Mistrust towards corporates buying carbon credits is unfounded, study suggests

10th October 2023

Companies that participate in voluntary carbon markets are outperforming those that do not on a range of climate action indicators, a new study has found.

Published today, the analysis by Forest Trends reveals that companies purchasing carbon credits are eight times more likely to be decarbonising year on year, and three times more likely to have supplier engagement strategies.

They are also four times more likely to have an approved science-based climate target, and the median voluntary credit buyer is investing three times more in emission reduction efforts within their value chain.

Furthermore, these companies are two times more likely to have board oversight of their climate transition plans, and three times more likely to include scope 3 emissions in their climate targets.

The analysis is based on voluntary carbon credit transactions and climate disclosures to CDP by 7,415 organisations, on behalf of 590 institutional investors with a combined $110trn (£90trn) in assets and more than 200 major purchasers with over $5.5trn in procurement spend.

Dr M Sanjayan, CEO at Conservation International, said that those who criticise companies engaged in carbon markets or lagging on the sidelines “should take note” of the findings.

“Carbon credits offer an immediate way for businesses to reduce global emissions right now,” he continued. “Today’s report reaffirms what we’ve long known: carbon credit buyers tend to be leaders in taking climate action.”

Many have criticised carbon credits for giving companies a licence to pollute, while a recent study found that tree planting projects supported by carbon credits can actually damage biodiversity. There are also concerns around a lack of standardisation, integrity and transparency in carbon markets.

However, the researchers found that there has been an uptick in demand for pricier, higher-quality carbon credits, suggesting that companies are willing to pay more to ensure supply-side integrity.

The voluntary carbon market was valued at $2bn in 2021, and industry experts expect it to grow at least five-fold to $10-60bn by 2030.

The study also found that the carbon credits companies are buying represent only a small proportion of overall action, accounting for an average of just over 2% of their total emissions.

Stephen Donofrio, managing director at Forest Trends’ Ecosystem Marketplace said: “Our analysis indicates that corporate voluntary buyers are using science to backstop their investments into a suite of climate solutions, including project-based carbon credits.

“Over the past decade, our market analyses have shown remarkably consistent results: that companies investing in voluntary carbon markets are outperforming their peers across a range of key indicators.”

Image credit: Shutterstock


Subscribe to IEMA's newsletters to receive timely articles, expert opinions, event announcements, and much more, directly in your inbox.

Transform articles

Biodiversity net gain requirements come into force

All major housing developments in England will be required by law to deliver at least a 10% increase in biodiversity under new rules that came into force today.

12th February 2024

Read more

As we approach the 40th anniversary of the Born Free Foundation, co-founder Will Travers OBE tells Chris Seekings how a new approach to conservation is needed to end animal suffering

1st February 2024

Read more

Ajirioghene Samuel looks at some exciting tree-planting initiatives, offering nature-based solutions to climate change impacts

1st February 2024

Read more

The UK should become the first G20 country to mandate financial disclosures on nature to propel widespread adoption by the private sector, according to an influential lobby group.

24th January 2024

Read more

The government is largely “off track” in meeting legally binding targets with nature in danger of “irreversible” decline, according to a highly critical report by the environmental watchdog.

24th January 2024

Read more

Matt Tompsett looks beyond tree planting to the pros and cons of land and sea-based carbon sequestration projects.

15th January 2024

Read more

Media enquires

Looking for an expert to speak at an event or comment on an item in the news?

Find an expert

IEMA Cookie Notice

Clicking the ‘Accept all’ button means you are accepting analytics and third-party cookies. Our website uses necessary cookies which are required in order to make our website work. In addition to these, we use analytics and third-party cookies to optimise site functionality and give you the best possible experience. To control which cookies are set, click ‘Settings’. To learn more about cookies, how we use them on our website and how to change your cookie settings please view our cookie policy.

Manage cookie settings

Our use of cookies

You can learn more detailed information in our cookie policy.

Some cookies are essential, but non-essential cookies help us to improve the experience on our site by providing insights into how the site is being used. To maintain privacy management, this relies on cookie identifiers. Resetting or deleting your browser cookies will reset these preferences.

Essential cookies

These are cookies that are required for the operation of our website. They include, for example, cookies that enable you to log into secure areas of our website.

Analytics cookies

These cookies allow us to recognise and count the number of visitors to our website and to see how visitors move around our website when they are using it. This helps us to improve the way our website works.

Advertising cookies

These cookies allow us to tailor advertising to you based on your interests. If you do not accept these cookies, you will still see adverts, but these will be more generic.

Save and close