90% of businesses view carbon credits as crucial part of decarbonisation plans
Almost nine in 10 business leaders from across the globe believe that carbon credits will play an important role to help deliver decarbonisation targets in line with the 1.5C limit of the Paris Agreement, but concerns persist around the quality and regulation of carbon markets and how using offsets can be viewed as greenwashing.
A new global survey of more than 500 business leaders, coordinated by Conservation International and We Mean Business Coalition has explored the priorities of businesses seeking to reduce emissions.
The survey found that 92% of businesses view long-term decarbonisation as a priority and 100% of businesses are already working towards these climate targets. Additionally, 79% of business leaders agree that science-based targets are crucial to holding corporates to account and keeping them on track to meet decarbonisation goals.
There are numerous challenges listed in the survey, including budget constraints (cited by 86% of respondents), a lack of collaboration (86%) and technological constraints (84%).
One of the more nuanced issues facing businesses attempting to decarbonise is that of carbon offsets and voluntary carbon markets. These markets collectively surpassed $1bn in value in 2021. Mark Carney’s Taskforce on Scaling Voluntary Carbon Markets is predicting that their scale in 2050 may be up to 160 times larger than in 2020. The fact that net-zero targets now cover 91% of GDP is a strong indication that further exponential demand growth is on the horizon.
The latest survey reveals that 51% of businesses feel that carbon credits will enable them to address climate impacts this decade and reduce emissions in the long-term. In total, 89% felt that carbon credits were an important part of decarbonisation efforts.
One-third of businesses are actively investing in the voluntary carbon market, while 51% view it as a viable option in the future. However, concerns around greenwashing (44%), carbon credit quality (33%) and a lack of market regulation and transparency (38%) are the current barriers to increasing corporate investment in this area.
The We Mean Business Coalition’s chief executive Maria Mendiluce said: “Governments and civil society must collaborate with companies like never before to ensure we halve global emissions in the next seven years.
“It’s encouraging to hear that hundreds of companies know that they need to both cut their emissions as fast as possible while also investing in nature beyond their value chains. Now that there are standards to ensure nature investments through carbon markets are impactful and responsible, we urge all companies to scale up their efforts.”
Separate analysis from the We Mean Business Coalition found that if 1,700 of the world’s highest emitting companies compensated for just 10% of their emissions through carbon market investments, more than $1trn could be mobilised by 2030. We Mean Business state that this is in line with what they consider “best practice” for corporate climate leadership.
The market is starting to become more mature and reliable, through frameworks such as the Integrity Council for the Voluntary Carbon Market, the Voluntary Carbon Market Integrity Initiative, and business-facing initiatives such as the Business Alliance to Scale Climate Solutions and the Natural Climate Solutions Alliance. Some frameworks are also starting to add the crucial voice of Indigenous Peoples and Local Communities (IPLCs) to discussions around quality credits. These include the Tropical Forest Credit Integrity Guide (TFCI).
Commenting on the research, Annette Nazareth, chair of the Integrity Council for the Voluntary Carbon Market, 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 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. And no matter where on the planet that activity is happening. This will be critical to reduce confusion, overcome market fragmentation and give buyers confidence that they are funding projects that make a genuine impact. This is what our Core Carbon Principles are designed to do.”
With the dust now settled on climate COP27 and biodiversity COP15, edie asks experts whether these weeks of international negotiations could mark a turning point in the development of robust carbon markets – or whether concerns over credibility will only get worse. Read the in-depth feature here.
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