The call for climate action is louder than ever—and businesses are under growing pressure to act. From shifting regulations to ESG-driven investor demands, carbon emissions are no longer just an environmental issue—they’re a strategic one.
While reducing emissions at the source is essential, many organisations face practical limitations in achieving this immediately. That’s where carbon credits offer an opportunity—not just to offset residual emissions, but to support global decarbonisation efforts while staying competitive and financially efficient.
This article explores how carbon credit strategies can help your business move closer to net zero, reduce costs, and strengthen its sustainability performance in today’s evolving economy.
Table of Contents
What Are Carbon Credits and How Do They Work?
Carbon credits are certified units that represent one tonne of carbon dioxide (or its equivalent) that has been reduced or removed from the atmosphere. Businesses can purchase these credits to compensate for emissions they cannot yet avoid—typically Scope 3 or supply chain emissions.
There are two main markets:
- Compliance markets, where governments regulate emissions (e.g. the EU Emissions Trading System), and
- Voluntary Carbon Markets (VCM), where companies act proactively to meet internal climate targets.
Malaysia’s own Bursa Carbon Exchange (BCX) is gaining traction, offering a transparent platform to trade high-quality, locally sourced credits. The momentum is real—and growing.
Three Ways Carbon Credits Help Decarbonise
- Addressing Hard-to-Abate Emissions
Not all emissions are easy to eliminate. For sectors like logistics, agriculture, or heavy industry, carbon credits can help manage residual emissions while long-term technologies and transitions are underway.
- Supporting Real Climate Solutions
By purchasing high-quality credits, companies can fund projects that genuinely remove or reduce carbon—such as forest conservation, renewable energy, and peatland restoration. These initiatives often come with added social and environmental benefits, making your sustainability story more meaningful.
- Supporting Interim Climate Action During Decarbonisation Transitions
While the priority should always be to reduce emissions at the source, carbon credits can play a complementary role in supporting interim climate action. For businesses still scaling internal reduction efforts—whether due to technological, operational, or financial constraints—high-quality offsets may help maintain progress toward climate goals. However, this approach should be part of a broader strategy that prioritises measurable, long-term decarbonisation.
How Carbon Credits Support Cost-Efficient Emissions Management and Financial Resilience
- A More Affordable Route to Net Zero
Complete decarbonisation is not always feasible in the short term. Carbon credits can act as a cost-effective bridge, allowing businesses to meet interim climate targets while transitioning their operations.
- Unlocking Green Finance Opportunities
Sustainability is increasingly tied to financial performance. Companies with credible emissions strategies—especially those incorporating verified offsets—are better positioned to access green loans, ESG-linked financing, and sustainability-focused investment.
- Enhancing Operational Flexibility in Carbon Management
Carbon credits allow businesses to adjust their decarbonisation strategies more flexibly. When operational changes or capital upgrades are delayed, verified credits offer a way to maintain alignment with emissions targets without derailing sustainability commitments or absorbing immediate financial strain.
Case Studies: Real-World Applications
Energy companies continue to dominate the carbon market. Shell and Microsoft remained the top carbon offsetting companies in 2024, each adopting distinct strategies that reflect their corporate priorities and approaches to climate leadership.
Shell: Scaling with Affordability and Volume
In 2024, Shell retired approximately 14.5 million credits, focusing mainly on forestry and land-use projects—representing 9.4 million tonnes of carbon avoided—and around 2.4 million renewable energy credits. This strategy prioritises cost-effectiveness, with credits averaging US $4.15 per tonne, and aligns with Shell’s goal of halving operational emissions by 2030 and achieving net zero by 2050. While this approach scales quickly, it has attracted scrutiny regarding the climate impact of certain forestry credits.
Microsoft: Investing in High-Impact Removal
Also in 2024, Microsoft retired 5.5 million credits, with nearly 80% allocated to bioenergy with carbon capture and storage (BECCS) projects—primarily a major partnership with Stockholm Exergi in Sweden reflects its ambition to be carbon negative by 2030, though at a higher cost—averaging US $189 per tonne. Microsoft’s deep investment in carbon removal technology and higher-quality credits underscores the trade-off between impact and cost.
These examples illustrate two valid but different strategic approaches: Shell emphasises scale and affordability, while Microsoft prioritises innovation and permanence. Both demonstrate how carbon credits support net zero aims, albeit along different pathways.
Strengthening Competitive Advantage
Forward-thinking companies are not only mitigating emissions but also gaining a commercial edge. Carbon credit strategies can support:
- Regulatory readiness: Avoiding future penalties or limitations in carbon-regulated markets
- Reputation building: Demonstrating responsible climate action to stakeholders and the public
- Investor and customer trust: Appealing to ESG-driven capital and climate-conscious buyers
- Strategic partnerships: Meeting the procurement expectations of multinational and sustainability-focused clients
Use with Integrity: Avoiding Common Pitfalls
While carbon credits are powerful tools, they must be used responsibly. Key considerations include:
- Avoiding greenwashing: Be transparent about what your credits offset, and do not overstate your climate contributions
- Ensuring credit quality: Work only with independently verified, high-integrity projects
- Aligning with long-term decarbonisation: Use credits to complement—not replace—direct emissions reduction
Used strategically and with care, carbon credits can enhance both environmental and financial performance. Misuse, however, can undermine trust and credibility.
Carbon credits are not a shortcut to net zero—but they are an essential component of a well-rounded decarbonisation strategy. When applied with rigour, transparency, and alignment to broader climate goals, they can support emissions reduction, cost management, and long-term business resilience.
In today’s fast-evolving regulatory and investor landscape, businesses that act early—and act wisely—will be best positioned to lead in the low-carbon economy. But strategic action starts with understanding.
To explore this topic further, we invite you to join our upcoming webinar on 10 July 2025, featuring the CEO and Founder of InnoBlock Technology Limited, Kevin Ng for an in-depth discussion on “Are Carbon Credits Legit?”.
Webinar
Are Carbon Credits Legit?
In this focused discussion, you’ll gain clarity on how carbon credits function, what standards govern their legitimacy, and how blockchain technology is enhancing transparency in carbon markets.
For those ready to take the next step, our public workshop “Mastering Carbon Credit Investment from Concepts to Implementation” on 31 July 2025 will offer a practical roadmap to help you assess opportunities, mitigate risks, and start your carbon credit journey with clarity and confidence.
Learn more about the public workshop and register now
Public Workshop
Mastering Carbon Credits Investment from Concepts to Implementation
Join our public workshop to master carbon credit investment. Learn how to assess credit quality, navigate markets, and integrate carbon credits into your net zero strategy effectively.