Firms such as Hong Kong’s Swire that use credits to offset carbon footprint are more likely to see lower emissions, report says

Companies investing in voluntary carbon markets are outperforming their peers across a range of key indicators, data compiler Ecosystem Marketplace’s managing director says

Firms taking part in voluntary carbon markets 1.8 times more likely to be decarbonising on a year-on-year basis compared to those that are not: report

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An offshore wind farm in China’s Liaoning province. A carbon credit is a permit that allows the holder to emit a certain amount of carbon dioxide or other greenhouse gases over a period of time. Photo: Xinhua

Published: 12:00pm, 10 Oct 2023

Companies buying credits to offset their carbon footprint are more likely to report lower emissions and invest more in their reduction, compared with businesses not taking part in voluntary carbon markets, according to a report by data compiler Ecosystem Marketplace.

Businesses engaging in voluntary carbon markets are already addressing climate change in their direct operations and throughout their value chains, and thus reducing emissions more quickly than peers, according to the report released on Tuesday by Ecosystem Marketplace, which monitors voluntary carbon credits trading data globally.

“Companies investing in voluntary carbon markets are outperforming their peers across a range of key indicators,” said Stephen Donofrio, Ecosystem Marketplace’s managing director.

A carbon credit is a permit that allows the holder to emit a certain amount of carbon dioxide or other greenhouse gases over a period of time. One credit is typically equivalent to one tonne of carbon dioxide, and polluters use carbon credits to offset emissions from their operations that they cannot otherwise reduce, to meet their climate targets.

The report analysed voluntary carbon market transactions, and corporate climate disclosures made to the non-profit Climate Disclosure Project by 7,415 organisations on behalf of 590 institutional investor signatories with a combined US$110 trillion in assets and more than 200 major purchasers with more than US$5.5 trillion in procurement spending.

Companies taking part in voluntary carbon markets were 1.8 times more likely to be decarbonising on a year-on-year basis compared to those that were not, according to the report.