Why Carbon Credits Are Essential for Voluntary Climate Action
- Laura Ann Lüdtke
- 1 day ago
- 5 min read
Blog by Laura Ann Lüdtke and Vincent Erasmy
When used correctly, carbon credits remain one of the most effective instruments for voluntary corporate climate action. In this blog, Vincent Erasmy, Carbon Competence Lead, and Laura Ann Lüdtke, Senior Key Account Manager, explore how companies can strategically utilize carbon credits and what opportunities arise from doing so.
Many companies ask themselves: Are carbon credits truly a reliable tool for climate action? Our clear answer is: Yes. Achieving the goals of the Paris Agreement requires the use of every available climate protection measure – and companies play a central role in this.
In recent years, the number of companies setting ambitious net-zero targets has increased significantly. However, in many cases, actual emission reductions still lag behind the intended pathways – even though the implementation of decarbonization measures, such as switching to renewable energy, is a high priority in corporate climate strategies. In practice, many companies still face major challenges in achieving the required reductions through efficiency measures alone, particularly regarding Scope 3 emissions.
From our perspective, carbon credits from verified climate projects can be key when it comes to enhancing internal reduction measures with investments in climate action beyond the value chain.
Use Cases for the Effective Deployment of Carbon Credits
How can carbon credits be applied strategically and effectively? There are several ways they can be integrated into corporate climate strategies:
When decarbonization measures are insufficient in the short term, carbon credits can serve as an additional instrument to close the gap and deliver immediate climate benefits.
Companies already on track with their reduction goals can use carbon credits to voluntarily compensate for unavoidable emissions and enhance their positive climate impact.
Once a company reaches a net-zero state, carbon removal credits from verified projects can be used to neutralize remaining residual emissions.
Even after achieving net zero, companies can take responsibility for past emissions through the purchase of carbon credits.
Carbon Credits Enable Additional Climate Action
The SBTi also recognizes in its current draft of the Corporate Net-Zero Standard 2.0 that carbon credits can serve as an effective, complementary measure for implementing net-zero strategies. The new draft introduces a two-tier recognition mechanism, highlighting companies as “Recognized” or “Leadership” when they voluntarily take responsibility for residual emissions early on, for example fusing carbon credits. This approach encourages voluntary action throughout the entire decarbonization journey. For companies under growing pressure from investors and stakeholders to demonstrate short-term progress, this represents a strategic opportunity to position themselves as leaders in voluntary climate action.
To achieve maximum climate impact, we recommend that companies integrate carbon credit purchases into a comprehensive climate strategy, as a supplement to ambitious emission reduction efforts – never as a substitute.
Incentives for Further Emission Reductions
The purchase of carbon credits should be directly linked to a comprehensive greenhouse gas inventory conducted in accordance with established standards (ISO 14064, GHG Protocol), covering all emission sources. If certain sources are excluded, this must be transparently disclosed. The resulting emission balance determines the number of carbon credits to be acquired (the ton-for-ton principle). This ensures that an equivalent climate benefit is achieved – and provides a strong incentive for further reductions within operations and supply chains.
A practical reality check confirms this: 60% of companies purchasing carbon credits demonstrate above-average engagement in emission reduction measures within their own operations and report lower annual emissions than those not using credits.
Scaling Innovative Climate Technologies
Carbon credits help mobilize financial resources for additional climate projects that deploy innovative technologies or nature-based solutions to reduce or permanently store carbon.
A good example is biochar, which stores carbon in solid form for the long term. The development and broader application of such forward-looking carbon removal or carbon sequestration technologies are essential to actively remove CO₂ from the atmosphere. Without voluntary support, these innovations would not be financially viable. In particular, technological CDR (Carbon Dioxide Removal) approaches that are still in early development stages depend on targeted investments to scale and unlock their full potential.
Sustainable Development and Measurable Impact
Supporting verified climate projects helps close the global climate finance gap. Carbon credits channel urgently needed funding into projects and regions with high climate potential, enabling them to better adapt to climate change – especially in the Global South, where emission reductions are often more cost-effective.
Furthermore, carbon credits from verified projects contribute to the UN Sustainable Development Goals (SDGs), generating measurable social and environmental co-benefits beyond emission reductions. They support biodiversity, clean energy, economic growth, and poverty reduction. By investing in carbon credits, companies not only strengthen their climate project portfolios but also enhance their reputation and social impact.
Focus on Integrity, Quality, and Transparency
Expectations for carbon credits are rising – and rightly so. We have observed that the trend shows that companies prefer to support high integrity and proven climate impact when selecting climate projects. Adherence to quality standards and transparency is crucial. Therefore, continuous improvement of project methodologies and certification standards is essential. A key milestone in this context is the introduction of the Core Carbon Principles (CCPs) by the Integrity Council for the Voluntary Carbon Market (ICVCM). These set new benchmarks for quality and transparency, providing clear guidance for project developers and registry operators.
When purchasing carbon credits, companies should ensure that they are certified under recognized standards such as Gold Standard, VERRA, or Puro.earth. Transparent communication and sustainability reporting are equally essential for building credibility and trust.
The Bottom Line: Carbon Credits – A Powerful Contribution to Climate Action
In the current climate crisis, we need every available lever to reduce emissions and advance global climate action. Carbon credits are not a license to emit but rather – when used responsibly – a strategic instrument that can support companies transition toward net zero. Those who understand and apply carbon credits as part of an ambitious, integrity-driven climate strategy can position themselves as leaders in voluntary climate action.
What are carbon credits?
A carbon credit is, strictly speaking, a digital record stored in a publicly accessible registry. It certifies that a specific, verified climate project has reduced greenhouse gas emissions or permanently removed carbon from the atmosphere. Each carbon credit corresponds to one ton of CO₂ equivalent and transparently represents a defined climate benefit.
How do carbon credits work?
Climate projects that meet the quality requirements of the voluntary carbon market are certified according to internationally recognized standards. The emission reductions or removals achieved are required to be verified by independent auditors. Certified projects can issue one carbon credit for each ton of CO₂ reduced or removed, which can then be traded on the voluntary carbon market and purchased by companies.
Questions about how to unleash the power of carbon credits?
Our carbon experts are ready to advise you.
Our authors
Laura Ann Lüdtke
Senior Key Account Manager
Vincent Erasmy
Carbon Competence Lead
