The Voluntary Carbon Markets Integrity Initiative (VCMI) has introduced a new code to guide how companies can handle Scope 3 emissions—the indirect emissions from a company’s value chain. Called the Scope 3 Action Code of Practice, the proposal allows companies to use high-quality carbon credits to help address gaps in their Scope 3 targets.
This new approach is attracting both strong support and sharp criticism. While some welcome the extra flexibility, others warn it could delay real climate action. This article explains what the new guidance means, why it matters, and how different stakeholders are responding.
Understanding Scope 3 Emissions
Scope 3 emissions are all the indirect emissions that happen in a company’s supply chain and product use—such as emissions from suppliers, product transportation, or even customer use of a product. For most companies, Scope 3 emissions make up the largest part of their total carbon footprint.
Yet, these emissions are the hardest to control because they come from sources outside the company’s direct operations.
According to the VCMI, the global Scope 3 emissions gap—the difference between actual emissions and what they should be to stay on track with climate targets—is already about 1.4 billion tons of carbon dioxide equivalent.
- That is roughly equal to the combined 2023 emissions of Germany, the United Kingdom, and Italy. This gap could grow 5x by 2030.
What the VCMI’s Scope 3 Code Proposes
The VCMI’s new Scope 3 code sets clear rules for how companies can use carbon credits to address this emissions gap. Like other frameworks, such as the Science Based Targets initiative (SBTi), the VCMI insists companies must first set science-based targets and prioritize cutting their own emissions. But VCMI goes further by allowing companies to use carbon credits sooner and in larger amounts than SBTi currently allows.
Under the code, companies must:
- Disclose their Scope 3 emissions gap and the steps they are taking to close it.
- Explain the barriers they face in reducing Scope 3 emissions, describe their strategies to overcome them, and set a clear timeline to close the gap by no later than 2040.
- Retire (cancel) high-quality carbon credits in an amount equal to their entire emissions gap.
- Limit their use of credits to no more than 25% of their total Scope 3 emissions in any given year.
The credits used must come from high-quality projects, such as select reforestation initiatives that meet strict standards. The following figure shows the steps companies must follow to comply with the new code.
Why Some Support the Code
Groups like the Environmental Defense Fund, the We Mean Business Coalition, and the U.K. government have backed the VCMI’s approach. They argue that Scope 3 emissions are so hard to reduce that companies need more flexible tools to stay on track with climate goals.
For many businesses, making deep cuts in Scope 3 emissions requires cooperation across global supply chains, which can take time. Supporters say using carbon credits can help companies show progress while they continue working on direct reductions.
In March 2025, even the Science Based Targets initiative suggested it might recognize the use of carbon credits to address ongoing emissions—although it has not finalized this proposal yet. The VCMI code could give companies clarity and a consistent framework to follow.
Why Others Are Worried
Not everyone is convinced. Many environmental groups and experts warn that allowing carbon credits to cover Scope 3 gaps could weaken corporate climate ambition and slow real emissions cuts.
Lindsay Otis Nilles, a global carbon markets expert at Carbon Market Watch, says:
“VCMI risks undermining its own credibility by allowing companies to present themselves as climate leaders while, in reality, falling behind on their commitments.”
Critics argue that allowing companies to rely on credits until 2040—a date without a clear scientific basis—could disadvantage firms that are already making tough changes to lower their emissions. If both leaders and laggards can make similar claims, it becomes harder for investors, consumers, and regulators to tell which companies are truly reducing emissions.
Thomas Day from the NewClimate Institute agrees:
“The Scope 3 Claim could mislead investors and regulators, allowing companies with ambitious-sounding targets to continue increasing their emissions in the short term.”
Others point out that carbon credits do not remove the need for direct cuts. According to Thea Lyngseth from the Environmental Coalition on Standards (ECOS),
“Investing in carbon credits for Scope 3 instead of reducing emissions at their source only delays real climate action.”
Balancing Flexibility and Integrity
The VCMI says its goal is not to undermine existing standards but to offer a practical tool that reflects real-world challenges. In response to concerns, the initiative stated:
“The intention is not to create divergence, but to offer a pragmatic, high-integrity solution to the difficulty many companies face in reducing Scope 3 emissions at the required pace.”
The VCMI also recommends that target-setting groups like the SBTi adopt a similar approach. However, with no unified global standard yet, companies could face confusion about which rules to follow.
What Comes Next?
The debate over VCMI’s Scope 3 code highlights a bigger question in corporate climate action: How can companies balance the need for fast, deep emissions cuts with the challenges of managing complex global value chains?
For now, companies interested in using the VCMI framework will need to:
- Carefully document their Scope 3 emissions and reduction plans.
- Make sure any credits used meet the highest quality standards.
- Be transparent about how credits are used and how they plan to phase them out over time.
The VCMI’s new Scope 3 guidance adds an important option for companies grappling with indirect emissions. Whether it speeds up or slows down real climate action will depend on how it is used—and how closely its users are held accountable.
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