Carbon Credit Claims Explained: What Companies Can Say After Buying Credits
Retiring a credit is evidence, not a claim. Here is where carbon neutrality wording goes wrong, what regulators and VCMI ask for, and what evidence a buyer should have on file before it speaks publicly.
A company that buys carbon credits has to decide what to say about it. The credit itself is a record of one tonne of emissions avoided or removed. The claim is a statement the company makes in its reports, products or advertising. The two are not the same thing, and regulators and voluntary initiatives are now paying close attention to the gap between them. This article explains what a credit can support, where claims go wrong, and what a buyer should have on file before it speaks publicly.
A credit is evidence, not a claim. When a credit is retired in a registry, the record shows the unit, its serial number and the beneficiary on whose behalf it was cancelled. That record is the evidence behind a claim. It does not decide what wording is fair. A company can retire a high-quality credit and still describe it in a way that overstates what it did.
Where claims go wrong. A recent Australian development shows the pressure points. In October 2026 the Australian Competition and Consumer Commission issued guidance saying marketers should not present purchased credits from avoidance projects as equivalent to actual emission reductions, particularly in claims of zero impact or carbon neutrality. Avoidance projects prevent emissions that would otherwise have occurred. Reduction projects eliminate emissions from a company's existing operations. The regulator's point is that these are different things and should not be described as if they were the same.
Why wording matters. Broad phrases such as carbon neutral or zero impact invite the reader to assume that the company's own emissions have fallen. If the claim rests on credits, the reader is owed an accurate picture of that. Our explainer on avoidance and removal credits sets out what each type actually claims. A statement that fits an avoidance credit may not fit a removal credit, and the reverse is also true.
What voluntary initiatives ask for. The Voluntary Carbon Markets Integrity Initiative (VCMI) works on the demand side of the market. Its Claims Code of Practice guides how companies describe their use of credits, and it was revised in 2025 to allow national greenhouse gas inventories that align with the Greenhouse Gas Protocol and to adjust its guidance on near-term net-zero targets, without forcing firms into public pledges. Its Scope 3 Action Code of Practice sets guardrails on credit use: credits must meet strict quality criteria and may only supplement, not substitute, a company's own emissions cuts. The common thread is that credits sit alongside direct action rather than replacing it.
Quality is part of the claim. A claim is only as strong as the credit behind it. The Core Carbon Principles label shows that a credit comes from a certifier and methodology the Integrity Council for the Voluntary Carbon Market has assessed, but it does not replace checking the project. A buyer that cites credit quality in a public statement should be able to show how it checked additionality, baselines, permanence and leakage. CarbonUnits has separate explainers on each of these tests, and on how registries record issuance and retirement.
A practical file for a buyer. Before publishing a claim, a company can assemble a short evidence file.
First, the serial numbers of the retired credits and the registry record showing retirement in its name. Second, the project documents and the most recent verification report for each project. Third, a note on whether the credits come from avoidance or removal projects, and how the wording of the claim reflects that. Fourth, a record of the company's own emissions and the reductions it has made directly. Fifth, the name of the standard and methodology, and whether the methodology carries the CCP label on the date of purchase. Finally, a statement of what the credits are meant to cover, for example residual emissions or emissions in a value chain that cannot yet be cut.
The bottom line. Carbon credits can support a climate strategy, but the words a company uses around them carry their own risk. Regulators are drawing lines between avoidance credits and real reductions. A careful buyer matches each statement to the evidence in the registry and the project file, describes what the credit actually represents, and presents credits as a supplement to direct emissions cuts.
Frequently asked questions.
Does retiring a credit entitle a company to call itself carbon neutral? Not automatically. Retirement shows that a unit was cancelled for a beneficiary. Whether a claim such as carbon neutral is fair depends on the wording, the type of credit and the regulator's guidance in the market where the claim is made. In Australia, the ACCC has said avoidance credits should not be presented as equivalent to actual emission reductions.
Should credits replace a company's own emissions cuts? According to VCMI's Scope 3 Action Code of Practice, no. Credits must meet strict quality criteria and may only supplement internal reductions.
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