Why carbon credits are becoming a core capital strategy for CFOs

The following is a guest post from Mohit Gupta, CFO of Zefiro Methane and COO of X Machina Capital Strategies. Opinions are the author’s own.

Sustainability leadership is a strategic imperative, not a choice. Consumer expectations are shifting away from vague “green initiatives” toward genuine, verifiable sustainability efforts. Banks and asset managers are increasingly prioritizing businesses with lower carbon intensity. CFOs must act now to demonstrate their company’s commitment to environmental responsibility or risk losing brand loyalty, growth opportunities, capital access and favorable lending terms.

One of the most effective ways CFOs can meet these demands is by integrating carbon credits into their sustainability strategy. These credits are a powerful tool for attracting investment, supporting long-term goals, and staying competitive in a rapidly changing market.

In 2024, 42% of Fortune Global 500 companies explicitly stated their intention to use carbon credits to achieve their climate targets, marking an increase from 40% the previous year. So, if you’re not integrating high-quality, verified carbon credits into your portfolios, you will be left behind.

Let’s dive into why carbon credits should be at the top of your agenda as a CFO and how you can leverage them successfully.

Building a brand image of sustainability

Beyond financial considerations, companies must actively cultivate an image of environmental responsibility to resonate with consumers and stakeholders. A recent survey found that 56% of U.S. consumers say sustainability is a key factor in their purchasing decisions. The younger generations are demanding transparency and accountability from the brands they support.

One study revealed that 91% of Gen Z consumers want to buy from sustainable companies, with 77% willing to pay more for sustainable products and services. Companies that fail to adapt risk alienating this critical demographic. Investing in credible carbon credits allows organizations to showcase their commitment to reducing their carbon footprint, ultimately driving customer loyalty and revenue growth.

Shifting lending practices by banks

As consumer expectations evolve, financial institutions are also adjusting their priorities, with a stronger focus on sustainability. Banks are moving their lending toward companies with lower carbon intensity, a trend that carries significant implications for Fortune 1000 companies.

It’s time for CFOs to reassess their financial strategies to align with this shift because demonstrating a commitment to sustainability can lead to improved access to capital and more favorable lending terms. High-quality carbon credits serve as a vehicle for financing sustainable initiatives while enhancing a company’s standing with financial institutions focused on sustainability.

Investor interests and asset management

The growing focus on sustainability is also reflected in the interests of asset managers and money managers, who are increasingly seeking out companies with strong environmental practices. Carbon credits offer a unique opportunity for companies to engage with investors looking to support environmentally focused projects. By prioritizing the acquisition of verified carbon credits, CFOs can attract investment, reinforce their companies’ commitment to sustainability and ensure long-term value creation for stakeholders.

Understanding high-quality carbon credits

Carbon credits transform emissions reductions into valuable financial assets, offering an essential tool for sustainability-minded CFOs. For instance, a company sealing abandoned wells to prevent methane leaks generates verified credits for every ton of methane avoided. These credits can then be sold to businesses aiming to offset their carbon footprint, creating a financial incentive for environmental protection.

However, as scrutiny of environmental claims increases — highlighted by debates such as those involving the Science Based Targets initiative — the importance of prioritizing high-quality carbon credits cannot be overstated. Verifying the quality of carbon credits ensures that investments drive real, measurable, and lasting environmental benefits while maintaining corporate credibility.

To make sure you’re well-armed to take this step, CFOs can use the following checklist to assess the quality of carbon credits:

1. Registry accreditation: Ensure credits are issued by trusted standards such as Verra, Gold Standard, American Carbon Registry (ACR), or Climate Action Reserve (CAR). These registries provide transparency, third-party verification and robust reporting mechanisms.
2. Additionality: Confirm the project demonstrates additionality — proving the emissions reductions would not have occurred without the initiative.
3. Verification and monitoring: Look for credits that have undergone independent auditing and ongoing monitoring to validate emissions reductions over time.
4. Alignment with SDGs: Evaluate how the project supports broader sustainability goals, such as improving community well-being, conserving biodiversity or enhancing renewable energy access.
5. Transparency and reporting: Opt for credits with publicly available data on project impact, ensuring accountability and credibility.

Navigating regulatory compliance and measuring impact

As regulatory demands for environmental transparency grow, CFOs must ensure compliance to avoid penalties and position their organizations as sustainability leaders. Robust data and metrics are crucial for measuring carbon footprints, but CFOs don’t need to be carbon market experts. Consultants can simplify the process, and resources like the Integrity Council for the Voluntary Carbon Market’s Core Carbon Principles and MCI Carbon Credit Ratings from Morgan Stanley help identify high-quality credits.