Many companies are starting to consider credits to offset emissions as a way to support net-zero targets as the target year approaches. As it stands, the carbon credit market is too small to bear the brunt of companies reducing their environmental impact. But voluntary carbon markets have the potential to pump billions of dollars into climate action over the next decade. Here, the authors provide a primer for leaders to learn about carbon credit markets. What is the best way to participate in the market? Which types of credit are considered to be of the highest quality and with the least reputational risk? Who is in control when it comes to standards and regulations? Author answer these questions and outline the characteristics of high-quality carbon credits.
In the absence of government regulations requiring significant reductions in greenhouse gas (GHG) emissions that cause climate change, more companies are adopting “net zero” targets. more than one-third According to Net Zero Tracker, a database created in collaboration with academics and non-profit organizations, 2,000 of the world’s largest publicly traded companies announced net zero goals in 2019. These goals typically include public commitments to reduce GHG emissions through measures such as process changes, product reformulation, fuel switching, transitioning to renewable electricity, and investments in carbon removal projects. It will be. It also includes a commitment to reduce remaining emissions to zero by purchasing carbon offsets. Known as carbon credits. Carbon credits are financial instruments in which buyers pay other companies to take steps to reduce their greenhouse gas emissions, and the buyer receives credits for those reductions.