Companies view carbon credits as a critical component of climate action but significant fears over greenwashing are a major barrier to increasing participation in the voluntary carbon market, a survey has found.
The study, which was conducted by Conservation International and the We Mean Business Coalition, gathered opinions on corporate climate action from business managers engaged in sustainability from more than 500 global organisations in the US, UK and Europe.
According to the study, 89 percent of respondents said carbon credits “are important to compensate for residual emissions that organisations are not yet able to eliminate or neutralise”, while 51 percent said they allow them to take immediate climate action alongside ongoing work intended to directly reduce emissions in the longer term.
More than a third of the companies surveyed said they were actively investing in the voluntary carbon market and more than half are considering it as a viable option for meeting climate targets.
A recent analysis from the We Mean Business Coalition found that, if 1,700 of the world’s highest-emitting companies compensated for 10 percent of their emissions through carbon market investments, more than $1 trillion could be mobilised by 2030.
However, when it came to concerns around the voluntary carbon market, nearly half cited fears over greenwashing.
This was closely followed by a lack of regulation and transparency requirements, the difficulty of linking carbon credits “with existing sustainability priorities” and the fear that their use could discourage direct action to mitigate emissions.
For organisations to adopt the use of carbon credits as part of wider sustainability strategies, business leaders said they are asking carbon projects and programmes to clarify how carbon revenues will be used, and for a greater understanding of how carbon projects reduce emissions.
Companies are also actively looking to rating agencies, the Voluntary Carbon Market Initiative (VCMI) and the Integrity Council for the Voluntary Carbon Market (IC-VCM) – which focus on the demand and supply sides of the market, respectively – to address these challenges and help facilitate additional investment in the voluntary market.
Annette Nazareth, chair of the IC-VCM, said: “Without a transparent, high-integrity voluntary carbon market that functions at scale, we won’t stay within 1.5 degrees. Companies’ priority must be to decarbonise their own value chains. High-integrity carbon credits allow them to go further.”
She continued: “We need to find a way to make it easy for investors to recognise and price a high-integrity carbon credit no matter which programme 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. And no matter where on the planet that activity is happening.”
Moving away from carbon credits, the majority of businesses surveyed agreed on the need to accelerate decarbonisation efforts – however, 86 percent cited budget and technological constraints, as well as a lack of consistency and collaboration across their organisation, as major barriers to reducing emissions and meeting targets.