate sustainability strategies.

In addition, we are part of The Taskforce on Scaling Voluntary Carbon Markets, led by Mark Carney and Bill Winters, one of the highest profile efforts to help companies and investors leverage the market to grow exponentially—building on 20+ years of voluntary action to advance international climate goals. The SBTi, meanwhile, issued new guidance on achieving net zero targets and the role of offsetting in getting us there, detailing how ‘compensation’ measures using projects which avoid and reduce emissions are part of the transition to net zero and its focus on ‘neutralisation’ through removals projects.

Carbon neutrality is increasingly recognised as a pragmatic and accessible tool for the ambitious. It is deployed by organisations which seek to complement longer-term, science-based abatement targets by financing emission reductions beyond their operational control which accelerate progress towards a net zero global economy.
A majority of that financing utilises the voluntary carbon market to find and support mitigation projects that also deliver against the Sustainable Development Goals.

While we enter 2021 with unprecedented uncertainty, we know the challenges and opportunities we face in driving climate ambition. Entering its 20th year and updated annually to reflect the latest industry best practice, The Protocol will continue to evolve in order to provide business with an invaluable tool for action.

We are pleased to present this 2020 edition of The CarbonNeutral Protocol. First developed and published in 2002, The Protocol is revised and updated annually to reflect developments in climate science, international policy, standards and business practice. It is an open source standard and guide developed for business by business that draws together leading independent standards for greenhouse gas accounting into a practical guide to carbon neutrality.

It underpins CarbonNeutral® certifications awarded by Natural Capital Partners to recognise carbon neutral organisations, products and activities, and provides a detailed framework for the design and implementation of credible carbon neutral programmes.

Purpose

The CarbonNeutral Protocol is designed for:

  • Businesses and organisations – To understand what is required to develop a credible carbon neutral programme and to achieve CarbonNeutral® certification.
  • Technical partners – To ensure Natural Capital Partners’ technical partners (e.g. GHG assessors) understand what is required of them to ensure their services are consistent with the requirements of each CarbonNeutral® certification.
  • The wider “Climate Action Community” – To encourage partnerships amongst business, NGOs, policy-makers, regulators and civil society to promote high standards for carbon accounting and the offsetting of greenhouse gas emissions.

The CarbonNeutral Protocol has been developed as a set of requirements to provide businesses with a single-source guide to make credible, transparent claims anywhere in the world. As third-party standards are developed, The CarbonNeutral Protocol aims to provide a framework which builds upon the best guidance in the market and offers a unifying process for making carbon neutral claims which are recognised internationally.

Principles

Three principles are the foundation for CarbonNeutral certifications:

  1. Promote immediate action to support deeper and widespread transformation: Carbon neutrality is the action taken immediately by an entity to fully compensate for the global warming impact from its greenhouse gas emissions. Transformation to a sustainable and resilient net zero economy is accelerated by carbon neutrality as entities act ahead of and beyond regulation. Carbon neutral entities reduce emissions under their direct control and enable mitigation activities elsewhere that require finance to deliver mitigation in line with the UNFCCC’s goals and contribute to the UN’s Sustainable Development Goals.
  2. Built on conservative estimation, best practice, transparency and continuous improvement: Public claims of carbon neutrality account for greenhouse gas emissions and the compensating emission reductions in accordance with best-in-class third-party standards to ensure that claims have integrity and the same meaning throughout the global economy. Entities making public claims of carbon neutrality commit to conservative approaches and to disclosing the basis (methodologies, standards, protocols) that underpin their claims.
  3. Committed to pragmatism and impact: Achieving carbon neutrality is an actionable, understandable and pragmatic response that can be adopted by any entity to meet its climate objectives and play a meaningful role in driving the transition to net zero across the global economy. The CarbonNeutral certification logo enables entities to communicate their commitment to carbon neutrality to key stakeholders so they may be recognised and rewarded for their progressive action.

These principles guide the development and application of the Protocol, particularly when the application of the Protocol’s requirements to specific issues or situations is ambiguous or unclear. When specific circumstances arise where the application of the Protocol’s requirements would not align with the intent of the principles, Natural Capital Partners reserves the right to amend the requirements of the Protocol to ensure the integrity of the certification.

Structure

High-level requirements for achieving CarbonNeutral® certification are set out in the Core Requirements section of this document. More detailed requirements are set out in the Technical Specifications that follows it. Detailed advice and clarification on selected topics can be found in the subsequent Guidance.

The term “must” is used in this document to indicate a requirement of the Protocol. The term “must not” indicates prohibited actions. The term “should” is used to indicate a recommendation, but not a requirement.

Development

The CarbonNeutral Protocol undergoes an annual development cycle which involves input from multiple stakeholders.

Natural Capital Partners’ Advisory Council is consulted on development priorities within the annual revision cycle. In addition, we consult with certified companies, our assessment partners and other sustainability leaders and environmental NGOs. We will seek to further deepen this consultation ahead of the 2022 edition.

Natural Capital Partners also invites and encourages input from clients and others with an interest in carbon neutrality. Suggestions for development priorities for subsequent versions of The CarbonNeutral Protocol should be sent to Natural Capital Partners at info@naturalcapitalpartners.com.

Based upon our experience and understanding of changing client needs, developments in the market for climate solutions and guidance from our Advisory Council, material changes to The CarbonNeutral Protocol in this 2020 version include:

  • New guidance on how CarbonNeutral certification complements a net zero target (Guidance 3.3)
  • New guidance on removals, encouraging clients to consider a shift to removals over time (Guidance 4.5)
  • New product-as-a-service certification (Table 3 and Technical Specification 1.2)
  • New “Target and Reduce Form” evolved from the Certification Form for gathering information about the abatement of certified clients (Technical Specification 3.1)
  • New guidance for communicating programmes including what advice and materials we issue to certified clients (Guidance 5.2) and communicating 100% renewable electricity (Guidance 5.3)
  • New “Reference Material” section which refers to cross-compliance tables clarifying how the Protocol aligns with other standards (Reference Material)
  • Updated required emissions sources for entity certifications to require homeworking emissions (Table 2)
  • Updated guidance on calculating the climate impact of aviation, including how to account for sustainable aviation fuels (Guidance 2.5)
  • Updated guidance on quality assurance and verification to clarify how assessment partners are approved (Guidance 2.3)
  • Updated guidance on defining boundaries for CarbonNeutral products (Guidance 1.4)
  • Updated requirements regarding the validity of assessments in support of product certifications (Table 6)
  • Updated requirements for the presentation of data in emissions assessments to summarise the extent of use of primary data and to increase alignment with best practice (Technical Requirement 2.2).

Relationship to other standards, protocols and broader context

The Protocol incorporates best practices in the areas of measurement and monitoring of GHG emissions and the design and certification of emission mitigation projects. Concerning GHG measurement, the Protocol is aligned with the GHG Protocol Corporate Standard (including the separate Guidance on Scope 2 and 3 accounting), GHG Protocol Product Standard, Environmental Product Declarations and the principles of the BSI PAS 2050 standard for products and services.

The Protocol is both influenced by and contributes to the evolution of other relevant standards, including but not limited to: ICROA’s Code of Best Practice, ISO’s new project to define carbon neutrality, Science Based Targets initiative’s work on net zero. These are critical to the Protocol’s evolution and the Protocol’s experience of being used as a framework for climate action around the world makes it a key point of reference.

The Protocol recognises the importance of taking action that is appropriate and proportionate to the range and scale of a client’s sustainability impacts. CarbonNeutral® certifications by definition are focused on climate impacts. However, clients should assess their material environmental, social, and economic impacts and take action appropriate to related impacts. Clients should use internationally recognised management standards, appropriate to the scale of their impacts, to identify and manage their key impacts. Such management standards include but are not limited to the ISO 14000 and ISO 9000 series.

About Natural Capital Partners

With more than 300 clients in 34 countries, including Microsoft, MetLife, Logitech, PwC, Sky and Ørsted, Natural Capital Partners is harnessing the power of business to create a more sustainable world. Through a global network of projects, the company delivers the highest quality solutions which make real change possible: reducing carbon emissions, generating renewable energy, building resilience in supply chains, conserving and restoring forests and biodiversity, and improving health and livelihoods.

Natural Capital Partners was founded in 1997 and has teams in the US, Europe, Central America and Asia. Since it began, the company has contracted more than 43 million tonnes of carbon credits from 489 projects in 64 countries on behalf of its clients. Over the past four years it has contracted 19 million MWh of energy attribute certificates from 43 countries. In addition, the company has been recognised as Environmental Finance Best Offset Retailer for the past ten years.

The CarbonNeutral Protocol is one of the services provided by Natural Capital Partners.

Acknowledgements

Natural Capital Partners is solely responsible for the development and deployment of The CarbonNeutral Protocol as an open access standard. However, we wish to acknowledge and thank our clients, members of our Advisory Group, and the many organisations and individuals that have encouraged, supported and shared their expertise with us during the development of the Protocol since it was first launched in 2002. We could not have done our work without their invaluable help.

Use, legal disclaimer and copyright

The CarbonNeutral Protocol should be applied in conjunction with relevant terms and conditions on the use of logos, marks and trademarks owned by Natural Capital Partners, as specified in contracts with Natural Capital Partners.

CarbonNeutral® certifications made in accordance with previous versions of The CarbonNeutral Protocol are not retroactively affected by subsequent changes to The CarbonNeutral Protocol.

CarbonNeutral® is the registered trademark of Natural Capital Partners. The copyright notice displayed in this document indicates when the document was last issued.

Awards

Natural Capital Partners has been recognised by Environmental Finance as Best Offset Retailer for 10 years running and Best Advisory Service for the last four years.