Over 90 percent of business leaders are prioritizing long-term decarbonization — and 89 percent believe carbon markets will play a key role, according to a recent survey of 500 sustainability managers conducted by Conservation International and the We Mean Business Coalition.
A third of the business leaders surveyed are already investing in a voluntary carbon market, while over half are considering carbon credits as an option for the future.
Carbon markets allow carbon-emitting companies and individuals to offset their greenhouse gas emissions through the purchase of carbon credits. These credits are meant to be tied to certified emissions reductions from projects designed to reduce, or in some cases remove, greenhouse gases from the atmosphere. Credits are often from renewable energy projects, such as wind and solar installations, and nature-based solutions like reforestation and land restoration.
Carbon markets and credits have come under intense scrutiny in recent years due to lack of oversight and regulation. Companies and governments have been accused of greenwashing, as certain entities created fraudulent carbon credit programs that accepted payment, but never implemented carbon reduction projects. Other critics maintain that the carbon market allows companies to continue emitting greenhouse gases instead of finding methods to avoid emissions in the first place.
A recent investigation from the Guardian, Die Zeit and SourceMaterial found that more than 90 percent of rainforest carbon offset credits from a leading provider are likely to be “phantom credits” that do not represent actual greenhouse gas reductions, adding more fuel to the skepticism.
Net-zero targets represent more than 90 percent of global GDP, and the vast majority of business leaders believe that carbon credits are a critical piece in the global decarbonization puzzle.
Over 80 percent of the business leaders surveyed by Conservation International and We Mean Business say they would like to accelerate their decarbonization plans beyond credits or offsets. They claimed to face barriers such as budgetary constraints, technological limitations, lack of collaboration, concerns about greenwashing, lack of transparency and regulation in the carbon market, and the quality of carbon credits available, which held them back.
To overcome some of the roadblocks and confusion around carbon credits, businesses are increasingly relying on carbon credit ratings agencies such as the Integrity Council for the Voluntary Carbon Market and the Voluntary Carbon Market Initiative. Carbon ratings agencies help ensure the integrity of the carbon market through robust oversight, as well as stewarding a consistent taxonomy for businesses making carbon reduction claims.
"Without a transparent, high-integrity voluntary carbon market that functions at scale, we won't stay within 1.5 degrees [Celsius]," Annette Nazareth, chair of the Integrity Council for the Voluntary Carbon Market, said in a statement. "Companies' priority must be to decarbonize their own value chains. High-integrity carbon credits allow them to go further, accelerating climate mitigation beyond their value chain by providing finance to critical climate mitigation activities that do not otherwise meet the risk and return expectations of investors. We need to find a way to make it easy for investors to recognize and price a high-integrity carbon credit no matter which program issued it, what kind of credit it is, whether it is based on a removal or reduction, a nature-based solution, or an emerging technology."
Tackling challenges in the carbon market is urgent to the activation of climate finance. Another recent report from the We Mean Business Coalition found that if the world's top 1,700 emitting companies purchased carbon credits for just 10 percent of their emissions, more than $1 trillion would be activated for climate finance by 2030.
"Climate change is the greatest test of collective action in human history, and a crisis of that scale demands an all-hands-on-deck, all-of-the- above strategy," Dr. M. Sanjayan, CEO of Conservation International, added in a statement. "Carbon credits are [a] proven tool for immediately reducing emissions, while also pursuing longer-term decarbonization ambitions. And though it isn't always reflected in the headlines, this study affirms that private-sector buyers are indeed gravitating toward high-quality credits, placing a premium on transparency and accountability."
The challenges to decarbonization are myriad, and the carbon marketplace is not yet ideal. However, many business leaders still feel a functional, scalable carbon credit system could accelerate the reduction of carbon emissions, perhaps just in time.
Image credit: aiokr chen/Unsplash
Mary Riddle is a writer and sustainability consultant based in Florence, Italy. As a former farmer and farm educator, she is passionate about regenerative agriculture and sustainable food systems. Currently, she and her husband also own and operate Italy in Season, a subscription box company with a mission to support small-scale Italian artisans and traditional craftsmanship.