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Accelerating corporate climate finance through carbon markets: overcoming the challenges

New research indicates that companies would substantially boost their climate investments if the corporate net-zero architecture recognizes and rewards investments in transparent, high-integrity carbon credits.  However, they also seek greater confidence in the effectiveness of the carbon credits they purchase, ensuring they deliver tangible and meaningful results.

We Mean Business Coalition partnered with Intercontinental Exchange (ICE) and Bain & Company, to survey 180 executives from 27 countries across sectors including industry, technology and finance on corporate attitudes to the voluntary carbon markets (VCMs).  

Our analysis finds that a lack of recognition and incentivization, coupled with questions over carbon market integrity are holding back corporate climate finance. But if barriers to access were addressed through more rigorous frameworks and regulation, companies would set more ambitious goals. 

If barriers to VCM participation were addressed:

Half of companies not participating would enter voluntary carbon markets, up from 22%

Spending on carbon credits by existing participants would increase by up to 10% in 2 years

More companies would set both near-term targets, up from 32% to 50%, and long-term targets, up from 37% to 56%

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More than 70% of companies surveyed said VCMs allowed them to increase climate action, beyond what they would do if not buying carbon credits. This supports the findings of our previous research with Ecosystem Marketplace in 2023, which found that companies participating in voluntary carbon markets were decarbonizing twice as quickly as those not engaging with markets

Benefits of increasing private sector investment in the VCM

The voluntary carbon market can help to address urgent and underfunded climate priorities, such as protecting and restoring nature and directing capital to climate efforts in the Global South.

In 2022 the voluntary carbon market was estimated to be worth $1.3bn, though our research reveals there is significant opportunity for the private sector to scale new and additional investments.

While decarbonization technologies are developed, buying high integrity carbon credits helps companies to tackle the emissions they are not yet able to cut. Participating in the VCM can allow business to go further, faster, but should be done alongside action to cut emissions across a company’s value chain.

At the 2023 COP28 Climate Summit in Dubai, the We Mean Business Coalition and key players in corporate climate action pledged to work together to develop clear, consistent standards for businesses and an “end-to-end integrity framework” for carbon markets. Meanwhile, efforts led by the Voluntary Carbon Market Integrity (VCMI) initiative and the Integrity Council for Voluntary Carbon Markets (ICVCM) are helping to address recent scrutiny and meet growing demand for a high-integrity carbon market. 

Key findings  

For the complete data and methodology, download the full report (pdf) 

Please note, the below graphs surveyed either participants or non-participants. Participants are companies that buy carbon credits for their own consumption to meet voluntary goals.  Non-participants are companies that do not buy carbon credits for their own consumption to meet voluntary goals. Non-participants may play another role in the VCM (e.g. credit trading) or may not engage with the VCM at all.

 

 

The VCM plays an important role in achieving decarbonization efforts across industries


The majority of companies surveyed (71%) agreed that participation in the VCM allows their company to take additional climate action, which otherwise wouldn’t happen without purchasing carbon credits.

Graph showing companies surveyed where (71%) agreed that participation in the VCM allows their company to take additional climate action

Participants were asked to rate their agreement or disagreement to the statement: Participation in the VCM enables my company to take additional climate action, that goes beyond what it would do if not buying carbon credits.


Investing in carbon markets catalyzes additional action


More than 60% of companies purchasing credits indicate that high-integrity, high-value credits incentivize investment in decarbonization. 

More than 60% of companies purchasing credits indicate that high-integrity, high-value credits incentivize investment in decarbonization.

Participants were asked to select all options that applied in response to a question on how the purchase of high-integrity, high-value carbon credits impact their behaviour.


Lack of recognition is the most common challenging limiting VCM engagement


Companies surveyed identified key challenges they faced when participating in the VCM. Top amongst these was a lack of recognition by standard setters, a lack of clarity around risks and claims and a lack of transparency.  

This graph shows the top five challenges identified by participants – where respondents were able to select up to four responses.


Addressing common challenges would accelerate VCM participation 


If barriers were addressed, twice as many companies would enter the voluntary carbon markets against the current status quo among companies not currently participating in the carbon markets. 

Graph shows if barriers were addressed, twice as many companies would enter the voluntary carbon markets against the current status quo among companies not currently participating in the carbon markets.

The graph shows responses from non-participants, on the likelihood they would begin or resume purchasing carbon credits from the VCM for their own consumption in the next two years, under current conditions ‘status quo’ (left) or if reputational and legal risks were rectified (right).


Climate finance at risk


There is a clear case of ‘use it or lose it’ when it comes to climate finance, with half of respondents saying that in the absence of high-integrity carbon markets, funds would be reabsorbed by the company.  

The graph shows responses from participants only responding to a question about the likelihood that a carbon credit purchasing budget would be used for increased direct abatement /decarbonization efforts (left), or budget savings (right).

The graph shows responses from participants only responding to a question about the likelihood that a carbon credit purchasing budget would be used for increased direct abatement /decarbonization efforts (left), or budget savings (right).

 

 

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