How do carbon credits work for companies?


How do carbon credits work for companies?

When we talk about the amount of “one carbon credit,” you can automatically imagine that this equals one ton of carbon dioxide—or other greenhouse gases—that has been prevented from being emitted into the atmosphere. That’s a significant amount!

Typically, companies emit not just one ton but much more, resulting in a substantial environmental impact and serious climate change. To improve this scenario and contribute to the environment, Canopée develops sustainable socio-environmental projects that generate carbon credits through the conservation of native forest areas in the Amazon. Both companies and individuals can purchase these carbon credits to offset their emissions.

But how does it work in practice?

By purchasing carbon credits, individuals or organizations “fund” a sustainable project that reduces greenhouse gas emissions in the atmosphere. Each program has some main guidelines, whether it’s preserving forests, regenerating deforested areas, generating renewable energy, or managing waste, among other practices.

Beyond just buying carbon credits, implementing a project of this magnitude involves bringing behavioral and process changes into the company. It requires changing the mindset of the company and its team, incorporating ESG concepts into the company’s culture.

An example of this would be replacing fuels used in factories, where the use of “fossil fuels” such as diesel could be changed to renewable biomass (agricultural residues, eucalyptus pellets, etc.).

To be called “zero carbon” or “carbon neutral,” a company needs to undergo a diagnosis first, where all sources of emissions directly responsible for the company are identified to quantify the impact of its operations on the environment. After this mapping, ways to mitigate and/or compensate for this impact are discussed.

For companies with a high emission level and few ways to achieve a short-term reduction, they can purchase carbon credits to offset their emissions while transitioning their modus operandi. This way, even indirectly, they contribute to the maintenance of a sustainable project and balance the level of greenhouse gas emissions in the atmosphere, contributing to sustainable development.

According to Ecosystem Marketplace, the voluntary carbon credit market quadrupled in 2021, reaching $2 billion worldwide. McKinsey expects it to reach $50 billion by 2030. Companies aiming to continue existing and thriving until then should join the race to reshape their production methods and pay attention to the new possibilities in this market, as it has shown several signs of its importance for maintaining life on the planet.

Interested? Request a mapping of your greenhouse gas emissions: