Carbon credit playbook for chief sustainability officers

In 2023, carbon markets were in turmoil with the prices of many types of credits falling dramatically as confidence in the integrity of carbon credits plummeted. But more than that, there was tremendous uncertainty around how to discern credit quality and plenty of confusion around whether and how credits could count toward corporate climate claims. The market chilled, shrinking year-over-year by 4%. Many Chief Sustainability Officers (CSO) were asking “why would you invest in carbon credits?”

Today, they’re asking “why wouldn’t you?”

What a difference a year makes. The first quarter of 2024 saw a big increase in demand for credits, with approximately 55 million tonnes of carbon credits retired in the first quarter, marking the third-highest amount ever recorded. What’s changed?

There are some concrete developments in the regulatory and standards domains, including the release of Science Based Targets Initiative’s (SBTi) Beyond Value Chain Mitigation (BVCM) guidelines, their signals on how to effectively leverage carbon credits to neutralize residual emissions, and the Voluntary Carbon Market Integrity Initiative’s (VCMI) Carbon Integrity Claims. Measurement, reporting, and verification (MRV) continues to advance in terms of technology and scalability, with The Integrity Council for the Voluntary Carbon Markets’ (ICVCM) Core Carbon Principles and associated label providing more credibility at the methodology-level for high integrity carbon credit projects. And governments across Europe and North America are weighing in on when and how corporates should engage with carbon markets from frameworks like the EU’s Corporate Sustainability Reporting Directive and the U.S. Principles for Responsible Participation in Voluntary Carbon Markets to reporting requirements like California’s
AB 1305.

But beyond all that, what’s directly driving this increased dynamism is that sustainability leaders
are becoming more and more convinced of both the business and climate imperatives for carbon
markets. The question CSOs need to answer is how to bring these together to drive climate
action through their organization.

source:

https://www.linkedin.com/posts/greenonomics_carbon-credit-playbook-for-chief-sustainability-ugcPost-7417852617067880448-VP7N?utm_source=share&utm_medium=member_desktop&rcm=ACoAAAtGGkQBsxwMBmX3lEJO8btihnfBCaHqTz4