Buy Carbon Credits to Support Climate Action
Supporting additional climate action is an important element of any impactful corporate climate strategy. First Climate offers many opportunities to make quick and effective contributions to global climate action by funding certified carbon reduction and removal projects with carbon credits.
Be a Part of Global Climate Action
By buying carbon credits from high-quality climate projects, your company helps make it possible to implement projects that actively reduce or remove carbon emissions from the atmosphere. First Climate offers a wide range of options to support project-based climate action: from long-term project support to forward contracts and early-stage projects to the exclusive development of your own climate project.
Creating climate benefits on the voluntary carbon market
Voluntarily supporting emission reductions or removal projects has long been an important voluntary climate action tool for many industries and sectors. This is based on trading carbon credits on the voluntary carbon market.
Our Expert
Vincent Erasmy
Team Lead
International Sales
What are carbon credits?
Strictly defined, a carbon credit is a data record which is stored in a specific databank and accessible to the general public. A carbon credit refers to the documentation that a specific climate project, which has been verified according to strict criteria, has reduced carbon emissions or stored carbon in the long term and thus removed it from the atmosphere.
Carbon credits provide transparent and traceable proof of a scientifically defined climate benefit. One carbon credit always stands for one metric ton (or tonne) of CO2 equivalent.
How do carbon credits work?
Only climate projects that meet strict quality requirements for the voluntary carbon market can be certified according to internationally recognized standards. Expected emission reductions or removals are carefully verified by independent third parties. Accordingly, these certified projects can issue a carbon credit for each proven metric ton of reduced or removed carbon. The resulting credits can then be traded on the voluntary carbon market and purchased by companies.
Do carbon credits have benefits?
Carbon credits facilitate funds to selected climate projects. While this does not reduce or eliminate emissions from business operations, this mechanism does make it possible to mobilize funds to countries in the Global South. In comparison to Europe or other industrialized regions, each euro in the Global South can achieve a higher amount of emission reductions or removals. By buying carbon credits, your company creates incentives for the development of emission reduction and removal projects. Without the funding from carbon credits, this would not happen.
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Filling the Climate Finance Gap
The Science Based Targets initiative (SBTi) estimates that at least $4.3 trillion (USD) is needed every year until 2030 to meet global climate goals. This represents a seven-fold increase in currently available finance.
This is why the SBTi recommends that in addition to taking measures to achieve their science-based climate targets, companies should also invest in climate action outside of their own value chains.
Carbon Credits and Net Zero Strategies
Carbon credits also play an important role in the implementation of net zero strategies: The SBTi recommends funding climate projects (Beyond Value Chain Mitigation), as a complimentary measure to their strategy in order to achieve the global net zero target. Your company can elect to support emission reduction projects or carbon removal projects. Once a net zero status has been achieved, the SBTi guidelines allow for carbon credits from carbon removal projects in an amount corresponding to the remaining emissions from direct business operations. However, the remaining emissions may not exceed 10% of the emissions in the first year of the net zero journey.
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The Correct Approach for Claims:
Support Climate Action with Carbon Credits
The question of how to properly present corporate commitment to climate action internally and externally is immensely important. Making the right sustainabilty claim makes it possible to communicate the measures you have taken and your contribution to climate action in a compelling way. With changed conditions on the carbon market however, primarily due to the Paris Climate Agreement's entry into force, claims such as "climate neutral" or "carbon compensated" no longer meet current transparency requirements.
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By purchasing carbon credits, your company mobilizes funds for the implementation of additional climate action measures. And this is exactly how it should be referred to for transparent communication.
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With this in mind, First Climates supports the "Supporting Climate Action" label. This label is compatible with the guidelines of the Paris Agreement and represents a future-proof alternative to previous climate claims. Use the claim and label provided by First Climate to communicate your support for climate action outside your own value chain and make it transparent how you take responsibility.
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Carbon Credit Best Practices
By buying carbon credits, your company is making an important contribution to global climate action. Three principles are important to ensure that your engagement delivers maximum climate benefits:
More compelling reasons to support
climate action with carbon credits:
Integrate carbon credits into a comprehesive climate strategy
Supporting climate action with carbon credits should only be used with other measures, in particular the reduction of a company’s avoidable emissions from its operations and value chain. It is an additional contribution to climate action.
Comply with relevant quality guidelines
To ensure the quality of credits from carbon emission reduction or carbon removal projects, purchased carbon credits must be certified according to a recognized quality standard (Gold Standard, VERRA, etc.).
Account for all relevant emissions
The amount of carbon credits must also be based on the carbon footprint calculation following international standards (ISO 14064, Greenhous Gas Protocol) according to the ton-for-ton principle. If, however, individual emission sources are omitted from the calculation, this must be communicated transparently and made publicly accessible. This ensures there is a equivalent benefit to the climate and also creates incentives for additional reduction measures.
How can companies best use carbon credits?
First Climate COO Mike Hatert answers.
"Companies should pursue ambitious targets and place value on the quality of the climate projects they choose to support."
From First Climate’s perspective, what are the criteria for using carbon credits?
First Climate has defined very clear criteria for using carbon credits. It is particularly important to make it clear that financial support for climate projects are an important addition to any corporate climate strategy—however, it can only be alongside a strategy and cannot replace it. This is already true of support for climate projects, and it will also apply to other areas in the future - for example, to support projects focused on biodiversity preservation with biodiversity credits or comparable instruments. Transparency is crucial when it comes to carbon credits. Companies should also pursue ambitious targets and place value on the quality of the climate projects they choose to support. In our view, the combination of these factors shows a clear pattern of how corporate climate action should be structured, and we advise our clients accordingly when we help them to plan their climate strategy.
What does that mean exactly? What if clients have specific requirements?
We know that every corporate climate journey is highly individual. Our goal is to support our clients on every step of that journey and provide them with the best climate solution for each case. As an example, if a company decides to align its climate strategy with the criteria and recommendations of the Science Based Targets Initiative or another market initiative, we will provide them with all the tools they need for successful certification. Of course, we are always available to provide our own recommendations as well.
Does this also apply to corresponding adjustments?
Yes, absolutely. First Climate is happy to offer carbon credits with corresponding adjustments upon request - provided, of course, that they are even available on the market. In all the current discussions, many overlook the fact that to date there are no carbon credits available for the pre-existing corresponding adjustments. We also see many unanswered questions regarding the concrete application of corresponding adjustments in practice. With this in mind, First Climate currently advises its clients against aligning their climate strategy with corresponding adjustments. Instead, we recommend that clients report the purchase of carbon credits as a contribution to international climate targets, and to refrain from counting these emission reductions or removals toward their own footprint. This approach creates concrete climate benefits without the need for corresponding adjustments.
And what about carbon credits that date back to the Kyoto Protocol? Can these be used to justify a compensation claim?
For the sake of transparency, we believe that it is important to follow a consistent claiming approach. First Climate exclusively supports the claim "Supporting Climate Action" and no longer issues labels with different wording.
