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Carbon credits buyers outperforming peers in climate action: study


Corporates in VCM more likely to have science-based targets

Buyers lead in emissions transparency, accountability

Carbon credits prices under pressure from growing scrutiny

  • Author
  • Eklavya Gupte
  • Editor
  • Manish Parashar
  • Commodity
  • Energy Transition Metals

Corporates that are active buyers of carbon offsets are reducing their emissions faster than peers, leading on key climate transparency, ambition and action efforts, according to a new report released Oct. 10.

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A new study by Forest Trends' Ecosystem Marketplace showed that participation in the voluntary carbon market is a signal that a company is likely already addressing climate change in its direct operations and throughout the value chains.

Critics have said that carbon credits allows emitters like oil and gas companies to continue releasing greenhouse gas emissions while claiming carbon neutrality.

The VCM is currently going through a tricky period as recent criticism over the efficacy of some carbon offsets and projects has led to a steady fall in liquidity and confidence.

The Platts CNC assessment -- which reflects the most competitive nature-based carbon credit prices -- reached $1.90/mtCO2e on Oct. 9, up from a record low of $1/mtCO2e on May 29. Platts CNC averaged $9.55/mtC02e in 2022, S&P Global Commodity Insights data showed.

Accelerating climate action

The report also concludes that voluntary carbon buyers are more likely to have science-based targets to address climate change and those targets are often more ambitious.

"59% of VCM buyers reported lower gross emissions year-on-year related to reduced emissions and/or renewable energy consumption, compared to 33% of companies not participating in the carbon markets," the report said.

"VCM buyers are also 1.3 times more likely to have supplier engagement strategies and spent three times more on emissions reductions activities than the typical non-buyer."

Ecosystems Marketplace is a carbon market intelligence group under the conservation non-profit Forest Trends,

The report has used data disclosed to the CDP by 7,415 organizations on behalf of 590 institutional investor signatories. CDP, formerly known as the Carbon Disclosure Project, is a global non-profit that runs the world's environmental disclosure system for companies and places.

Voluntary carbon buyers lead the pack when it comes to emissions transparency and accountability, the analysis also showed.

"Compared to other companies, they are 1.2 times more likely to disclose their emissions to CDP, and the median voluntary credit buyer disclosed more than 2.5 times the volume of emissions with their Scope 3 reporting than companies not engaged in voluntary credits," it said.

Despite heavy scrutiny on carbon credits markets and allegations of greenwashing, some of the world's key buyers of offsets have continued to place trust in this market, though there are a few such as Delta Airlines and EasyJet that have stopped trading on this market.

"Far from 'buying their way out of the problem,' voluntary carbon buyers are taking advantage of the valuable role carbon credits play as one of the available solutions for value chain emissions that cannot be addressed by reducing Scope 1 and 2 emissions," the report said.