A new report from Octopus Investments has revealed that 76% of UK businesses surveyed prefer UK-based carbon credits to meet their net zero targets.
The research, which surveyed 300 senior UK business leaders across various sectors, highlights the increasing role of carbon credits in corporate net-zero strategies. With 73% of firms planning to offset their hard-to-abate emissions using carbon credits, the demand for high-quality and verifiable carbon removal projects is at an all-time high, the researchers claim. The ability to visit and directly assess carbon offset projects within the UK also enhances confidence in their impact, the survey found.
Supported by stringent standards such as the government-backed Woodland Carbon Code, UK credits, especially removal as opposed to avoidance credits, offer greater quality and more robust oversight than credits in other jurisdictions, reducing greenwashing risk and making them attractive to corporate buyers, according to the study.
Octopus Investments is a major player in the UK carbon credit scene, actively investing in projects that generate credits, though the company has not publicly quantified the specific level of its exposure. A key component of their strategy is the partnership with Treeconomy—a firm specialising in monitoring and verification technology that integrates satellite-based analytics into reporting workflows.
Transparency and greenwashing risk have long been the bane of the voluntary markets. Octopus Investments sees carbon credits as vital for hard-to-abate sectors, advocate for better standards and what it calls “Voluntary Carbon Market 2.0”, which includes a focus on higher quality removal credits.
Octopus Investments’ thesis is that removal credits, which physically remove carbon dioxide from the atmosphere, represent an opportunity to provide measurable environmental impact and align corporate investments with national and global sustainability goals. This is opposed to avoidance credits, which focus on preventing future emissions and often fail to deliver tangible reductions.
Avoidance credits account for 96% of the global voluntary market.
KEY FINDINGS:
- 92% of senior decisionmakers are confident that their organisations will meet their net zero targets
- 73% of organisations are planning to offset their hard-to-abate emissions using carbon credits
- 64% of senior decisionmakers say their companies have already bought carbon credits
- 76% of senior decisionmakers would be more likely to buy carbon credits if they were in the UK
- 86% of organisations have net zero targets in place, with the most common approach (39%) aiming for net zero by 2035. The second most popular target is the more pressing target of 2030 (33%), followed by 2040 (19%).
Knowledge gap
With 92% of UK business leaders confident in their net-zero targets, the report highlights a crucial next step: closing the knowledge gap and strengthening trust in the carbon market. Only 42% of respondents could accurately define what carbon credits are, and even fewer understood the distinction between removal and avoidance credits.
Regarding the obstacles to UK businesses buying carbon credits, the leading factor cited was the lack of understanding around credits (30%).
“Knowing the difference between carbon removal and carbon avoidance is key when the data shows that 64% companies have already started buying carbon credits,” the researchers write. “If this figure is considered alongside the knowledge gap it becomes clear to see why past scandals have arisen. It has left businesses vulnerable to missteps, relying on lower-quality credits that risk accusations of greenwashing or failing to deliver meaningful environmental impact.”
Mike Toft, senior fund manager at Octopus Investments, said: “This report emerged from our firmly held belief that businesses need access to high-quality, traceable credits that align with their sustainability goals and the UK government’s legislated net zero target of 2050.”
Institutional investor involvement
Asset owners have two reasons to purchase carbon credits: for speculation (Bloomberg NEF’s most bullish scenario predicts a price of $238 per ton in 2050) or for offsetting their own emissions, especially those “hard-to-abate” emissions the removal of which will be essential to get them over the net zero line.
Yet to date, corporates, especially big tech companies with increasingly power-hungry data centres, have been the biggest buyers of carbon credits. Pension funds, insurance companies, and sovereign wealth funds have not matched the enthusiasm of tech giants like Microsoft, Google, and Amazon, which often commit to buying large volumes to offset emissions.
Notable exceptions include Canada’s CPP Investments, which has engaged in multiple initiatives involving carbon credits, such as partnering with Conservation International, and Temasek, which is bolstering Asian efforts to support the development of carbon markets through platforms like GenZero.
“Pension funds tend to invest in carbon credits as a by-product as part of their wider forestry strategy,” said Gustave Loriot-Bosreup, founder of Compass Insights.
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