How to build a credible carbon credit portfolio

Once viewed by some as a 'Wild West' where credibility and transparency were in relatively short supply, the global market for carbon credits has undergone a major transformation in recent years, as standards and regulatory frameworks have worked to address concerns over the ability of projects to deliver promised emissions savings.

Indeed, the value of the global voluntary carbon market (VCM) is estimated to have risen six per cent last year to surpass $1bn mark for the first time, according to carbon data specialist Sylvera, with corporate investors pouring billions of dollars into new carbon removal projects. The VCM appears to be leaving its difficult teenage years behind, and entering an exciting new phase of maturity and opportunity.

But while corporate confidence in the market may have improved considerably, leading to increased demand for high integrity credits, for many businesses the VCM remains a relatively new and still complex component of their wider climate strategies. 

For growing numbers of businesses in 2026, therefore, the key question is: how can they to build up a credible portfolio of carbon credits that supports rather than undermines their wider decarbonisation efforts, bolsters their short and long-term resilience, and stands up to growing scrutiny from consumers, customers, and stakeholders?

It was a question that stood at the heart of BusinessGreen's latest online discussion last week, hosted in partnership with Ecologi and titled Navigating the carbon credit maze: How to build a portfolio that stands up to scrutiny, which explored a raft of crucial developments, initiatives, and standards in the fast-evolving market, from increasingly influential guidance, such as the Oxford Principles and the SBTI's new Corporate Net Zero Standard, to balancing investment in carbon credits and decarbonisation efforts, and many of the risks, challenges, and opportunities in between.

Sam Jackson, director of climate science and impact at Ecologi, set the scene for the discussion with a succinct summary of why the carbon credit market remains so important.

"Fundamentally, on a functional level, what it is designed to do is to help accelerate and reduce the cost of decarbonisation globally," he explained. "For businesses, what that means is that it's a market-based vehicle for businesses to fund projects around the world which can either reduce, remove or avoid greenhouse gas emissions. That could be from tech-based means or the conservation or restoration of nature, and it really provides a vehicle to move funding from where it is to where it isn't.

"It is a market like any other, which means that carbon credits have a price... But the overall aim is to try and drive funding to projects around the world that are going to help solve the climate crisis."

As a climate tech platform and consultancy which works with thousands of businesses to support them on their 'climate journey' - from measuring emissions and setting science-based targets to implementing CO2 reduction efforts and investing in carbon credits - the firm is well placed to offer a broad view of the market as a whole, from supplier to buyer and beyond. Ecologi also offers guidance and support for companies looking to build a bespoke credible carbon credits portfolio, starting with a free 30-minute advisory sessions with its expert team.

One of the many UK-based companies Ecologi has worked with on its carbon market strategy is Bytes Technology Group, a FTSE 250 firm with over 1,300 employees, which works with major tech firms such as Microsoft and Adobe to provide software and hardware to a range of clients.

As Lisa Prickett, group sustainability manager at Bytes Technology Group, explained, the company first embarked on its carbon credit journey shortly after its public listing in 2020 and it has therefore seen first-hand how the market has evolved in recent years.

For Bytes Technology Group, the initial interest in purchasing carbon credits came from querying "how do we do more than just reduce emissions?" but it has since expanded from there, according to Prickett.

"Obviously reducing emissions is our focus, but I think it is key to add that extra bit where we are removing carbon or avoiding it, so we're investing in projects that are nature-based or community-based," she explained. "I think it's evolved over time for us. We initially went down the 'carbon neutral' route, but obviously that's changed, and actually as we've expanded our emissions reporting, that's no longer relevant. Now it's more about aligning it with our carbon strategy and our planet strategy as well - so they do have buy-in for that, thankfully."

Science Based Targets initiative's new Corporate Net Zero Standard

Bytes Technology Group is aiming to achieve net zero by 2040, backed by interim targets to reduce its Scope 1 emissions by 60 per cent by 2030/31 and halve its Scope 3 emissions by the same date, both compared to a 2022/23 baseline. It is also aiming to cut its Scope 2 emissions by 100 per cent by 2028/29. 

All these goals have been validated by the Science Based Targets initiative (SBTi) - which is widely seen as the 'gold standard' for corporate climate goals, and is expected play a key role in how corporates approach the carbon credit market going forward. That is in part because the SBTi's revamped and updated Corporate Net Zero Standard - launched barely a fortnight ago - seeks to strike a "sweet spot" that both encourages companies to decarbonise their own operations, while also recognising other climate efforts, such as investments in carbon credits, will be required if long term net zero goals are to be met.

While carbon credits cannot be used to count directly towards a company's SBTi-validated decarbonisation targets under the new standard, such investments are still encouraged and are set to be given recognition separately by the standards-setter through a new process known as 'Ongoing Emissions Responsibility'.

Bytes Technology Group is continuing to base its climate strategy around the previous iteration of the SBTi's Corporate Net Zero Standard - which allows firms to use carbon credits to offset up to 10 per cent of their residual Scope 3 emissions - but Prickett believes the firm's approach will broadly align with the new approach set out in the revamped SBTi standard when it fully replaces the previous version. 

"I think we're part of the way there, to be honest," she said. "We're buying durable carbon credits for Scope 1 and 2, as we try to reduce our emissions as much as we can at the moment. One of our projects is an HVAC replacement, which is going to take a bit more time to embed, so while we're doing that and still generating emissions, we're going to be investing in durable carbon credits, and then a mix of removals and avoidance for the rest of our emissions."

Also taking part in the webinar discussion was Dan Magarth, head of corporate best practice at carbon credit certification programme Gold Standard, who said the new SBTi Corporate Net Zero Standard was a "big improvement" on the previous iteration and marked "a pretty seismic shift" in the recognition of carbon credits as a credible means of supporting corporate climate strategies.

"I think the really important thing here is that traditionally credit purchases - unless they were to do with a 'carbon neutral' claim - were really packaged as a philanthropic effort, but I don't think that's the case anymore and hasn't been for a while," he said. "I think it's more about brand recognition, taking responsibility, and the ability to tell stories."

Indeed, while building a carbon credit portfolio may not directly count towards SBTi-validated emissions reduction targets, it can create a competitive advantage for firms, he added.

"If a company is going to go above and beyond its competitors, it should receive recognition for that," said Magarth. "I am excited to see [the updated SBTi standards] come in."

Oxford Principles

Of course, the SBTi is not the only organisation producing corporate standards that have implications for the carbon market. The International Organisation for Standardisation (ISO) also last week launched its own world-first draft standard designed to help businesses develop net zero transition plans, which similarly gives leeway for companies to use carbon removal credits where necessary, as long as decarbonisation is the first priority.

On top of that is the Greenhouse Gas Protocol (GHGP), which provides the standard for corporate emissions measurement, and the Oxford Principles - a framework developed by university academics guide firms, governments, cities and more in designing credible net zero commitments that minimise 'greenwashing' - to name just a couple of the standards or guidance frameworks in circulation. The glut of such standards can appear overwhelming and it can be an admin intensive task for credit providers and corporate purchasers to try and navigate with them all.

However, Ecologi's Jackson insists that now more than ever these various standards and verification bodies are working more effectively in lockstep, rather than merely creating confusing duplication or overlap between different approaches.

"A lot of these same groups are coming together and helping to sing from the same hymn sheet, which I think is enormously beneficial to the market at large," he explained. "Because when you're looking at 'acronyms galore' – the SBTi, ICVCM, VCMI, the Oxford Principles, ISO and BFI - all of these things you have perhaps got to know, or you can just distil it into what's important."

For many companies, the Oxford Principles may be the first and most accessible port of call when seeking to develop a credible carbon credit portfolio. Developed in 2020 and revised again in 2024, the Principles offer guidance on how organisations can design credible net zero strategies that avoid 'greenwashing' and do not distract from wider decarbonisation efforts.

"The Oxford Principles are essentially an answer to the question of: 'now we've established that we need to participate in carbon markers, how do I go about doing this?'" said Jackson. 

Under the Principles - as with the SBTi's standard - companies are expected to concentrate first and foremost on direct decarbonisation of their business. But firms are also encouraged to ratchet up the amount of carbon removals in their credit portfolios, while tapering down the use of carbon avoidance credits, in order to gradually boost the flow of investment into higher-integrity removals investments, while at the same time diversifying carbon credit portfolios.

"You want to ramp it up in such a way that you're starting from a baseline of perhaps a different mix of projects," said Jackson. "You're ramping up the amount that's going towards the removal-based market and the durable ones."

Prickett also echoes advice from many carbon market advisers with regards to the importance of taking a portfolio approach to purchasing carbon credits, spanning different types nature-based and technology-led projects for avoiding, neutralising, and removing CO2. In other words, the aim is to avoid putting all your carbon credit investments in one basket.

"That's exactly it," said Prickett. "It also ties in with other things, such as aligning [our carbon credit portfolio investments] with some of the UN Sustainable Development Goals, or for nature, or communities… We've tried to do a few different things to be able to support quite a few different areas."

Magarth argued that the increasing maturity and accessibility of carbon credit standards were becoming ever-more important to the market's success, but he also acknowledged that as projects come in so many different shapes and sizes, developing clear standards that take their different nuances into account can still be "really difficult and challenging". 

So, supported by a landscape of different standards and guidance to help guard against 'greenwashing' risks, how can companies go about building a credible carbon credit portfolio in practice?

"The thing you need to be thinking about is, when it comes to integrity, there's two sides of the same coin - and they're both important, so you should balance them both" he said. "But really there is the question of whether the instrument itself is a credible, high impact credit - i.e. whether it is funding the things it should do and in an appropriate way, and whether it is creating balance without as many negative outcomes. 

"And the second part is: what am I claiming? The reality is that carbon credits are designed to fund important things, so I think if you keep that at the core of it, funding things that are important is always generally a good idea."

With standard-setting bodies now better co-ordinated than ever, and the new ISO and SBTi guidance for corporates likely to drive further demand for high-integrity carbon credits, alongside a similar boost to demand from regulated schemes such as the EU Emissions Trading Scheme of the CORSIA aviation offsetting scheme - what does the future hold for the burgeoning carbon credit market for UK-based firms?

"I think the reality is that it is going to depend," replied Magarth. "My sense is that if we're going to exponentially increase the requirements of people to buy long-term, low-risk carbon dioxide removals… we need to get financing now. There are positive signs and there have been good steps made, but I think the major thing is understanding credits as part of the solution, not the whole solution, so we don't put unfair expectations on them. We need to really join those voluntary and compliance systems together to really drive climate finance for which credits are a fantastic way to do so." 

Jackson was also "cautiously optimistic" about the future of the carbon credit market for businesses, as he said he could "only see the demand going one way".

"I don't think it is a dead cert that it will all work out and be rosy," he said. "Where the market lands in 10 years' time I think it will depend on the actions that businesses are taking today - making smart decisions, identifying the risks that they're exposed to from climate change and nature loss, and identifying commercial opportunities to enter these slightly ambitious, more novel agreements to fund projects over time. It will depend on where the mandates are coming from, how the standards evolve over time, and how we change our thinking. So, I think it is in our hands."

The evolving and gradually maturing market for carbon credits is still a new field for many businesses both large and small - but it may well pay to begin embarking on the journey towards building a portfolio of high integrity carbon credits sooner rather than later.

BusinessGreen's webinar - 'Navigating the carbon credit maze: How to build a portfolio that stands up to scrutiny' was hosted in association with Ecologi.

The discussion can be watched back in full on demand here.

Businesses looking for support and advice in building a bespoke, Oxford Principles-aligned carbon credit strategy can also book a free 30-minute call with the Ecologi team here.