How Do Carbon Credits Influence Corporate Sustainability Practices?

Abstract

Listen

Translate article

Climate change is the pivotal challenge of this modern era, which needs broad sustainability practices in different sectors. Industrial sectors are at the core of climate impact mitigation, considering that these industries belong to the most significant GHG emitters, and one of the critical tools in this fight is carbon credits. Carbon credits allow an organization to offset its GHG emissions through purchase; the latter is generated through specific projects that reduce or avoid GHG emissions. In this paper, the carbon credit issue has become part of corporate sustainability strategies, given their implications for how business is done, incentives, and the challenges inherent in this approach. Given the rise in sustainability goals and regulations, carbon credits foster a better financial foundation and corporate reputation. However, fraud, lack of transparency, and price volatility remain challenging. Critics claim that reliance on carbon credits undermines genuine emission reductions and extends environmental injustices. Case studies on carbon credit use vary from large corporations like Microsoft and Shell to SMEs like Illy. The effective use of carbon credits calls for a balanced mix of direct emission reductions and carbon offsetting that will create significant sustainability impacts. This paper underlines that the full integration of carbon credits within a company-wide corporate sustainability strategy allows the challenges linked to climate change to be comprehensively met.