Action and Market Based Instruments – ECOS feedback

GHG Protocol and ISO (the leading organisations setting global standards for corporate greenhouse gas accounting) have launched a ‘request for information’ on their Action and Market Instruments (AMI) standard. This standard, set for adoption in 2028, will define how companies account for and report on various kinds of climate actions. For example, how companies should report their use of green commodity certificates and green procurement practices, their purchase of carbon credits, and their avoided emissions for the placing on the market of low-carbon products. It will shape what companies can and cannot claim about their climate progress for the years to come.

The AMI technical working group is proposing to move towards a multi-statement reporting structure in which:

• Statement 1 (attributional accounting) is similar to the Scope 1, 2, 3 reporting structure. The only difference is that Scope 2 market-based accounting is covered under statement 2.
• Statement 2 (attributional accounting) reports a company’s emissions based on the use of ‘market-based instruments’ such as energy attributes certificates or commodity certificates (such as green steel or green cement certificates).
• Statement 3 (consequential accounting) reflects a company’s beyond value mitigation interventions as well the repercussions of changes in production design (avoided emissions from sold products).
• Statement 4 (non-GHG indicators) is a compilation of non-GHG indicators relevant to assess a company’s progress towards achieving decarbonisation.

In its answer to this request for information, ECOS made the following recommendations:

• Mutual exclusivity: the four statements must be mutually exclusive (one tonne to appear only once)
• Mandatory versus optional: Statements 1 and 4 should be mandatory, statements 2 and 3 be optional.
• Partial reporting allowed rather than full coverage of optional statements: companies should be allowed to partially report on statements 2 and 3.
• No aggregation: Aggregation of figures across statements, categories, or subcategories must be explicitly prohibited.
• More clarity needed around the use of mass balance: the AMI standard must provide prescriptive guidance on the use of chain of custody models. In particular, it needs to clearly distinguish between rolling‑average and credit mass balance ; state that credit mass balance always belongs to statement 2 ; and clarifty that certain attribution methods such as overclaiming are not acceptable, even in statement 2.
• Scope 2 TWG alignment: Scope 2 TWG outputs should be the basis for the scope 2 statement 1 and 2 rules. Statement 2 scope 2 should not allow the use of energy attribute certificates which are not recognised in the scope 2 standard.
• Quality criteria for market instrument in statement 2: the AMI standards must set strict quality criteria for the market based instruments used to report emissiosn under statement 2.
• Clarification needed around data provenance: to avoid misinterpretations, the AMI standard needs provide more clarity around the use of primary supplier data in statement 1 where it reflects physical flows, avoiding that supplier specific data, simply because they come from contractors, are automatically reported in statement 2.
• Limitations of statement 3 to be made explicit: statement 3 is the one which has the most risk of leading to overclaiming and greenwashing. Beyond providing as strong safeguards as possible, we expect the AMI standard to clearly acknowledge these inherent limitations.

These safeguards are essential to ensure the integrity of this newly proposed multi-statement system. Read all of our feedback.