The largest voluntary purchasers of carbon credits typically allocate less than 1% of their capital expenditures

Innovative technologies and geopolitical tensions are attracting the attention of companies in the midst of a battle to break down the causes that drive climate change. In the 1990s, carbon credits emerged as a way to mitigate climate change and foster a transparent and efficient global emissions market. Not only does this boom seem to be fading, but these carbon offsets are not related to the optimal environmental performance of major multinationals.

A carbon credit is a certificate that represents the reduction, avoidance, or removal of one ton of carbon dioxide from the atmosphere. While companies claim that these credits help them reduce their environmental impact, there is debate about whether companies that buy these credits decarbonize faster. A comprehensive study of 89 multinationals reveals that companies that buy credit do not have the impact many expected and do not decarbonize faster. Collectively, they retired about a quarter of all voluntary carbon credits in 2022. This finding is compelling: companies that buy offsets do not decarbonize either in their historical performance or in the ambition of their objectives. Carbon credits have been largely irrelevant to corporate decarbonization trajectories, according to the study published in the journal Nature. For most businesses, they are an additional budget, a communication tool, a cash register that can be passed on to customers.

Continue reading news in Cambio16