Carbon Credits: An Overview

To meet national and international net-zero targets, companies need to reduce emissions over time. Such efforts include the measuring of, and reporting on, progress made in this regard for the purpose of showcasing environmental accountability to investors and other stakeholders. Technological advances notwithstanding, some companies may find it prohibitively expensive to meet desired sustainability claims and aims. For example, making cement at industrial scale typically involves a chemical reaction. These hard-to-abate emissions may never be fully eliminated.

In this respect, dealing in carbon credits, and participating in the carbon market, may prove useful. Accordingly, it has become important today for a variety of entities to understand what such credits entail and how these can benefit their respective businesses.