Many business leaders see long term-decarbonisation as a priority (92%) and say the responsible use of carbon credits is important to reducing emissions (89%), according to a new survey released on Thursday, January 12, 2023, by Conservation International and We Mean Business Coalition.
The report, “Corporate Minds on Climate Action: The current thinking, the key challenges, and the will to find a way forward”, gathered opinions on corporate climate action from business managers engaged in sustainability from over 500 global organisations in the United States, United Kingdom, and Europe.
It reveals that businesses recognise the urgency to reduce atmospheric emissions, with nearly all respondents (92%) stating that reducing carbon emissions is an urgent priority for their organisations. A large majority (79%) also agree that science-based targets are critical for keeping companies on track, and all (100%) respondents have or are already working towards climate targets.
However, the survey also indicates that while businesses are using all tools available to cut emissions and help keep global temperature rise below 1.5°C, they still face challenges in meeting decarbonisation targets. A vast majority (86%) shared that they see budget constraints, a lack of consistency and collaboration across their organisation (86%), and technological constraints (84%) as major barriers to reducing emissions and meeting targets.
As such, rather than creating an either-or mindset to climate action, businesses are seeking ways to counterbalance emissions by investing in the voluntary carbon market, which corporate leaders recognise has a key role to play in keeping global temperature rise below 1.5°C. Over half of respondents (51%) agreed that carbon credits will enable them to address climate impacts this decade while they also work to directly reduce emissions in the long-term. Nearly all (89%) agreed that carbon credits are important either to compensate for emissions that organisations are not yet able to eliminate, or to balance out residual emissions.
While companies view carbon credits as a critical component of climate action and pointed to a desire to scale action, they also expressed concerns over credible and responsible engagement. With over a third (38%) of respondents actively investing in the voluntary carbon market, and over half (51%) considering it as a viable option for meeting climate targets, businesses cite fears over greenwashing (44%), challenges in evaluating carbon credit quality (33%), and lack of regulation and transparency (38%) as main barriers to increasing investment in the voluntary carbon market.
Overcoming these concerns will be critical to unlocking much needed climate finance in the next decade. A recent analysis from We Mean Business Coalition found that if 1,700 of the world’s highest emitting companies compensated for just 10% of their emissions through carbon market investments, more than $1 trillion could be mobilised by 2030.
This is in line with the best practice for corporate climate leadership as outlined in We Mean Business Coalition’s recently published “Guiding Principles for Corporate Climate Leadership on the Role of Nature-Based Climate Solutions”. The report also reflects Conservation International’s principles for companies looking to invest in natural climate solutions.
For those aiming to realise the potential of and increase confidence in carbon credit markets, progress is already well underway as a number of initiatives have emerged to produce guidance and bring greater transparency to the market. Prominent examples are the work of carbon credit ratings agencies, the Integrity Council for the Voluntary Carbon Market, the Voluntary Carbon Market Integrity Initiative, and business-facing initiatives such as the Business Alliance to Scale Climate Solutions and the Natural Climate Solutions Alliance. Other initiatives, like the Tropical Forest Credit Integrity Guide (TFCI), endeavour to add the voices of Indigenous Peoples and Local Communities (IPLCs) to discussions around quality credits.
Overall, the report shows that business leaders seek to accelerate action during this climate-critical decade and do so responsibly, despite the recognized challenges of long-term decarbonisation. Though businesses also almost unanimously agree that carbon credits are a valuable tool to accelerate immediate climate action, concerns persist. As initiatives continue to advance, businesses are expressing an eager desire to contribute to solving the climate crisis within their means, recognising the benefits of their contributions both to their organisations, and to the world.
Mr. M. Sanjayan, CEO, Conservation International, said: “Climate change is the greatest test of collective action in human history, and a crisis of that scale demands an all-hands-on-deck, all-of-the-above strategy. Carbon credits are proven tool for immediately reducing emissions, while also pursuing longer-term decarbonisation ambitions. And though it isn’t always reflected in the headlines, this study affirms that private-sector buyers are indeed gravitating toward high-quality credits, placing a premium on transparency and accountability.”
María Mendiluce, CEO, We Mean Business Coalition, said: “Governments and civil society must collaborate with companies like never before to ensure we halve global emissions in the next seven years. It’s encouraging to hear that hundreds of companies know that they need to both cut their emissions as fast as possible while also investing in nature beyond their value chains. Now that there are standards to ensure nature investments through carbon markets are impactful and responsible, we urge all companies to scale up their efforts.”
Angela Churie Kallhauge, Executive Vice President for Impact, Environmental Defense Fund, said: “Companies want to make greater efforts to combat climate change, though many struggle to deliver near-term actions to meet their aspirational goals. This survey affords a deeper understanding of corporate perspectives, showing that companies believe it’s urgent for them to take climate action. The survey also shows companies see value in investing in high integrity carbon credits that can accelerate immediate climate action.”
Giulia Carbone, Director, Natural Climate Solutions Alliance, said: “This study comes at a critical time. We need in fact to urgently mobilise more businesses to go beyond the decarbonisation of their scopes 1-3 and invest in the voluntary carbon market and in particular in Natural Climate Solutions credits. Investment in the voluntary carbon market will unlock the additional mitigation actions needed to reach global net zero while there is still time.”
Annette Nazareth, Chair of the Integrity Council for the Voluntary Carbon Market, said: “Without a transparent, high-integrity voluntary carbon market that functions at scale, we won’t stay within 1.5 degrees. Companies’ priority must be to decarbonize their own value chains. High-integrity carbon credits allow them to go further, accelerating climate mitigation beyond their value chain by providing finance to critical climate mitigation activities that do not otherwise meet the risk and return expectations of investors.
“We need to find a way to make it easy for investors to recognise and price a high-integrity carbon credit no matter which program issued it, what kind of credit it is, whether it is based on a removal or reduction, a nature-based solution or an emerging technology. And no matter where on the planet that activity is happening. This will be critical to reduce confusion, overcome market fragmentation and give buyers confidence that they are funding projects that make a genuine impact. This is what our Core Carbon Principles are designed to do.”
