• Strategic Alignment: Maximize the value of your carbon credit purchases by connecting them to long-term sustainability goals.
• Portfolio Approach: Diversify your investments across various project types to mitigate risks and enhance climate impact.
• Long-Term Pricing: Lock in future carbon credits at lower prices to hedge against future supply shortages and price hikes.

A Comprehensive Guide to Carbon Credit Strategy for CSOs

Chief Sustainability Officers (CSOs) are increasingly turning to carbon markets to support their decarbonization efforts. However, without clear objectives and a comprehensive strategy, many organizations find their carbon credit purchases to be mere compliance checkboxes. This guide offers a playbook to connect your carbon credit strategy to real climate impact, helping you get more out of your sustainability budget.

Why Carbon Credits Matter

The voluntary carbon market (VCM) is a unique mechanism for funding climate solutions, offering a fast track for private capital to address the growing climate crisis. As highlighted in Patch’s 2023 Guide, carbon markets can mobilize resources rapidly compared to slower government mechanisms.

However, without strategic goals, carbon credit purchases can become ineffective. This guide, based on insights from Workday’s portfolio and Patch, outlines how CSOs can avoid this pitfall by connecting strategy with execution.

Developing a Carbon Credit Strategy

1. Aligning Strategic Goals:

To truly leverage carbon markets, sustainability leaders need to begin with well-defined goals. Whether for compliance, reducing your carbon footprint, or enhancing your corporate social responsibility (CSR) profile, strategic alignment is critical.

2. Building a Portfolio:

A diversified portfolio approach spreads risks across different types of carbon credit projects, from reforestation to cutting-edge solutions like direct air capture. Projects vary greatly in cost and impact, so blending them can optimize both price and impact.

Long-Term Pricing Outlook

Carbon credit prices are expected to rise dramatically by 2035, with forecasts showing prices exceeding $150 per tonne. Offtake agreements—long-term purchase commitments—are a powerful tool to lock in lower rates today, securing both supply and price stability for years to come.

According to EY Net Zero Center, “Carbon credit prices are forecasted to surge, especially for high-integrity credits,” underscoring the importance of locking in prices now.

Why a Portfolio Approach Matters

The benefits of a portfolio approach go beyond risk reduction. By combining high-permanence credits like enhanced rock weathering and lower-cost options like biochar, organizations can hedge against price volatility while supporting a wide array of climate solutions.

Related Article: ERM Launches Carbon Credit Portal in Partnership with CEEZER to Support Corporate Decarbonization

For CSOs looking to maximize their carbon credit investments, this playbook provides a clear pathway. With strategic alignment, a diversified portfolio, and long-term price security through offtake agreements, organizations can ensure that their carbon credit purchases drive meaningful climate action.

Download the full playbook to start maximizing your carbon credit purchases.