Around the world, businesses are taking drastic measures to minimize their environmental impact, from slashing carbon emissions to utilizing recycled materials to minimizing corporate travel. Carbon offsets have become a major tool for companies looking to reduce their climate impact.
For the industry to achieve its full potential, companies need clarity and transparency in the process of choosing carbon credits. For companies looking to effectively reduce their carbon footprint, there can be concern and confusion over picking the “right” credits – those that actually deliver the impact being paid for. The voluntary carbon markets lack clear standards, which can make it difficult for businesses that want to do the right thing to navigate.
It is essential that companies make major strides in reducing the carbon that they produce. However, there will eventually come a point when organizations have reduced their total emissions as much as possible. Companies then rely on carbon credits which represent the removal or protection of carbon by others.
Companies purchase carbon credits from projects that remove carbon trapped in the atmosphere and protect existing stores of carbon from being released.
For example, the crops of the world’s two billion smallholder farmers naturally remove carbon from the atmosphere, storing it back in the soil. Using sensors, satellite imagery, AI and regular monitoring, this stored carbon can be measured then sold as a carbon credit.
In selecting carbon credits, consider the data:
- What kind of data is provided – is it clear who is responsible for carbon sequestration (ie. smallholder farms) and how they’re doing it (ie. through the crops of their regenerative farms?)
- How is the carbon removal calculated?
- Who is verifying the data – is it a third-party entity?
- Is the carbon data auditable (this is especially important for public companies in light of coming SEC climate disclosure rules)?
Businesses need auditable, transparent climate and social impact data to show their actions to key shareholders. Also, when buying carbon credits, ensure that carbon stewards are being equitably compensated.