Joint Industry Statement on Green Claims Directive (GCD)
As co-legislators advance negotiations on the Green Claims Directive, BACA has joined with industry leaders to put forward key recommendations for a clear, science-based framework on climate-related claims—one that recognizes and incentivizes the role of Voluntary Carbon Markets (VCMs) as a credible and essential tool for achieving climate goals.
To protect consumers and provide legal clarity for businesses, the GCD must:
✅ Support ambitious, verifiable climate claims
✅ Recognise the vital role of Voluntary Carbon Markets (VCMs)
✅ Enable the use of both reduction and removal credits
✅ Provide flexibility on climate compensation claims ahead of 2050 net-zero goals
✅ Avoid regulatory hurdles that could deter urgent climate finance
BACA and its members remain committed to unlocking the full potential of VCMs and urge co-legislators to deliver a clear and enabling framework that integrates these tools into future EU priorities, including the 2040 Climate Proposal.
Read the full statement here:
Joint Industry Statement on the Green Claims Directive (GCD)
Ahead of the next trilogue meeting, the undersigned organisations set out key recommendations for co-legislators negotiating the GCD, with a focus on climate-related claims.
To protect consumers from greenwashing and ensure legal clarity for businesses, the GCD must provide a consistent, verifiable framework for high-integrity environmental claims. We hope that our recommendations will be reflected in the final file, so that businesses investing in climate mitigation may have certainty. We support ambitious, evidence-based climate claims and believe the regulation should recognise the role of Voluntary Carbon Markets (VCMs) as a credible decarbonisation tool. A well-designed framework can help mobilise private capital swiftly and direct it to impactful, cost-effective climate solutions.
The GCD must not limit the use of compensation claims solely to those contributing toward a net-zero target, as defined in the CSRD - i.e., the permanent removal of CO₂ from the atmosphere. Such a restriction would effectively allow carbon credits to be used only for residual emissions, which is overly narrow and constrains high-integrity climate action via Voluntary Carbon Markets (VCMs). However, we of course stress our support for businesses using voluntary climate compensation claims by investing in removal and reduction credits in the interim period to 2050 net zero. Achieving global net-zero goals cannot rely on removals alone; both high-quality removal and reduction credits are essential to meeting EU and international climate targets. Furthermore, the CSRD itself is expected to evolve under the Omnibus package, introducing regulatory uncertainty and potentially delaying climate action that could be implemented immediately.
Co-legislators must provide clear guidance on the types of claims businesses are permitted to make. This clarity will help traders and industry participants navigate policy requirements effectively. It is essential to define which nature-based and engineered credits are eligible, ensuring access to a range of high-quality crediting options. Restricting the use of carbon credits by businesses would unnecessarily hinder urgently needed climate action. A broad, scalable, high-integrity crediting framework is vital to support nature protection, mobilise climate finance, and advance a just transition, particularly in the Global South.
Businesses must therefore be allowed to make claims based on both emissions reductions and the purchase of carbon offsets. Additionally, claims that reflect product improvement, even where the commitment is financial rather than physical, should not be unduly limited.
Businesses must be provided with the proper incentives to decarbonise and invest in quality climate claims, both nature-based and technological. Achieving global climate objectives requires a substantial scale-up of both tools. Excluding high-quality nature-based projects - both removal and reduction - from being used in climate claims would not align with scientific evidence and have negative impacts on nature, climate, biodiversity and communities supported by corporate investments. Carbon pricing, including through VCMs, are vital in mobilising private sector finance needed to achieve global net-zero goals, including those of the EU, and empirical research consistently shows that companies investing in carbon markets are also accelerating the decarbonisation of their operational and value chain emissions at a faster pace compared to those not engaged.
Restricting climate claims from fossil fuels to permanent removals certificates - the so-called ‘like-for-like principle’ - does not allow for comprehensive climate action. Like-for-like would limit climate action because permanent CDR is unreasonably expensive and not yet scalable while disincentivising investments in nature. Additionally, as ‘permanence’ is not defined, this would also add much uncertainty to the use of climate claims. It would further hinder the flow of much needed private capital in climate mitigation efforts. All sectors must decarbonise and mitigate emissions, so they must be given the tools to do so.
Currently, the GCD will require a company to disclose whether the carbon credit they are using will also be counted toward a host country’s mitigation efforts. Co-legislators must be clear that this does not risk the requirement of CAs. In the context of Art. 6 of the Paris Agreement, CAs are an important mechanism to prevent emissions reductions from being counted against “Nationally Determined Contributions” (NDCs) of more than one country. However, in the context of VCMs, CAs are not needed. When a European business purchases a carbon credit from a host country outside of the EU’s NDC, the reductions associated with it are not reflected in the EU’s NDC. There is no risk of double-counting because country-level GHG accounting and corporate voluntary GHG accounting are not directly linked.
Additionally, CA’s are misleadingly seen as a quality indicator. They are merely an accounting tool necessary for country-to-country trades and do not speak of quality. Requiring CAs could significantly discourage private sector participation in much-needed action.
Signatories remain committed to supporting voluntary private investment in climate mitigation through high-quality carbon credits. The transparent use of VCMs can meaningfully contribute to EU and global net-zero goals. However, to unlock their full potential, the GCD must provide clarity and avoid regulatory uncertainty that could deter investment and slow progress.
We recommend that co-legislators ensure the Directive sets a clear, ambitious, and enabling framework—one that integrates VCMs into future priorities, including the 2040 Climate Proposal—and look forward to continued cooperation on this agenda.
Signatories
