Carbon Markets: a Green Light for Investors
2023 was the warmest year since global records began in 1850, with temperatures 1.35°C higher than the pre-industrial average. With only six years left to cut emissions by 43% by 2030 and limit global warming to 1.5 degrees celsius, it is clear that countries and businesses need to increase their efforts to promote sustainable practices and reduce emissions.
Introducing carbon markets
In a speech at COP28, the UN Climate Change Executive Secretary identified carbon markets as a possible solution to drive down emissions. By empowering businesses to take the lead in promoting sustainable practices, they offer a measurable way to keep track of where pledges end and where real action begins. If done right, they can be a scalable solution to accelerate the pace towards a more sustainable future.
Carbon credits, explained
Carbon credit certificates attest to the reduction of greenhouse gas emissions. Companies can earn them by reducing emissions and can sell those credits to other companies to offset their own, creating a virtuous cycle where emission reduction is not only good for the planet, but also a profitable investment.
In short, carbon markets enlist the forces of supply and demand to drive emission reduction.
The case for investing in carbon markets (smartly)
A recent whitepaper published by Bloomberg suggests that carbon prices are likely to increase as more ambitious goals for offsetting carbon emissions are set and achieved.
Meanwhile, the supply of carbon credits is constrained, and the ability to generate new carbon credits will decrease as new, more stringent regulations come into effect. The factors constraining supply will, in the long-term, be overcome with technological advancement and will help carbon markets scale and gain confidence. In the short term, however, the supply gap is likely to widen and the price pressure to increase.
This means that organisations should seek out high-quality carbon credits sooner, rather than later. Those taking the wait-and-see approach may find themselves forced to purchase increasingly expensive carbon credits to make up for their unavoidable emissions.
Doubts and confusion around carbon markets
While on paper carbon credits are a relatively simple market-based approach to reduce emissions, scepticism persists around the effectiveness of this measure to truly slow down climate change on a global scale.
The line between a box-checking exercise and real, impactful initiatives is fine, and even businesses with the best intentions can struggle to navigate this new realm efficiently. For this reason, it is key for businesses to assess, understand, and plan their carbon offset strategically.
Carbon Credits, the Good Way
GoodZero is committed to empowering our partners with the knowledge they need to have a tangible impact on the collective action against climate change. Carbon credits can be a powerful tool, but they need to be used correctly. They are meant to be used by businesses to offset only their truly unavoidable emissions, and need to come from high integrity initiatives that deliver proven results. For this reason, we take our partners through each step of reducing their emissions - from initial assessment to high-impact offsetting.
Calculate: Understanding a business’ carbon footprint is the first step to reducing its environmental impact. At GoodZero, we use the Greenhouse Gas Protocol to help our partners figure out where their emissions come from - whether it is their supply chain, their operations or transportation - and we advise on the first areas to tackle.
Reduce: Once we know how much carbon a business produces, we work with them to come up with a plan to cut it down. We focus on practical changes that can make a real difference, like saving energy, reducing waste, and using alternative transportation.
Offset: Some emissions can't be avoided, so we help our partners support high-impact carbon offsetting projects. We do so by following the Good Criteria: transparency and measurability.
Impactful offsetting projects: the Good Criteria
We believe that impactful, credible, long-term offsetting projects need to take into account social stability, sustainable development goals, biodiversity, and credit clarity.
By visiting sites, meeting with project developers, and establishing clear guidelines, we enhance projects’ transparency and can assure visibility to our partners. Moreover, visibility doesn’t cease at the initial phase; tangible results require reliability, auditability, and measurability. At GoodZero, we help partners monitor the data across the entire value chain and support them in how they choose to communicate it to their stakeholders.
Navigating Carbon Markets, with GoodZero
Introducing sustainable practices and reducing emissions has become non-negotiable. As more and more reports encourage businesses to invest in Carbon Markets, GoodZero stands ready to empower your organisation to make a real difference in a way that benefits your company and your team, too.
Let’s work towards a more sustainable future, today →