Combating Greenwashing: Taiwan Ministry of Environment Issued Corporate Carbon Neutrality Guidelines

To curb greenwashing practices, the Taiwan Ministry of Environment issued the Corporate Carbon Neutrality Guidelines (“Guidelines”) on September 26, 2024. The Guidelines require companies to adhere to three core principles—greenhouse gas (“GHG”) emissions inventory, reduction, and offset—before declaring their achievement of carbon neutrality. Furthermore, companies shall disclose and explain their carbon reduction pathways, the results of their reduction measures, and their targets within their carbon neutrality management plan, ensuring transparency and accountability for public oversight. The key provisions of the Guidelines include the following:

Applicable to Carbon Neutrality Declarations for Organizations, Products, or Services

Carbon neutrality refers to achieving a balance between anthropogenic GHG emissions and anthropogenic removals, including measures involving carbon offsets. The Guidelines apply to companies that have completed the inventory, reduction, and offset of their GHG emissions and are therefore eligible to make a carbon neutrality declaration.

The 3 Core Principles: GHG Emissions Inventory, Reduction and Offset

1. Conduct an Inventory and Identify the Carbon Neutrality Target
Companies shall conduct a comprehensive GHG emissions inventory and, after selecting the carbon neutrality target, ^[1]  take into account the significance of all activities and processes related to it, ensuring that carbon neutrality is not based on a specific, predefined entity. Once the carbon neutrality target is selected, companies shall separately compile the emission sources, carbon sinks, and corresponding emissions and removals within the boundaries of the target for each relevant scope. ^[2]

2. Reduce GHG Emissions or Enhance Removals
Companies shall develop and implement a carbon neutrality management plan. The plan should include at least the following: a description of the target and its boundaries, a timeline for achieving carbon neutrality, the GHG emissions from the baseline, the carbon neutrality pathway, and the expected types and quantities of reduction credits to be used.
In addition, companies shall, within a widely accepted, science-based carbon reduction pathways, set the short-term and long-term reduction pathways and targets and implement reduction measures accordingly. Also, they shall demonstrate that they have made all reasonable efforts to minimize emissions. For product or service carbon neutrality, the plan must further include the material impact of reduction measures on the carbon neutrality target.

3. Utilize Offsetting to Compensate for Net GHG Emissions
If a company intends to adopt the offset measure to compensate for remaining GHG emissions in order to achieve carbon neutrality, it shall not only demonstrate that it has reduced GHG emissions from the carbon neutrality target and increased GHG removals to the greatest extent possible, but also, as necessary, retire GHG reduction credits to compensate for the net remaining GHG emissions.
Before doing the offset, companies shall conduct due diligence on the reduction credits and the associated reduction projects used for offsetting, ensuring that these reduction credits and projects meet the standards set forth in the Guidelines.

Principles for Disclosing Carbon Neutrality Results

In the process of achieving carbon neutrality, companies shall prioritize the completeness, specificity, and accuracy of publicly disclosed information. The companies shall make the carbon neutrality management plan publicly available on their websites, ensuring it is easily accessible to the public and stakeholders.
The Guidelines outline eight key items that companies shall disclose when declaring carbon neutrality, which include:

1. Clearly specify the boundaries of the carbon neutrality target and the period of the declaration.
2. For product and service carbon neutrality, the types and quantities of all products or services within the organization and the rationale for selecting the carbon neutrality target shall be disclosed.
3. Explain the chosen carbon neutrality pathway and rationale, including short-term and long-term reduction targets and measures.
4. Provide the original GHG emissions within the defined boundaries, including the calculation methods and whether the data has been verified by a verification body.
5. Detail the measures implemented for GHG reductions or removals, along with quantified results.
6. Specify the net GHG emissions after reductions and the proportion offset against total emissions.
7. Provide information on the reduction credits used for offsetting, including the issuing authority, project name and code, project type and location, executing and participating entities, the year of removal or reduction, and verification status, etc.Disclose the retirement status of the credits, including the retirement date, credit codes, and the location where retirement information is publicly available.

[1]  If the carbon neutrality target involves emission sources designated by the Ministry of Environment under Article 21, Paragraph 1 of the Climate Change Response Act, the GHG inventory and verification process shall follow the Regulations Governing the Inventory Registration and Verification of Greenhouse Gas Emissions.
[2]  These are divided into three scopes under the Guideline. According to the Greenhouse Gas Protocol, scope 1 emissions refer to direct GHG emissions from sources owned or controlled by the company, such as emissions from boilers, furnaces, and vehicles that the company owns or controls; scope 2 emissions are indirect GHG emissions from the generation of purchased electricity consumed by the company; scope 3 emissions are other indirect GHG emissions that occur as a result of the company’s activities but come from sources not owned or controlled by the company. These include emissions from activities such as the extraction and production of purchased raw materials, transportation of purchased fuels, and the use of sold products or services, etc.