01 Measure
Greenhouse Gas Measurement Requirements
A. Measurement Boundaries
Entities seeking certification in 2023 are required to count their full calendar year cradle-to-customer emissions from 2022. This includes emissions related to all products, services, and business activities. Fiscal year data can be used as long as six or more months overlap with calendar year 2022. Measurement boundaries are based on the Greenhouse Gas Protocol and include all of Scope 1 emissions, all of Scope 2 emissions, and 8 out of the 15 categories of Scope 3 emissions, as shown below.
Table 1: Climate Neutral measurement boundary requirements
scope 3
Table 1
B. Data Requirements
Use of verifiable activity data vs. estimated data: Certifying entities are strongly encouraged to provide actual metered or billed data, rather than modeled estimates, for Scopes 1 & 2.
Use of activity data: Certifying entities are strongly encouraged to use activity data or physical data for emissions Scopes & Categories where emissions are equal to or more than 5% of the total footprint. Companies with science-aligned reduction targets are required to use activity data or physical data (i.e. kWh, not dollars spent on electricity) for Scopes 1 & 2 starting in their second annual certification cycle.
C. GHG Measurement and Verification Requirements
While all GHG estimates must follow the boundaries defined in Table 1, how you estimate your footprint depends on your annual revenues.
Table 2: GHG Measurement Requirements
Large Brands
2022 revenues above $100 million
A measurement report, detailing total emissions by scope and category, can be generated using the Climate Neutral Business Emissions Evalutator (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.
You must also hire a third-party consultant to verify the report (see below).
Medium Brands
2022 revenues $5-100 million
Estimate your emissions using the Climate Neutral Business Emissions Evaluator (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.
Small Brands
2022 revenues below $5 million
Estimate your emissions using the Business Emissions Evaluator (BEE) or equivalent pre-approved tool using sector, geography, financial, and other firmographic data.
Table 2
Once GHG inventory has been completed, Climate Neutral staff will review your submission and evaluate it for compliance with the Standard.
Table 3: Verification Requirements
Large brands:
2022 revenues above $100 million
Medium brands:
2022 revenues $5-100 million
Table 3
D. 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 corporate or product level footprints.
- At least five years of corporate history auditing and/or verifying corporate GHG footprints of companies 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. Verification reports must specify the level of assurance provided by the report as either limited or reasonable.
E. Counting Renewable Energy Purchases
Power purchase agreements (PPAs), renewable energy certificates (RECs), and guarantees of origin (GOs) may be used to make “market-based” adjustments to the total emissions from your electricity consumption.
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 2022 Scope 2 emissions, you must purchase RECS or GOs with a vintage of 2020 or later. All RECs and GOs used for compliance must also take place on the same grid as your Scope 2 electricity consumption.
If there is a question about the eligibility of renewable energy instruments in the case of your pending certification, Climate Neutral will reference the GHG Protocol guidance.
02 Reduce
Requirements for Investing in Value Chain Reductions
A. Target Setting Requirements:
Certifying entities are required to create a Reduction Action Plan using Climate Neutral’s template that shows progress toward reducing emissions from products and services. Action plans must include a minimum of two measures that will reduce emissions within the next 12-24 months. If a certifying entity has annual revenues over $5 million, you must identify at least one reduction measure that applies to your Scope 3 emissions. To recertify, reduction plans must include reports on progress made toward prior years’ reduction actions.
If the certifying entity has over $100 million in annual revenues, you are required to create a science-aligned reduction target for 2030. This target applies to all emissions included in Table 1. The target can be a default target of 50% absolute reductions based on a 2022 emissions baseline, a 1.5 degree C-aligned target approved under the Science-based Targets initiative, or a well documented science-aligned target that is sector specific. Entities with less than $100 million in annual revenues are strongly encouraged to set 2030 science-aligned targets.
B. Checkpoint Year Requirements:
Success toward reduction actions and science-aligned targets will be closely evaluated in Checkpoint Years set in 2025 and 2028. Certified entities will be required to evaluate and report on progress towards the following goals:
Checkpoint Year 2025 Goals:
- All RAPs set through 2023 should be complete.
- You should be roughly 50% toward completing 2030 target requirements, if applicable.*
Checkpoint Year 2028 Goals:
- All RAPs established through 2026 should be complete.
- You should be roughly 80% toward completing 2030 target requirements, if applicable.*
*Failure to match exact Checkpoint Year 2030 reduction plan goals may be explained if you can demonstrate that you have significant pending reduction actions, or that you are following a separate but clear reduction plan with custom baseline or target years.
03 Compensate
Requirements for Emissions Compensation
Certifying entities are required to compensate for all emissions measured according to the Standard (all product, services, and operations) with investments beyond the value chain. Carbon inventories may be adjusted with clean energy purchases made via PPAs, RECs, and/or GOs. All forms of compensation must meet the following criteria:
a. Third-party Verification
Carbon credits must be verified according to one of the following standards: Gold Standard, Verified Carbon Standard, Climate Action Reserve, or American Carbon Registry.
b. Vintage Year Restriction
With the exception of forestry and land-use, all carbon credits must represent avoided emissions or removals from within the four years up to and including the emissions year. For companies getting certified in 2023 for a 2022 emissions footprint, this includes any vintage year from 2019 through 2022. For forestry and land-use projects, all credits must represent emission reductions from within the seven years up to and including the emissions year, which includes any vintage year from 2016 through 2022. There are no requirements for project start dates as long as the credits meet the vintage year requirement.
c. Portfolio Requirements
Climate Neutral will track carbon credit purchases based on the project categories and types listed in Table 4. All carbon credit purchases must be from the approved project types in Table 4. You are required to report on the Project Category for all credits purchased. You are also encouraged, but not required, to follow the Suggested Portfolio Allocation Targets.
Table 4: Eligible Carbon Credit Types and Categories
Table 4
Project Category
Project Type
Suggested Portfolio Allocation Targets
Avoided Emissions from Energy and Industry
Project Type
- Agriculture & Grasslands: e.g., avoided ecosystem conversion, grassland & rangeland management, soil carbon
- Blue Carbon: e.g., mangroves, coastal conservation, wetland & seagrass restoration
- Forestry: e.g., Afforestation, Avoided Deforestation, Improved Forest Management, Peatland Restoration, REDD+, Reforestation
Suggested Portfolio Allocation Targets
Emissions Avoided or Removed From Nature
Project Type
- Chemical / Industrial: e.g., manufacturing, methane capture
- Household & Community: e.g., cookstoves, composting, household energy efficiency, water filtration
- Renewable Energy: e.g., biomass, geothermal, small-scale hydropower*, solar, wind
- Transportation: e.g., electric vehicles
Suggested Portfolio Allocation Targets
Engineered Removals
Project Type
- Engineered Removals: e.g., direct air carbon capture, mineralization
- Emerging Nature Based Removals**: e.g. kelp
Suggested Portfolio Allocation Targets
Excluded Project Types
Project Type
- HFC-23 Destruction
- N2O Destruction (ex-U.S. adipic acid only)***
- Large-scale Energy Efficiency in non-LDCs****
- Large-scale Hydro
- Tokenized credits
Suggested Portfolio Allocation Targets
* “Small-scale" follows UN CDM definitions (i.e., < 15MW for renewables and < 60 GWh in annual improvements from energy efficiency)
** Emerging Nature Based Removals applies to new, emerging project types where methodologies have not yet been developed, so verification is not possible.
*** Prohibition does not apply to U.S.-based projects listed on Climate Action Reserve.
**** A list of the UN’s Least Developed Countries (LDCs) can be found here.
Open Allocation for Carbon Dioxide Removal (CDR) Credits: Up to 5% of the carbon credit portfolio may consist of CDR credits that are not verified under one or more of the standards listed in 2(a). Credits must be issued & retired in order to count toward certification.
In addition to meeting all project documentation requirements outlined in section D, you must submit methodology documents for CDR projects for the credits to be eligible for certification.
d. Requirements for Procuring and Documenting Carbon Credit and Clean Energy Purchases
Emissions compensation may be conducted with carbon credits and clean energy purchases from any provider, as long as the instruments meet the requirements of these standards.
All carbon credit purchases must be substantiated with an attestation form signed by the provider that contains the following information for all credits purchased:
Project Name
e.g. Honduras Hydro
Project Type
Small Hydro
# of credits purchased
30,000
Vintage Year Credits
2020
Verification standard
VCS
Project Location
Honduras
Seller
Carbon Broker
Price Per Tonne
$10.00
This attestation form serves as a proof of purchase and retirement, and provides the information needed to confirm that the credits meet the requirements of the Standard. In addition (or in the event that a credit attestation form is unavailable), you may provide the following for all carbon credits that you purchase:
A. Registry report (via hyperlink or screenshot) showing carbon credits retired on your behalf, plus a report of the average price paid per credit
OR
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 certifying entity 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.
Purchases of clean energy must be substantiated with the following information:
Type of contractual instrument
e.g. Renewable Energy Certificate (REC)
Quantity and units purchased
5,000 MWh
Country where renewable energy was generated
United States
In addition, you must provide at least one of the following for every clean energy purchase: contract attestation document, certificate, and/or payment receipt.
04 Disclosure
Requirements for Information Disclosure
Climate Neutral requires that companies with active certifications publicly disclose the following information on the Brand Profile Directory on the Climate Neutral website:
- Total annual GHG footprints calculated broken down by Scope 1, 2, and 3 emissions for medium and large entities)
- Total annual investment (in USD) in carbon removal and avoidance credits as well as the project types supported
- Categories of certified products and/or services
- Summary of reduction action plans
- Progress toward past reduction action plans
In certain cases, Climate Neutral may, in its sole discretion, allow alternative disclosure formats for the Brand Profile Directory, upon request from certified companies.
05 Advocacy
Climate Advocacy Recommendations
Certified entities are strongly encouraged to engage in lobbying, education and stakeholder (e.g. customer, supplier, employee) mobilization efforts in support of climate solutions. Applications for re-certification will include a requirement to report on such activities completed in the prior calendar year. This reporting will not be made public, but should generally include one or more of the following activities:
- Climate Lobbying: Support climate policy at any political level directly or in collaboration with an advocacy or trade organization.
- Internal Climate Literacy: Engage your team in the Climate Neutral Certification process and conduct education sessions to increase staff understanding of climate issues.
- Consumer Climate Literacy: Engage consumers in the Climate Neutral Certification process and importance of climate action.
06 Transition Period
Provisions for Multi-Year Phase-in of Changes
Climate Neutral reviews and updates this Standard annually through an in-depth stakeholder review process. For significant year-to-year changes to the Standard, Climate Neutral may specify a transition period to allow re-certifying entities more time to comply with the revised requirements. The length of the transition period for a given change (if any) will be defined during the annual review process.
All entities certifying for the first time must comply with the version of the Climate Neutral Standard for the applicable certification year.
Transition periods will not apply to changes in the requirements for purchasing emission reduction or removal credits / offsets. Certifying entities with pre-existing multi-year offtake agreements that do not conform to the Standard will be considered on a case-by-case basis.
