SUSTAINABILITY MANAGEMENT
Rise of Voluntary Carbon Markets
Article Highlights
Explosive growth is expected for voluntary carbon markets (VCMs) in 2022. (Endnote 1).
In 2021, One in three of the largest listed companies in the G20 nations had net zero targets. In 2020, it was one in five. (Endnote 2). A large amount of net zero plans include the possibility of buying carbon offset credits.
According to the world bank, “[g]rowth in voluntary corporate commitments is the main driving force behind increased carbon credit demand.” (Endnote 3)
Carbon commitments are being adopted by a diverse list of companies that include “tech giants, oil majors, consumer brands, and airlines, among others.” (Endnote 3).
As of October 2020, there are “1,565 companies across all continents that had adopted commitments to reduce their emissions to net zero.” (Endnote 4). “The list of companies adopting such commitments is diverse, encompassing tech giants, oil majors, consumer brands, and airlines, among others. About half of these companies have expressly indicated their intent to rely at least partially on carbon offsetting to achieve their targets, with few companies having entirely ruled out the possibility of offsetting.” (Endnote 3).
For example, Shell plans to “purchase 120 million carbon credits each year by 2030.” This number is “more than the entire size of the voluntary carbon market in 2019. (Endnote 5).
Suggested Actions Tasks to help you prepare
Net zero plans are mainstream. Focus on building your company’s net zero plan.
Scope 3 emissions are currently voluntary. That said, It is recommended to include scope 3 emissions in your net zero plan.
Reduce scope 1, scope 2 and scope 3 emissions to reach net zero. If you are not able to reduce scope 1, scope 2 and scope 3 emissions any further, consider carbon offsets in order to obtain net zero.
ENDNOTES:
End Note 1: Net Zero Tracker (https://zerotracker.net/analysis/pr-post-cop26-snapshot/)
Endnote 2: Net Zero Tracker (https://zerotracker.net/analysis/g20-net-zero-stocktake/).
Endnote 3: World Bank, State and Trends of Carbon Pricing 2021 (May 2021), p. 45. (https://openknowledge.worldbank.org/handle/10986/35620)
Endnote 4: New Climate Institute and Data-Driven EnviroLab. (October 2020). Navigating the Nuances of New-Zero Targets.
Endnote 5: Reuters. (February 11, 2021). Shell Turns to Forests and the Earth to Soak up its Emissions. (https://www.reuters.com/article/shell-strategy-carboncapture-carbonoffse-idINKBN2AB19Y).
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