A recent study published in Nature Communications has found that carbon credits have minimal impact on the environmental performance of companies. Our research looked at 89 multinationals that purchased roughly 1/4 of all carbon credits purchased in 2022. The conclusion was clear—buying these credits does not result in more rapid decarbonization.
The report examined the emissions data of these companies from 2018-2023. More importantly, it was laser-focused on their use of carbon credits. Research has proven that when companies invest in carbon credits, they don’t reduce their emissions any faster. In fact, they’re on the same trajectory as those that have no credit purchase at all. Companies mainly spend only about 1% of their capital spending on carbon credits. This is only a very small percentage of their total budgets.
Carbon Credits and Corporate Emissions
The research specifically looked at carbon credits. These credits are the equivalent of a reduction, avoidance, or removal of one metric ton of carbon dioxide from the atmosphere. Using a very specific framework, the researchers dissected each of the 400+ sustainability reports. They further examined self-reported environmental data from corporations in key industries such as oil and gas, automobiles and airlines.
Our new analysis casts serious doubt on the efficacy of this reliance on carbon credits to produce the needed environmental benefits. The companies that bought these credits showed no greater reduction in emissions than companies that did not buy them. That’s disturbing enough, but it’s bad news for carbon credits, which are often touted as one of the main tools in corporate climate strategies.
“Voluntary emission offsetting is not associated with positive corporate environmental performance. Therefore, it is not a reliable alternative to regulatory measures, such as compliance carbon pricing,” – Niklas Stolz et al.
Implications for Corporate Climate Strategies
The CTI findings CTI has important implications for corporate climate strategies. Companies around the globe are diligently striving to achieve their ambitious climate targets. New research casts doubt on the notion that carbon credits are the silver bullet tool to get us there. In order to survive, companies must redefine their go-to-market strategies. They must prioritize actions that make a measurable difference in emission reductions rather than purchase offsets.
The new research illustrates a deeper, concerning disconnect between growing corporate ambitions on climate and their environmental performance. Companies will have to do more, and with greater intensity, to make real, substantive progress on their greenhouse gas emissions.