From disastrous floods sweeping away homes to crippling heat-waves that put the most vulnerable at risk, we're already seeing devastating change: crop failures are threatening our food supply, while the loss of biodiversity is severe enough to be labelled the
sixth mass extinction.
To achieve striving ecosystems and protect livelihoods on a global level, we have to attack the problem from two ends: dramatically decrease emissions while taking responsibility for those emissions that cannot yet be reduced. How can businesses support this goal today with measurable, meaningful actions? Financing projects that avoid or remove emissions, protect nature and support sustainable development is a powerful tool in any organisation's sustainability tool box. This is where carbon credits come in.
Why should companies compensate for their emissions, today?
Companies have now grasped the urgency of the climate crisis and the opportunity that action brings. Still, the number of commitments they're making to achieve climate neutrality or net zero is still low according to new
research, and the pool of companies with a robust reduction target and clear strategy to get there is even smaller. This is not enough: time is running out and we need urgent action to avoid and reduce emissions globally. Right now. It's also true that any company operating today, even those most ambitious in their efforts to decarbonise, are left with unavoidable emissions, and many have a role, direct or indirect, in social or environmental damage.
Carbon credits are a preferred solution for companies to address these unavoidable emissions and demonstrate maximum climate action. They finance measurable impacts that are certified by credible and independent standards. Consequently, carbon credits have become an essential part of a holistic climate strategy that demonstrates maximum climate action by supporting mitigation and sustainable development beyond companies' value chains*. By purchasing carbon credits a company is putting a price on their carbon footprint. This makes carbon credits an effective decision making tool for financing climate action. With prices of carbon credits predicted to rise in the long term, it makes increasing economic sense for companies to focus on reductions first, meaning only truly unavoidable emissions are compensated for through investing in high-quality projects.
*Beyond-value-chain mitigation represents efforts to reduce carbon emissions that are outside a company's scope 1, 2 & 3 emissions, i.e. outside of its operational control.
How do carbon credits work?
As climate change is a global issue, climate action projects can operate anywhere in the world. They range from protecting threatened forests to providing clean cooking solutions and supporting renewable energy infrastructure. Certified projects generate “carbon credits" for the amount of emissions they reduce or remove: each carbon credit represents the avoidance or removal of one metric tonne of carbon dioxide equivalent (1 tCO2e) from the atmosphere and each has a unique serial number, which is stored on a public registry.
Once a company buys a carbon credit, it is retired within this registry to ensure that it can only be claimed once. By buying these credits, companies can take responsibility for their emissions while financing projects that could not otherwise happen and which contribute to the UN's Sustainable Development Goals. Certification from internationally recognised carbon standards provides assurance that the carbon credits generated from South Pole's portfolio of projects create the positive environmental and social impacts that they set out to achieve.
How do I select which climate action projects to support?
It's common for companies to purchase carbon credits from projects close to their operations where 'close' might mean geographically or relevant to their sector. A consumer goods company, for example, might support a waste handling project or a community-based project. Equally, a food company might finance a project that supports sustainable agricultural practices or clean cookstoves.
By supporting climate action projects, companies address more directly the impacts they create beyond the reach of their value chains. There are a number of different project types available, all of which help to drive the
global transition to a low-carbon world.
What activities are eligible to generate carbon credits?