Procuring high-quality carbon credits - How companies can purchase Nature-Based Carbon Credits to achieve Net-Zero goals | Latest Information | ASUS ESG website, ASUS ESG goal

Since the consensus was reached on limiting global warming to 1.5°C after the COP26 conference in 2021, companies have been competing to declare their net-zero commitments. Planning a net-zero pathway and developing carbon reduction actions have become important materials for companies to communicate their ESG policies and progress to the stakeholders.

Based on international initiatives such as SBTi, there are rigorous definitions and requirements for companies to achieve and announce their net-zero goals. They require companies to reduce carbon emissions as much as possible and use high-quality and permanent carbon credits with carbon removal technology to offset the residual carbon emissions by 2050.

However, there are many types of carbon credits on the market with significant differential prices. Establishing high-quality screening criteria will become an important basis for companies to procure carbon credits.

Nature-based carbon credits are widely recognized as high-quality carbon credits in the market

They cover a wide range of activities, such as afforestation, forest conservation, and farmland restoration. In addition to sequestering carbon through photosynthesis, these types of carbon credits also accumulate natural capital¹, improve forest and agricultural yields, and provide social and economic benefits through human conservation efforts.

For corporations like Apple, investing in and procuring nature-based carbon credits remains an important strategy for multinationals to achieve carbon neutral commitments².

Three Guiding Principles and Eight Steps for Procuring Nature-Based Carbon Credits

To provide guidance for companies in procuring nature-based carbon credits and avoid the risk of purchasing low-quality carbon credits, the WBCSD published "A Buyer's Guide to Natural Climate Solutions Carbon Credits"³ on March 15, 2023. The guide recommends that companies prioritize three principles when procuring nature-based carbon credits: mitigating the impacts of climate change, enhancing biodiversity, and improving the socioeconomic status of local communities.

Furthermore, when developing procurement strategies, companies can refer to the methods suggested in the guide, such as " Strategy & Budget," " Team Selection," " NCS Criteria," " Identify credits," " Due Diligence," Purchase/Contract " Reporting," and " Claims." We suggest that before procuring carbon credits, companies should understand the background of the projects and disclose carbon offset purposes to avoid spending a lot of money and damaging the company's reputation.

How Corporations Can Evaluate and Procure Carbon Credits

From the WBCSD guidelines, there are three key points for companies when procuring carbon credits, as follows:

• Collecting and analyzing project information

  As most nature-based carbon credit projects are in remote areas, it is difficult for companies to conduct on-site investigations and evaluate the pros and cons of different projects. It is recommended that companies first review the Project Design Documents and Monitoring Reports to understand the background and implementation plan of the projects, as well as the local environmental impact and benefits.

• Finding a suitable dealer

  Carbon credit partners can generally be divided into three categories, including project developers, carbon credit retailers, and carbon credit platform providers. Project developers not only execute the project but also received the carbon credits from the carbon credit registries, so they hold all the project's carbon credits. Carbon credit retailers and platform providers accept commission from developers for selling carbon credits, and the only difference between them is the online or offline sales channel. It is recommended that companies who are new to the carbon market and have a small demand purchase from retailers and platform providers. If they have a large demand in the future, they can directly purchase a large quantity of carbon credits from project developers at a lower price.

• Publicly disclosing carbon offset information

  After purchasing and retiring carbon credits, companies should publicly disclose the purpose of the carbon credits to demonstrate their actual environmental compensation actions. Major international carbon credit registries suggest that the companies should disclosure retirement information voluntarily on their public information platform. However, if companies do not intend to declare compensation actions on carbon offset platforms, they can also disclose retirement certificates on their official website for stakeholders to access.

   

¹: Natural capital refers to the natural assets of the world, including land, soil, oceans, air, trees, plants, animals, etc., which are beneficial for life to survive on Earth. Regerence: https://climateassetmanagement.com/

²: https://www.apple.com/

³: https://www.wbcsd.org/