With 2030 not that far away, if nations and companies are to accelerate towards their net zero targets, voluntary carbon markets have an essential part to play.

The transition to reach 45% carbon reductions by 2030 and net zero by 2050 needs to accelerate. The voluntary carbon market, when used by companies to complement ⁠— not substitute ⁠— the decarbonization of their own operations as they transition to net zero, is one tool that could accelerate action to tackle climate change.

Helping companies to decarbonise must therefore remain paramount, including across their entire value chain.

Many solutions to reduce these emissions, such as renewable energy, electric vehicles, efficient home insulation, low emissions lighting and ground or air source heat pumps, are now moving into the mainstream, and must be financed at scale.

Alongside this, momentum has been increasing in the voluntary carbon market, where companies support low-carbon solutions outside of their value chain and, in return, receive carbon credits that many use to compensate, or offset, some portion of their own emissions.

The 2021 voluntary carbon market was, for the first time, worth more than USD 2 bn, according to Ecosystem Marketplace. It’s a nascent market, but its recent rapid growth is expected to continue — perhaps even accelerate — as corporates increasingly take action on climate change to meet their own net zero targets.

Carbon credit-generating projects, of course, can also provide a huge wealth of other benefits to people and the planet, such as supporting healthy soils and water supplies, whilst also strengthening community land and resource rights, and increasing the income of indigenous peoples and local communities.

Voluntary carbon credits, whilst historically transacted through bespoke bilateral agreements between buyer and seller, can increasingly be bought through specialized carbon credit exchanges and trading platforms.

Given the growth of the voluntary carbon credit market, more established exchanges are looking to launch their own offerings.

In the Middle East, Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, and the Saudi stock exchange plan to establish a voluntary exchange in Riyadh for carbon credits within the region.

No matter how carbon credits are procured, it’s important they are high quality: namely, that buyers can be confident in their climate benefits.

The Integrity Council for the Voluntary Carbon Market, formed in September 2021, is an initiative that seeks to set and enforce definitive global threshold standards for high-quality carbon credits in the voluntary carbon market.

The Integrity Council recently released for public consultation its draft framework for defining a high-quality carbon credit. While a major milestone, reaching agreement across its stakeholders looks likely to continue well into 2023.

Companies should, however, also continue to look to the voluntary carbon credit market to complement their own decarbonization. Focusing on high-quality carbon credits will be key. The Integrity Council may help guide companies in this respect, but given this initiative is still in its early phases, companies will want to ensure they have the expertise to navigate the voluntary carbon market — whether by building their own capability or partnering with others.

The voluntary carbon market can be an incredible force for good that can help us accelerate the transition to a net zero economy. Time is of the essence.

This op-ed was written by Chris Webb (LinkedIn), HSBC’s global head of carbon markets. HSBC’s column on Enterprise appears every second Monday. A version of this article first appeared in the South China Morning Post.