Coming after a period of negative coverage for voluntary carbon markets, the research tries to shed light on all aspects of using carbon credits and argues that companies who purchase them are also engaged in reducing their emissions.
The research uses data about investments in carbon credits and Scope 1 and 2 emissions from 102 of the largest business organizations across a variety of industries. With figures covering a long period (2013-2021) and an even split between companies that use and don’t use carbon credits, the research is one of the most compehensive deep dives into the net effect of carbon offseting.
And the numbers do show a clear connection between reducing emissions and utilizing carbon credits.
Companies that bought carbon credits were also reducing their Scope 1 and 2 emissions by 6.2% every year. This compares to a 3.4% emissions reduction rate for those companies that didn’t buy credits.
With these figures showing emission reductions (not net emissions), we understand that companies using carbon credits don’t rely on them as the only meaningful course of action. Reducing and offseting are commonly found working in tandem.
The research also reveals that the financial services industry demonstrates the highest level of emission reductions and the report includes Bank of America and Visa as two examples of decarbonization leaders.
Al Furey, CEO and co-founder of Sylvera commented on the results by saying: “The pace of decarbonisation is not moving fast enough across the board. We need companies urgently pulling all levers available to reduce emissions, invest in protecting nature and fight climate change, and that isn’t happening right now. However, once emissions disclosure regulations come into effect in different regions, like the SEC’s in the US, we expect the increased scrutiny will see activity start to expedite at all levels.”
According to him the industries that will likely see the strongest progress in the short-term are aviation and tech. The former is classified as a hard-to-abate sector but has been priotizing new equipment that generates less emissions in combination with investing in high-quality carbon credits.
Commenting on the supply constraint of high quality carbon offsets and the potential mismatch with growing demand, Furey added: “Right now, the supply of high-quality credits is very limited. Savvy companies know this and are looking upstream. Leveraging experts, such as Sylvera, and, in some cases, their in-house expertise, these companies are looking to shape carbon projects earlier while they’re still in development and before credits to drive higher quality development, or they’re insetting, creating projects within their own operations.”