Scope 3 Action Code of Practice.

After an extended consultation period, the Voluntary Carbon Markets Integrity Initiative (VCMI) has released its Scope 3 Action Code of Practice. Designed to provide guidance for companies on best practices when facing difficulties in reducing scope 3 emissions, the code works to promote credible, net-zero-aligned greenhouse gas mitigation by corporates and other organizations, including participation in high-quality voluntary carbon markets.

The report aims to achieve two goals: to increase climate action through direct emissions reduction and to increase companies’ climate action ambitions through the VCM.

As the report highlights, a key objective of the code is to accelerate climate action, with high-quality carbon credits used in addition to, not as a substitute for, direct decarbonization of scope 3 emissions. With this dual approach of overcoming the barriers to scope 3 emissions reduction and provisioning climate finance through the retirement of high-quality carbon credits, companies can continue to work towards delivering on their climate commitments and accelerating global net zero.

For sustainability professionals, this report highlights a few key points:

Carbon credits can be purchased, but only under strict conditions.

Buying carbon credits is not a shortcut to emissions reductions—it’s a complementary tool.

The Scope 3 Action Code of Practice highlights that high-quality carbon credits are an effective tool to close the gap between actual Scope 3 emissions and science-aligned targets, but organizations:

• Must first set and pursue real, direct reductions (especially for Scope 1 and 2).
• Must disclose why you have a gap (e.g., barriers in the supply chain, lack of data).
• Cap credits at max 25% of Scope 3 trajectory emissions.
• Retire (not just buy) credits equal to the emissions gap each year.

Organizations need a solid accounting method.

To credibly use carbon credits for Scope 3 emissions, companies must quantify their emissions gap in a way that’s transparent, science-aligned, and repeatable. The code gives two options, and you must stick with one method for the entire target period.

1. The Year-on-Year Approach. An annual tracking method, suitable for monitoring and acting on the emissions gap every year. With this method, organizations set a science-aligned emissions reduction target for Scope 3 emissions, establish a trajectory from the base year to the target year and then each year, the difference is the emissions gap.
2. The Carbon Budget Approach.  This method front-loads the accounting for the entire near-term target period. First, a Scope 3 carbon budget is defined, then the cumulative emissions gap is calculated from the implementation year to the most recent year and then retire carbon credits equal to the emissions gap.

Sustainability leads will need to build or upgrade a robust GHG inventory, especially for Scope 3, coordinate with internal teams to integrate emissions accounting, and validate their approach with third-party assurance, if possible. Organizations can’t just buy a fixed amount of credits every year, use credits without showing exactly how much excess emissions they offset, or use credits if the emissions gap exceeds allowable thresholds.

Credit quality matters. A lot.

Low-quality credits or opaque sourcing will not cut it. When purchasing credits, only these credits can be used:

• ICVCM Core Carbon Principles (CCP)-labelled credits (when available), or
• Article 6.4 credits under the Paris Agreement (when they come online).

Until January 1, 2026, companies can use:

• CORSIA-eligible credits, or
• Credits backed by internal due diligence, if transparently disclosed how they align with ICVCM standards.

Transparency and assurance are mandatory.

Organizations that purchase and retire carbon credits are required to publicly disclose their emissions gap, barriers, actions, and credits retired and align their climate reporting with best-practice frameworks. To add further credibility and transparency, organizations can consider getting third-party assurance for all of the above. This creates a paper trail showing carbon credit use is credible, limited, and strategic.

It’s become a coordinated, cross-functional climate strategy.

This is no longer just a sustainability team issue. The strategic implications of the code go far beyond compliance, and they affect how a company sets climate goals, engages the value chain, allocates capital, and communicates with stakeholders. Sustainability professionals should look to:

• Integrate a carbon credit strategy into the broader decarbonization roadmap, not simply tag it on.
• Make carbon credits a governance issue, involving finance, procurement, and legal.
• Think long-term: by 2040, any emissions gap must be eliminated, and credits are just a temporary bridge.

Carbon credit strategy becomes a competitive differentiator.

Participation in the VCMI Scope 3 Action Code of Practice is a signal of an organization’s climate leadership being backed by credible action. It offers differentiation in sustainable finance, customer procurement, and talent markets and allows an organization to get ahead of likely future regulation or investor pressure on carbon claims. Credit quality or calculation errors could lead to greenwashing accusations, so organizations must always present credits as a bridge, never a solution and carbon credit use must also be tightly integrated with storytelling and accountability.

In summary, the use of carbon credits is credible, but only as a high-integrity, temporary mechanism to support your broader decarbonization journey and never as an excuse for delay or inaction.

As an organization, if you are purchasing carbon credits you must know your emissions gap inside and out, be radically transparent about the purchase and due diligence, and only buy high-integrity carbon credits and retire them.

Invert Insights.

💡 By focusing on meaningful carbon reduction first and then investing in high-integrity carbon credits to offset emissions they couldn’t otherwise abate, organizations are able to accelerate their net-zero plans while taking a stance as a leader in sustainability.

💡 Organizations have been calling on the industry to set strict guidelines to help boost credibility and transparency in the voluntary carbon market, and this guide delivers the clear outline they were hoping for.