12As regulation tightens, investors ask tougher questions, and supply-chain decarbonization pressure intensifies, companies can no longer treat carbon credits as an optional voluntary tool. Their role is being reshaped—from a branding device to a core element of compliance disclosure and net-zero governance.
But the questions follow quickly: what counts as high quality? Are carbon credits a supplementary tool or a substitute solution? If these issues remain unclear, carbon credits will not support a credible climate narrative; instead, they may amplify compliance and reputational risks.
For corporate management, the real issue is no longer whether to use carbon credits, but rather within what boundaries, under what standards, and in support of what kind of decarbonization pathway they should be used.
Net Zero Is Moving from a “Voluntary Commitment” to a “Hard Constraint”
Over the past decade, corporate net-zero commitments were largely driven by brand image, capital-market expectations, and international cooperation requirements. Today, however, regulators, investors, and customers are transforming these commitments from voluntary statements into governance matters that can be scrutinized, challenged, and held accountable.
From the EU to the US, and from the ISSB to markets across Asia-Pacific, one clear trend is emerging: companies can no longer simply buy carbon credits and declare themselves “carbon neutral” or “climate neutral.” What regulators care about more are three things: whether the company has actually reduced emissions, whether the carbon credits used are of reliable quality, and whether the related claims have been adequately disclosed.
What does this mean?
Carbon credits are shifting from a “nice-to-have” to a governance tool that must be explained and verified, directly affecting financing, ratings, and supply-chain access. Market attention is also shifting from whether credits are purchased to what is purchased, why it is purchased, and how it is disclosed.
Asia-Pacific markets are evolving just as quickly. China is expanding its national carbon market and has restarted CCER; Japan is advancing its GX policies; South Korea’s K-ETS has entered a new phase; and Vietnam, Singapore, and Indonesia are all strengthening carbon pricing, disclosure requirements, or market infrastructure. Across different economies, experimentation around carbon-market development, carbon-pricing mechanisms, disclosure systems, and low-carbon transition policy is accelerating. For companies—especially export-oriented businesses—the use of carbon credits is now embedded in a more complex operating environment, where local policy, EU rules, multinational customer decarbonization demands, and financial institutions’ ESG due diligence all interact.
Conclusion: Carbon credits are moving from a voluntary action to an institutionalized tool. The earlier companies establish a clear sense of boundaries and quality, the better they can avoid being forced into reactive catch-up later.
What should companies do?
Incorporate carbon credits into the company’s climate governance framework, rather than leaving them at the branding or PR level.
Conduct a systematic compliance review of existing and future climate claims, especially high-risk expressions such as “carbon neutral” and “climate neutral.”
Establish internal consistency across the company’s decarbonization pathway, credit procurement, and external disclosure, so that different departments do not make conflicting statements.
SBTi’s New Draft Strategy: A Major Shift in the Rules for Using Carbon Credits
The SBTi plays an important signaling role in global corporate net-zero practice. The reason why the draft Corporate Net-Zero Standard 2.0 has attracted so much attention is not only because it updates technical requirements, but also because it sends a clear signal: under certain conditions, high-quality carbon credits are being reconsidered within a more nuanced and conditional discussion framework, moving from being “in principle limited to final residual emissions” into the broader set of tools available for corporate net-zero pathways.
In the past, SBTi took a relatively strict stance on carbon credits—generally not allowing them to count toward a company’s emissions reduction targets, except to offset residual emissions that were genuinely unavoidable at the final stage. The new draft introduces a framework of “progressive responsibility,” under which, provided high-integrity standards and certain conditions are met, the boundaries for credit use may become more refined. Before 2035, and subject to high-integrity requirements, high-quality carbon credits may be used as a supplementary tool in decarbonization pathways, rather than being confined entirely to the “last mile.” At present, however, the new standard remains in draft form and is still under consultation.
The practical reasoning behind this change is not difficult to understand. For many sectors—especially hard-to-abate industries and sectors with complex supply chains—it is difficult in the short term to achieve highly ambitious targets through internal reductions alone. If the rules are too rigid, companies may either set unambitious targets or choose not to act at all. SBTi is clearly trying to strike a new balance between scientific rigor and practical feasibility. The draft also emphasizes multi-path management of Scope 3, separate governance for Scope 1/2, mandatory transition planning, and a five-year review mechanism.
What does this mean?
SBTi 2.0 does not mean “open season for buying carbon credits.” It means companies must explain much more clearly: why they need to use credits, how much they use, until when, and how they will phase them out over time.
Common misconceptions
Misconception 1: SBTi has loosened its stance, so carbon credits can now replace emissions reductions. In fact, the draft emphasizes a supplementary relationship, not a substitutive one.
Misconception 2: Since there is flexibility before 2035, companies can delay transition efforts. In reality, the later internal decarbonization begins, the higher the future carbon-credit costs and compliance risks.
Misconception 3: As long as the credits come from “green projects,” that is enough. What SBTi actually cares about is the quality of the credits, the boundaries of their use, and their consistency with the company’s transition plan.
What should companies do?
Assess early whether the current target system needs to migrate toward the SBTi 2.0 framework.
Present carbon-credit strategy as a standalone component within the transition plan, clearly defining scope of use, procurement principles, caps on proportion, and phase-out rhythm.
Conduct scenario planning for carbon-credit demand after 2030 to avoid being pushed into a high-cost procurement environment later.
Decision-Making Discernment in Net-Zero Frameworks:
Clarify Conceptual Boundaries Before Discussing Procurement Strategy
Before discussing carbon credits, many companies make a more fundamental mistake: they fail to clearly distinguish among carbon neutrality, net zero, and climate neutrality. These may look like mere differences in wording, but they correspond to very different regulatory risks and usage logics.
Carbon neutrality is usually a point-in-time balancing concept. Its scope can be relatively flexible: it may apply to a product, a business unit, or the entire company. Precisely because it can most easily be achieved on paper through the purchase of carbon credits, it has become the area most heavily scrutinized and constrained by regulators.
Net zero, by contrast, is fundamentally different. It emphasizes a long-term pathway: a company must first make substantial reductions in its own emissions and use high-quality carbon removals only to balance the residual, hard-to-abate portion. It is important here to distinguish that carbon credit is an umbrella term that includes both reduction/avoidance credits and removal credits; at the final net-zero stage, however, the emphasis is usually on matching residual emissions with high-quality removal credits. In other words, net zero is not simply about “buying balance,” but rather about a sequenced, orderly, and continuously reviewed long-term decarbonization arrangement.
Climate neutrality is broader still. It may cover all greenhouse gases and involve more complex boundary setting. The problem is not whether it can be used, but that once boundaries are vague and definitions unclear, it can easily be regarded by regulators or the market as misleading language.
Equally important is a proper understanding of Scope 1, 2, and 3. Scope 1 and Scope 2 mainly correspond to a company’s operational emissions and purchased electricity emissions, and are currently the areas most suitable for advancing internal reduction efforts. Scope 3, however, involves the entire value chain, often accounts for the majority of total emissions, and is also the area most difficult to manage—and the most likely to tempt companies into trying to use carbon credits to offset everything wholesale.
If a company fails to seriously address Scope 3, its net-zero commitment is often scientifically incomplete. But if it tries to simply cover Scope 3 through carbon credits, it easily falls into zones of quality controversy and high reputational risk.
What does this mean?
Decision-makers need to build a basic capacity for discernment: claim language determines legal risk, emissions boundaries determine governance difficulty, and carbon-credit strategy must be subordinate to both.
What should companies do?
Align internal definitions and usage scenarios for “carbon neutrality,” “net zero,” and “climate neutrality.”
Discuss, govern, and disclose Scope 1, Scope 2, and Scope 3 separately, instead of masking key issues under vague aggregate expressions.
Before making any external claim, answer three core questions: What is the boundary of the claim? What real emissions reductions have already been implemented? What role do carbon credits play within that framework?
The Priority Logic of Corporate Decarbonization:
Why Carbon Credits Cannot Come Before Emissions Reductions
No matter how regulation evolves, high-quality carbon credits must be built on one prerequisite: the company has already prioritized internal emissions reductions to the greatest extent feasible. Once that decarbonization order is reversed, carbon credits cease to be a tool and become a source of risk.
The first priority is always operational decarbonization—namely Scope 1 and Scope 2. Energy-efficiency upgrades, equipment retrofits, electrification, green power procurement, PPAs, and on-site distributed energy systems are not just routine measures; they are critical levers determining a company’s future dependence on carbon credits and its overall transition cost. At this stage in particular, many of the most cost-effective emissions reductions come not from breakthrough technologies, but from systematic optimization of existing operations.
The second priority is Scope 3 value-chain management. For most manufacturers, FMCG companies, and financial institutions, Scope 3 often accounts for the majority of total emissions. If a company thinks of decarbonization only as “reducing emissions within the factory fence,” its climate commitment will likely have tackled only the easiest part. The truly difficult work lies in identifying high-emission categories, improving supply-chain data quality, pushing suppliers to set reduction targets, and building mechanisms for product carbon-footprint accounting and customer collaboration.
The third priority is hard-technology deployment for hard-to-abate sectors. Industries such as steel, cement, chemicals, shipping, and aviation cannot achieve deep decarbonization quickly. In these sectors, high-quality carbon credits do have transitional value. Even so, their use must be matched to a clear and credible technology roadmap, rather than serving as a substitute for technology investment.
From a time perspective, companies are advised to evolve their carbon-credit strategies in stages: Before 2030, mainly high-quality reduction credits, supplemented by a small share of nature-based removals; 2030–2040, gradually increase the share of removal credits; After 2040, shift more toward highly durable engineered removals to support final net-zero claims. That said, the exact pace should still be carefully calibrated to sector characteristics, regulatory requirements, cost curves, and the company’s transition pathway.
A truly mature company does not treat carbon credits as a year-end financial top-up to “fill the gap,” but instead incorporates them into a strategic resource-allocation system that evolves in step with its reduction pathway.
Common misconceptions
Focusing only on current purchase costs while ignoring future “portfolio switching” costs.
Meeting short-term claim needs while overlooking the steadily rising quality threshold after 2035.
Advancing only operational decarbonization while ignoring supply-chain emissions, thereby widening the gap in the net-zero pathway.
What should companies do?
Map the company-wide decarbonization priority structure: which reductions must be achieved internally, and which gaps may be addressed with carbon credits at specific stages.
Set phased targets for the type mix and usage ratio of carbon credits for 2030, 2040, and 2050.
For hard-to-abate sectors, manage both technology lock-in risk and the cost of waiting, to avoid path dependency and missed opportunities during the transition.
A Framework for Identifying High-Quality Carbon Credits:
Not Every “Carbon Credit” Is Worth Buying
A common and misleading market perception is that carbon credits are highly standardized commodities. In reality, corporate decision-makers rarely face a simple “buy or not buy” question, but rather a question of how to screen and combine them. Against this backdrop, more and more companies are adopting portfolio-based approaches to manage carbon-credit risk. Carbonstop’s high-quality carbon-credit portfolio (CCT, Carbonstop Carbon Tonnes), through project screening, quality grading, and structured allocation, helps companies build a more explainable carbon-credit strategy while keeping compliance and reputational risks under control. In fact, carbon credits may look similar in form, but their underlying quality can differ dramatically. If companies focus only on the “price per tonne” while ignoring whether that tonne of reduction is real, durable, or vulnerable to double counting, what they ultimately acquire may not be an asset but a potential liability.
One of the most representative international frameworks for identifying high-quality carbon credits today is the Core Carbon Principles (CCP) proposed by the ICVCM. Companies do not need to master every technical detail, but by drawing on the CCP and other high-integrity frameworks, they can evaluate procurement options along at least six key dimensions: Credibility of governance – whether the project has clear rules, independent verification mechanisms, and a traceable registry system. Additionality – whether the project would still have happened without carbon-credit revenue. Conservativeness of quantification – whether the claimed emissions reductions may have been overstated. Double counting risk – whether the same reduction may be claimed more than once. Leakage risk – whether emissions reductions in one place cause emissions to rise elsewhere. Permanence risk – how the risk of reversal is identified and managed.
In practice, companies especially need to focus on double counting and permanence. The former directly concerns whether the same tonne of reductions is being used in claims by multiple parties. The latter determines whether the climate benefit purchased today could later be weakened or even lost due to fire, policy shifts, or project reversal.
Meanwhile, the VCMI has further clarified the operational boundaries for companies making external claims based on high-quality carbon credits. Its logic is straightforward: first achieve real emissions reductions, then use credits as a supplement; first establish clear goals and pathways, then make external claims. In other words, even if a company procures high-quality credits, its claims will still struggle to stand if it lacks a credible reduction pathway of its own.
What does this mean?
The value of a high-quality carbon credit lies not only in the fact that the project itself appears strong, but in whether it can withstand independent scrutiny and align coherently with the company’s decarbonization pathway and external claims.
What should companies do?
Use the presence of CCP or comparable high-integrity labels as a baseline procurement threshold.
Build an internal quality-oriented scoring system, rather than making decisions based only on price.
For every type of carbon credit, answer three questions: Is the emissions reduction real? How is reversal risk controlled? Is there a double counting risk?
Understanding the Essential Differences Among Credit Types:
Especially the Risk of Permanence
From a corporate perspective, carbon credits should not simply be understood by project name; they should be classified according to the stability of the climate benefit they deliver. Put differently, one of the most important differences among credit types is how long they can keep carbon “locked away,” and how likely that benefit is to be reversed in the future.
The first category is nature-based reduction credits, such as REDD+ and some early-stage or condition-specific renewable energy projects. These credits essentially represent avoided emissions that would otherwise have occurred and do not necessarily correspond to long-term physical carbon storage. Therefore, the main controversies usually center on additionality, baseline setting, and leakage, rather than permanence in the classic sense.
The second category is nature-based removal credits, such as afforestation, reforestation, blue carbon, and peatland restoration. These credits do remove carbon from the atmosphere, but their risks are equally obvious: fire, pests, extreme weather, and land-use change can all cause the stored carbon to be released again. As a result, these credits have transitional value, but they are difficult to rely on alone for long-term net-zero claims.
The third category is medium-durability engineered removals, such as biochar and enhanced weathering. These credits offer greater stability than nature-based removals while remaining within a cost range many companies can bear, making them an important bridge from traditional reduction credits toward highly durable removals.
The fourth category is high-durability engineered removals, such as DAC, BECCS, and mineralization. These projects can lock carbon away on timescales of hundreds to thousands of years. They are the most certain type of credit for long-term net-zero pathways and are also likely to become the scarcest and most expensive strategic resource in the future.
What does this mean?
Companies should no longer lump different types of carbon credits into a single bucket. Different credits correspond to different stages, claim scenarios, and risk preferences. As companies move closer to final net-zero targets, their credit structures should evolve toward highly durable removals.
Common misconceptions
Believing that low-cost nature-based reduction credits can support net-zero claims indefinitely.
Ignoring the reputational backfire risk that may arise if a project later reverses.
Failing to make strategic preparations in advance for rising prices of highly durable removals.
What should companies do?
At the current stage, allocate a certain proportion of high-quality nature-based credits, but with clear caps and a defined phase-out timeline.
Include medium-durability credits such as biochar in the mid-term transition mix to optimize risk and cost structure.
Evaluate long-term procurement or contracting arrangements for DAC, BECCS, and other highly durable removals as early as possible, rather than entering the market passively when it becomes crowded and expensive.
Final Judgment for Management:
The Value of High-Quality Carbon Credits Lies Not in “Offsetting,” but in “Calibration”
The importance of carbon credits does not lie in replacing emissions reductions, but in connecting real-world constraints with long-term ambition. For companies facing immature technologies, complex supply chains, and long transition cycles, high-quality carbon credits can provide necessary flexibility during the transition, create buffers at critical moments, and serve as a means of addressing the “last mile” in long-term targets.
In practical terms, this also means that companies are no longer merely “buying carbon credits”; they are building a sustainably evolving asset portfolio and management mechanism. Portfolio tools such as CCT are, in essence, a way of front-loading quality screening + structural allocation + pathway alignment, thereby reducing the cost of repeated adjustment and portfolio switching at different stages.
But the premise remains unchanged: carbon credits must serve real emissions reductions, not replace them.
Judging from the current regulatory direction and market trends, the companies that will truly withstand scrutiny in the future tend to share four characteristics: Reduce first, then talk about credits; Build governance first, then make claims; Screen for quality first, then procure; Think about the post-2035 pathway first, then decide today’s allocation.
Carbon credits have never been the “main character” in a corporate net-zero strategy, but they are increasingly becoming an important litmus test of whether that strategy is mature and credible.
Action recommendations
Launch an internal, systematic review of carbon-credit use and related climate claims as soon as possible, to identify high-risk language and potentially low-quality assets.
Within the next 12 months, establish a company-level carbon-credit management policy that defines procurement principles, quality thresholds, applicable scope, and approval mechanisms.
Embed carbon-credit strategy into the company’s transition plan, ESG disclosures, and legal review process, rather than managing it as a stand-alone module.
Make forward-looking plans for nature-based removal and engineered removal credit demand after 2030, so as not to be forced into a future environment of high prices, high pressure, and high uncertainty.
Conclusion
As carbon credits gradually evolve from a “voluntary tool” into a “critical tool,” what companies truly need to build is no longer a simple procurement routine, but a more mature decision-making capability: one that can clearly understand the priority of emissions reductions while accurately defining the boundaries of carbon-credit use; one that can respond to mounting compliance pressure today while also recognizing the long-term direction of climate strategy.
On the road to net zero, high-quality carbon credits have never been a shortcut. But if properly positioned and prudently used, they can become a genuinely strategic tool that continues to create value over time.
It should be noted that requirements for carbon-credit use and climate claims are not fully consistent across jurisdictions, sector standards, and disclosure frameworks. In practice, companies should still make judgments based on applicable local laws and regulations, industry standards, and third-party professional advice.
