It’s true: We have an urgent problem with climate change mitigation. The 2015 Paris Agreement set a goal of limiting global temperature increase to 1.5 degrees Celsius above pre-industrial levels. It proposed the global community do so by decreasing greenhouse gas emissions as soon as possible through financial investment, technological research and building our capacity for climate mitigation. While these goals require huge transformations, they also open up opportunities for businesses to play a critical role in mitigation.

The voluntary carbon market (VCM) is one of the most efficient mechanisms available to businesses that are looking to channel climate finance into mitigation solutions. The VCM is a decentralized marketplace where buyers interested in voluntarily supporting efforts to reduce or compensate for global warming carbon emissions can find (and fund) carbon projects doing that work. Carbon projects generate emission reductions through natural or technological solutions which are measured, monitored and verified, and then issued in the form of carbon credits (also called carbon offsets). One carbon credit equals one metric tonne of carbon dioxide equivalent, a greenhouse gas emission reduction or removal from the atmosphere. However, the VCM has faced intense scrutiny in the last few months, leading to uncertainty in decision-making for businesses. This is nothing new. Every market in the world carries uncertainty, and the VCM is no different. In the VCM, the uncertainty is two-fold: businesses are uncertain as to whether the carbon credits purchased on the voluntary market will be seen as an “acceptable” route toward net zero, and they are uncertain as to whether carbon credits themselves are making a tangible impact on the environment.

With regard to the first source of uncertainty, businesses are waiting for a signal from other entities and voices to receive guidance on the acceptable use of carbon credits. In the absence of guidance, businesses are often simply proceeding as best they know how: purchasing removals credits for their direct emissions (Scope 1), buying energy from renewable sources for their emissions from electricity (Scope 2), and using either reduction or removal carbon credits for compensating for emissions over which they have no control (Scope 3), like airline travel or employee commuting, for example.

Read the full article about businesses mitigating climate change by Dee Lawrence at Forbes.