Are Carbon Credits Becoming More Acceptable?

Carbon credits are controversial. With concerns about effectiveness and a lack of transparency, critics are worried that they could be misused for corporate greenwashing. This has led to some companies steering clear and carbon markets standing relatively still. 

However, the World Resources Institute says that carbon removal will be required to counterbalance remaining emissions that cannot be abated on the journey to net zero. Without investment, carbon credits could struggle to scale and truly become an effective mechanism for protecting the planet.

In a report published at the beginning of 2025, MSCI suggested that it expects the “frozen” carbon market to thaw. With increasing corporate climate commitments and evolving market mechanisms, MSCI believes the sector could experience a resurgence by 2030.

"Carbon credits have come a long way since their inception in the late 1980s. From early offset programs to today's dynamic voluntary markets, the path has been shaped by pivotal milestones like the Kyoto Protocol, the EU Emissions Trading Scheme and the Paris Agreement," said Jeremy Davis, Executive Director at MSCI. 

With big companies like SAP, Microsoft and Google not just getting on board with carbon credits, but talking about them, carbon markets could be set to soar.

Read the full story in the first September 2025 edition of Sustainability Magazine.​​​​​​​

What are carbon credits?

Carbon credits differ based on a variety of factors, including market origin, mechanism and approach.

In some cases, carbon credits are used for compliance to meet legally mandated emissions caps, such as in the European Union Emissions Trading System (EU ETS). In others, their purchase may be voluntary. 

Carbon avoidance credits are generated by projects that prevent emissions from occurring like renewable energy installations or forest conservation. Carbon reduction credits reduce emissions compared to a baseline, such as improving industrial efficiency. Carbon removal credits physically remove carbon dioxide or other greenhouse gases from the atmosphere, such as reforestation or enhanced weathering.

Nature-based credits include solutions like forestry, land use, regenerative agriculture and mangrove protection. Technology-based credits include carbon capture and storage, direct air capture, biochar and methane capture. 

Ex-ante credits represent projected future emissions reductions and ex-post credits are issued after the emissions reductions have been verified.

Who provides carbon credits?

The carbon market is diverse. Different purposes, regions and regulatory frameworks have different needs, and the pool of carbon credit providers has grown to match this. Different marketplaces are available with different specialties for the unique requirements of each business.

Climeworks says it crafts “best-in-class” carbon removal strategies, including its own Direct Air Capture (DAC) technology. It works with businesses including the LEGO Group, H&M Group, Morgan Stanley and SAP. All carbon removal solutions, suppliers and projects it works with have been verified or certified by internationally recognised standards.

3Degrees can curate a portfolio of independently verified credits from projects that map to specific goals and purchasing criteria. It says it leads the monitoring, reporting and verification for managed projects and conducts extensive due diligence for partner projects. 

South Pole offers a range of carbon credits including nature-based, technology-based, avoidance and removals. The company says it offers one of the world’s largest portfolios of climate action projects to make an “immediate, cost-effective, strategy-aligned impact on climate change”. 

Agreena offers verified nature-based carbon credits with third party verification and strict adherence to international standards. With carbon stored in more than 4.5 million hectares, it says it runs Europe’s largest soil carbon programme and supports 2,300 farmers. 

Watershed’s marketplace offers climate projects vetted against six key considerations: additionalist, verification, permanence, leakage, catalytic nature and co-benefits. It supports the creation of diverse portfolios with centralised purchase records. 

Carbon credits standards and verification

Voluntary carbon market standards (VCMS) set rules, requirements and methodologies that govern the development, certification and issuance of carbon credits in the voluntary carbon market. These help to ensure credits represent real, measurable, additional and permanent greenhouse gas reductions or removals. There are a wide range of standards and credit issuers available with different focusses, such as nature-based or technology-based.

The ICROA Code of Best Practice sets an overarching code for organisations providing carbon management and compensation services instead of issuing credits. It defines minimum requirements for GHG footprinting and advisory services, transacting and retiring carbon credits, ensuring credits are trustworthy and annual third-party compliance audits.

Verra’s Verified Carbon Standard (VCS) is one of the most widely used standards, providing detailed methodologies for diverse project categories including renewable energy, forestry and waste management. It requires independent third-party audits for all projects. VCS sets the rules for project validation, monitoring and verification alongside maintaining a public registry for transparency. 

The Puro Standard specialises in certifying carbon removal projects such as biochar, bioenergy with carbon capture and storage and other technology-based removals. It has a set of requirements, methodologies and independent verification processes. 

Isometric is a newer standard focussed on technological carbon removal. It emphasises scientific rigour and transparency and verifies projects through independent audits and detailed methodologies. 

SAP’s collaboration with Climeworks

Climeworks and SAP are working together through a multi-million-euro agreement to secure 33,500 tonnes of carbon removal credits. Until 2034, Climeworks will remove CO₂ for SAP through a portfolio of DAC, biochar and enhanced rock weathering, tailored specifically to SAP’s business context.

"Investing in quality carbon removals addresses emissions we can't eliminate directly,” says Sophia Mendelsohn, Chief Sustainability and Commercial Officer at SAP. “Our Climeworks partnership secures high-integrity capacity at preferred rates while protecting against price volatility. This investment also strengthens SAP economically - we can now develop new products that meet evolving customer, partner and regulatory expectations.”

As part of the collaboration, Climeworks has implemented SAP S/4HANA Public Cloud through the GROW with SAP programme alongside SAP LeanIX to help streamline operations, enforce compliance and optimise financial management. Climeworks says that it plans to expand its use of SAP’s sustainability solutions, including the SAP Sustainability Control Tower.

Christoph Gebald, Co-Founder and Co-CEO of Climeworks, says: “Climeworks and SAP share the belief that sustainability is a core element of business strategy. Through this partnership, we are not only advancing carbon removal as a key solution to mitigate climate change-induced business risks but are also embedding it into enterprise technology, making it easily actionable for businesses worldwide. Thereby, companies can build resilience into their operations – turning the shift toward sustainability into an economic opportunity, not a trade-off.”

Microsoft’s plan for carbon credits

The growth of energy-intensive AI and cloud have caused trouble in Microsoft’s climate commitments. While in 2024 it achieved a 30% reduction in Scope 1 and  emissions from its 2020 baseline, its total emissions grew by 23.4%. The company is employing a range of approaches to try and tackle this growth, including carbon credits. 

In the Southern United States, Microsoft has sealed a long-term agreement with Chestnut Carbon to deliver more than six million tonnes of carbon credits over 25 years. This involves the planting of more than 35 million trees. 

Brian Marrs, Senior Director of Energy and Carbon Removal at Microsoft, said: “Microsoft is thrilled to announce that it has entered into a new long-term offtake agreement with Chestnut Carbon, a Kimmeridge company, to purchase high-quality, carbon removal from its afforestation, reforestation, and restoration projects across the southern United States.

“This is one of – if not the – single largest voluntary corporate investments in conservation forestry in the United States. It will deliver 7 million tons of carbon removal over a 25-year period, restore roughly 60,000 acres of land and plant over 35 million native, biodiverse hardwood and softwood trees.”

How Google uses carbon removals

Energy-intensive technologies are causing similar problems for Google’s carbon footprint. Since 2019, its emissions have grown by 51% which is in part due to an increase in electricity consumption. 

In 2024 the company contracted for more than US$100m in carbon removal credits to catalyse removal solutions through a combination of independent purchases and deals contracted through consortium Frontier. 

Its investments are supporting a variety of carbon removal advancements. Restoring carbon sinks, with a focus on rigorous measurement, is supported by Google’s co-founding of Symbiosis, an advance market commitment to set criteria for forestry projects and pool demand from corporate buyers to help projects scale. Terradot has received support from the company, along with other enhanced rock weathering suppliers, to advance the solution’s deployment and improve measurement. 

Randy Spock, Carbon Credits and Removals Lead at Google, wrote in a blog post: “We’re encouraged by our progress, but the journey to catalyse carbon removal is just beginning. In the year ahead, we will continue to expand our support for carbon removal as part of our ongoing effort to find the solutions the world needs and maximise their impact on the planet. We’ll also remain open to other approaches that can help drive rapid, near-term action to mitigate climate change.

“And since Google can’t achieve this alone, we’ll continue to help other players, from companies to academics, work collectively to accelerate the solutions the world needs now and in the future.”