A. Footprint Boundaries
Brands seeking certification in 2021 are required to count their calendar year emissions from 2020. This requirement is based on the widely recognized Greenhouse Gas Protocol and includes all of Scope 1 emissions, all of Scope 2 emissions, and 8 out of the 15 categories of Scope 3 emissions, as shown below.
Direct Brand Emissions
- Fossil fuels used at your facilities
- Fuel consumed by your vehicles
Indirect Brand Emissions
- Electricity used at your facilities
- Steam bought and used at your facilities
Supply Chain Emissions
- 3.1Purchased goods and services
- 3.2Capitol goods
- 3.3Upstream emissions from fuel and energy
- 3.4Upstream transportation and distribution
- 3.5Waste from operations
- 3.6Business travel
- 3.7Employee commuting
- 3.9Downstream transportation and distribution
Not Included in Certification:
- 3.8Upstream leased assets
- 3.10Processing of sold products
- 3.11Use of sold products
- 3.12End-of-life treatment of sold products
- 3.13Downstream leased assets
B. Footprinting and Verification Methods
While all GHG estimates must follow the boundaries defined in Table 1.1, how you estimate your footprint depends on your brand’s annual revenues.
2020 revenues $100 M+
Large brands must hire a third-party consultant to verify their footprint calculation. The underlying calculation can be based on the Climate Neutral Brand Emissions Estimator (BEE), a third-party calculator, or an internally-built tool, as long as it is based on the GHG Protocol standard and meets Climate Neutral boundary requirements.
Estimate your footprint using the Climate Neutral BrandEmissions Estimator (BEE). A report from a recognized third-party carbon accounting firm can be used instead if it is based on the GHG Protocol standard and meets Climate Neutral boundary requirements.
2020 revenues below $5 M
Small brands use an emissions estimate from Climate Neutral’s BEE based on sector, geography, and financial data (revenues and costs).
For small brands, some basic operational data and a letter of attestation are all that is needed. For medium and large brands, once GHG footprint estimates have been completed, Climate Neutral staff will review your documentation to verify results.
Medium and Large Brand Verification Requirements
Large Brands (2020 revenues above $100 million)
If you calculate your footprint using the BEE, you need to submit a third party verification report. The report must verify your data inputs.
If you don't use the BEE, you need to submit a third party verification report. The report must verify your inputs, methods, boundaries, and tool. Verifications must follow one of these standards: ISO14064-3, ISAE3000, ISAE3410, or Corporate GHG verification guidelines from ERT.
Medium Brands (2020 revenues $5-100 million)
If you calculate your footprint using the BEE, you need to submit: 1) A final calculation of your total Scope 1-3 emissions, reported in tCO2e and broken down by GHG Protocol categories 2) The .csv export of your data
If you don't use the BEE, you need to submit: 1) A final calculation of your total Scope 1-3 emissions, reported in tCO2e and broken down by GHG Protocol categories 2) A description of your estimation methodology and a report including the sources of your GHG emission factors as well as operational data used to make your calculations
C. Requirements for Third-Party Verifiers
Third-party verifiers (e.g environmental auditors or consultants) must be able to demonstrate the following:
- At least five years of corporate history working in carbon accounting and/or lifecycle analysis at product and company levels, with at least 25 documented client engagements involving brand or product level footprints.
- At least five years of corporate history auditing and/or verifying corporate GHG footprints of brands with over $100 million in annual revenue.
- Ability to demonstrate independent control and ownership from the company under review to avoid any conflicts of interest.
- Ability to act as an unbiased third party in the verification process.
- At least five years of corporate history with one or more of the third-party verification standards referenced in Table 3 (e.g. ISO 14064-3).
All verification reports should follow these five common principles of carbon footprint verification: relevance, completeness, consistency, transparency, and accuracy.
D. Counting Renewable Energy Purchases
Appropriate power purchase agreements (PPAs), renewable energy certificates (RECs), and guarantees of origin (GOs) may be used to “reduce” the total footprint of your electricity consumption. If there is a question about the eligibility of these instruments in the case of your footprint, Climate Neutral will reference the GHG Protocol guidance.
Climate Neutral requires that vintages of any energy attribute certificates used for compliance fall within the three years up to and including the certification year. For example, when considering 2020 Scope 2 emissions, you must purchase RECS or GOs with a vintage of 2018 or later. All RECs and GOs used for compliance must also take place on the same grid as your Scope 2 electricity consumption.
Once you successfully estimate your brand-level emissions and adjust them for any PPAs, RECs, and/or GOs, you must purchase at least as many carbon credits as the total remaining footprint amount. All carbon credits must meet the following criteria:
A. Third-Party Verification
Carbon credits must be verified through one of the following standards: Gold Standard, Verified Carbon Standard, Climate Action Reserve, American Carbon Registry, Clean Development Mechanism.
B. Vintage Year Restrictions
With the exception of forestry and land-use, all carbon credits must represent emission reductions from within the four years up to and including the certification year. For brands getting certified in 2021 for a 2020 emissions footprint, this includes any vintage year from 2017 through 2020. For forestry and land-use projects, all credits must represent emission reduction from within the seven years up to and including the certification year, which includes any vintage year from 2014 through 2020. There are no requirements for project start dates as long as the reductions meet the vintage year requirement.
C. Portfolio Requirements
All carbon credit purchases must meet the following portfolio requirements:
Tier 0 (Banned)
- Avoided deforestation
- Tree planting
- Water filtration
- Renewable energy in LDCs*
- Small hydro**
- Chemical processes / industrial manufacturing
- Energy efficiency
- Renewable Energy in non-LDCs
- Methane capture/landfill gas
- HFC-23 Destruction
- N2O destruction (adipic acid only)
- Large-scale Energy Efficiency in non-LDCs
- Large-scale Hydro
*A list of the UN’s Least Developed Countries (LDCs) can be found here.
**“Small-scale” follows UN CDM definitions (e.g. < 15MW for renewables and < 60 GWh in annual improvements from energy efficiency)
D. Requirements for Procuring and Documenting Carbon Credit and Renewable Energy Purchases
All small brands must purchase carbon credits using Climate Neutral’s pooled procurement. Medium and large brands have the option to use Climate Neutral’s pooled procurement or purchase a qualifying portfolio on their own. Brands purchasing carbon credits on their own must provide a single .pdf file that contains the following information for all credits purchased:
Name & type of project
e.g. Honduras Hydro
# of credits purchased
Vintage Year Credits
In addition, you must provide the following for each batch of carbon credits you purchase:
A. Registry report (via hyperlink or screenshot) showing carbon credits retired on your behalf (preferred), plus a report of the average price paid per credit.
B. Fully executed purchase contract, payment receipt for credits purchased, and a letter attesting that they were retired on your behalf. A valid purchase contract must indicate either (a) that the brand has completed a purchase of all required carbon credits or (b) has a contractual obligation to complete the purchase of all required credits within 12 months. Installment purchases should be spaced at least quarterly and weighted evenly across the 12 month period.
Brands who have purchased renewable energy to reduce emissions from electricity usage (“market based” Scope 2 emission reductions) must provide the following information:
Type of contractual instrument
e.g. Renewable Energy Certificate (REC)
Amount of renewable electricity purchased
Country where renewable energy was generated
In addition, you must provide all relevant contracts, attestation documents, certificates, and payment receipts associated with your renewable energy purchase.
All brands are required to create a Reduction Action Plan using the Climate Neutral template that shows you are working on internal emission reductions. Action plans must include a minimum of two measures that will reduce emissions within corporate boundaries within the next 12-24 months. For renewal certifications, reduction plans must include reports on progress made against actions included in the prior year’s plan. If activities aren’t underway, at least one qualitative goal must target improvements within the brand’s value chain.
Brands are strongly encouraged to align long-term reduction targets with the guidelines of the Science-Based Targets Initiative.