Carbon Credits as a CSR Strategy

​Photo by Hoan Ngọc

     Carbon credits were first introduced at the 1997 United Nations Kyoto Protocol, the first global agreement to cut carbon emissions. A carbon credit is a permit that allows the owner, a company, to emit a certain amount of CO2 or other greenhouse gas. This might sound like an undesirable transaction but it actually helps limit net carbon emissions. Imagine a company emits 100 metric tons of carbon in a year and would like to offset those emissions. It can purchase a carbon credit that uses some method of carbon capture to offset 100 tons of emissions. Companies can buy or sell carbon credits – or even create more by funding new carbon offset projects. Carbon offsetting was found to be an effective way to reduce greenhouse gas emissions by reputable studies. The four main types of carbon offset methods are:

• Forestry and conservation: capturing carbon by planting new trees or protecting old trees that would release carbon when cut down
• Renewable energy: investing in solar, wind or hydro energy to help grow renewable energy and decrease reliance on fossil fuels
• Community projects: these help develop energy-efficient technology in underdeveloped areas around the world
• Waste to energy: the process of capturing methane (from landfills, human or agricultural waste or small villages) and converting it into electricity

     Each of these methods offsets carbon damage by creating carbon repair that otherwise may not have happened. When companies or organizations buy carbon credits, they are helping to fund these projects that cannot be funded on their own. Carbon credits can be used for businesses that are required to lower their carbon emissions by legal regulations or for companies looking to improve their corporate social responsibility (CSR).

     Carbon credits are a way for companies to maintain operations while managing greenhouse gas emissions. Participating in carbon credits can help your company in many ways:

• Help reduce your carbon emissions
• Strengthen your CSR
• Improve your social license to operate
• Help you stand out to your stakeholders by differentiating yourself as a sustainable company

     Despite these pros, there are also criticisms of carbon credits. For example, what if the development of wind power in that small village would have happened without the trading of carbon credits? Also, are the carbon measurements accurate? And are we truly offsetting as much as we're emitting? All of the concerns are valid and should be addressed when trading or creating carbon credits. Nevertheless, for small companies starting their sustainable strategies, carbon offsets can be a good option. There are even companies, like Radicle, that help track your emissions, lower your emissions, create carbon credits and trade carbon credits – all in compliance with regulatory and environmental standards. Bottom line? If you want to reduce your carbon emissions, consider carbon credits.