Carbon credits are moving up the boardroom agenda
Over the past six years, climate commitments have quietly become a mainstream feature of corporate strategy. Since 2019, the number of Fortune Global 500 (FG500) companies with at least one climate commitment has tripled, rising from 24 per cent to 72 per cent. Collectively, these companies represent more than a third of global GDP.
But delivering a net zero target is fundamentally different from setting one.
Even after investing heavily in renewable energy, operational efficiencies and supply chain decarbonisation, many emissions remain difficult, costly or impossible to eliminate entirely. At the same time, the climate solutions needed to address those emissions – from forest protection and restoration projects to carbon removal technologies – require significant capital to scale.
The carbon market has emerged as one mechanism to channel finance to these solutions and it is increasingly central to how large companies plan to meet their long-term climate commitments.
Over the last seven years, since Climate Impact Partners started its FG500 reporting, it has seen climate commitments advance from carbon neutral to net zero. Our analysis of the FG500 found that companies with net zero commitments are 11 times more likely to use carbon credits than those without them.
This means that more companies are now transitioning from short-term neutrality pledges toward long-term operational strategy, recognising that having such a strategy transforms supply chains and business models.
As the carbon market becomes more important to delivering corporate climate commitments and wider operational resilience, it means that the conversation at the Board level now needs to evolve, especially if companies are applying the same financial discipline to carbon purchasing that they would to any other investment decision in order for them to deliver value.
However, most are not, and that gap is becoming a strategic liability for the Board.
Companies routinely spend tens or even hundreds of millions of dollars on operational infrastructure, technology, acquisitions and long-term supply agreements. Finance teams build forecasts, stress-test assumptions and evaluate future risks and returns before approving those investments. Yet, carbon purchases of a similar scale often receive far less scrutiny, and this needs to change quickly, particularly with growing compliance obligations, increasing investor pressures, and growing consumer expectations on corporate social responsibility.
The good news is that organisations do not need to invent new frameworks to solve this problem. Capital budgeting frameworks, net present value analysis and portfolio management techniques are standard practices for evaluating long-term investments under uncertainty. Carbon offtake agreements should increasingly be approached in the same way.
An offtake agreement may appear more expensive than purchasing credits on today’s spot market. However, that comparison can be misleading. The relevant question, Boards should be asking, is whether the agreement holds value against expected future prices, supply constraints and the strategic benefits of long-term certainty for their operations. Viewed through that lens, carbon offtakes begin to look less like annual sustainability purchases and more like the long-term supply agreements companies use elsewhere in their operations.
Our recent partnership with Aviva Investors on Llanos Vivos, a large-scale afforestation project in Colombia, is one example of what this looks like in practice. Aviva structured its investment through a dedicated Carbon Removal Fund, receiving rights to future credits in return for upfront capital, exactly the kind of long-term, investment-grade thinking the broader market needs to adopt.
As Genevieve Ding of JPMorgan recently put it, investors do not avoid risk; they avoid ambiguity. The most sophisticated carbon buyers are already applying these approaches, moving away from opportunistic spot purchases and towards diversified, long-term supply strategies that balance project types, geographies, delivery timelines and risk profiles.
This is precisely where CFOs and CSOs working in closer alignment can unlock the real value for their business. Carbon offtake agreements structured with the same rigour as any major supply contract can reduce the cost of meeting climate commitments, hedge against future price increases by locking in supply today, and position organisations ahead of tightening compliance requirements.
The carbon market is maturing rapidly, and demand for high-integrity credits is growing. The organisations that build considered, long-term carbon strategies now will be meaningfully better positioned than those that treat it as a procurement afterthought.
This approach should now prompt deeper discussions from every CEO, CFO and CSO in their boardrooms. Are companies buying carbon simply to meet next year’s target, or are they building a long-term carbon strategy capable of withstanding the same scrutiny as every other major investment decision they make? And are they treating this as part of their wider resilience planning and infrastructure capability?
The time to bring your carbon strategy into the boardroom is now. Subject it to the same rigour as every other long-term investment decision. Build a portfolio of future supply that reflects your climate commitments and your operational ambitions, and start before the window to do so narrows further.
