This is a headline finding from a new survey of more than 180 business decision-makers, conducted by the We Mean Business Coalition (WMBC).
The survey took in businesses from 27 countries and a range of sectors including heavy industry, professional services, financial services and digital technology.
It found that most businesses (78%) not already purchasing carbon offsets, or planning to do so, would not consider entering the market. Their main concerns arose from worries that projects would not deliver the carbon benefits promised, thus exposing them to reputational risk and the risk of missing their commitments.
If the carbon credit market was more strictly regulated and had stronger standards for best practice, however, half of non-participating companies would consider entering the offset market.
Moreover, most companies already buying credits would increase their spend. The research forecast a 10% total increase in spend among this cohort within two years.
Several organisations are working to develop and proliferate clear, consistent offsetting frameworks for corporate carbon credit purchasers and standards to increase integrity for credit producers and traders. They include the Voluntary Carbon Markets Integrity Initiative (VCMI) and the Integrity Council for the Voluntary Carbon Market, which last summer pledged to work collaboratively.
Impact on emissions ambitions
Another concern about carbon offsetting is that businesses could purchase offsets to avoid actually reducing their absolute emissions. But a previous WMBC-backed study found that companies participating in voluntary carbon markets are typically reducing their emissions at a quicker pace than those not using offsets.
Seven in ten of the businesses already purchasing carbon credits, or with plans to do so, said this option enabled them to increase their climate-related investments and action. Fewer than one in ten strongly disagreed that offset purchases would be counterproductive.
The survey also found that firms participating in voluntary carbon markets are twice as likely to place an internal price on carbon than those which do not.
A way forward
WMBC’s deputy director of nature-based solutions, Luke Pritchard, said: “It’s clear there’s broad consensus among business leaders that climate action is a strategic priority and carbon markets are an essential tool for delivering on global net-zero goals.
“But our survey showed that even more corporate climate finance could be unlocked by improving private sector confidence in carbon markets with robust frameworks that ensure greater integrity, transparency and recognition of companies going above and beyond.”
The report calls for the swift delivery of a finalised, end-to-end integrity framework for carbon credits. This was promised at COP28, the UN’s most recent annual climate summit, which concluded in December 2023 in Dubai.
Such a framework should include “robust safeguards” to prevent the corporate misuse of carbon credits to the detriment of genuine climate action.
Nations will also need to decide on which bodies should be responsible for regulating the market and enacting enforcement.
Related feature: Why 2024 is a make or break year for voluntary carbon markets