Carbon Credits In The Age Of Corporate Net Zero

To many, this shift looks like the long-awaited moment when business finally decided to take climate responsibility seriously. After all, if corporations that once fueled consumer demand without pause are now pledging to offset their damage, should we not be optimistic? Yet optimism alone cannot answer the more uncomfortable question: is this really change, or is it simply a rebranding exercise. A closer look reveals that many corporate net zero pledges lean heavily on carbon credits, a mechanism that allows firms to keep emitting while claiming neutrality, that reliance complicates the story. Are credits a bridge to a cleaner future, or are they little more than a distraction.

Net Zero As A Balancing Act

At its simplest, the idea of net zero works like an accounting exercise. Emit a tonne of carbon dioxide, and then balance it out by either cutting a tonne elsewhere or removing it from the atmosphere. The promise is neat: the damage and the remedy cancel each other out.

There are two broad ways for corporations to achieve this balance. The first is by reducing emissions directly, that could mean switching to renewable energy, redesigning supply chains to cut transport emissions, or making factories more efficient. These measures alter how the company functions at its core. The second is through offsets. Here, companies pay for projects outside their walls forest conservation, wind farms, solar projects, or carbon capture plants and in exchange, receive credits they can claim against their own emissions.

In theory, both paths can work together but in practice, however, offsets often become the easier escape route. For a firm looking at quarterly results and shareholder demands, it is far simpler to purchase credits than to dismantle long-standing operations or invest in disruptive changes and that reliance on the easier option has sparked doubts about how transformative the net zero movement really is.

The Framework of Carbon Credits

Carbon credits are, at their core, tradable certificates. One credit equals one tonne of carbon dioxide either removed, reduced, or avoided. The idea took shape under the Kyoto Protocol in the late 1990s and was refined in the Paris Agreement. Today, there are two markets where these credits circulate, compliance markets are run under government regulation, where companies must trade within strict caps other is voluntary markets where corporations buy credits beyond what the law requires, often to polish their public image or satisfy investor pressure.

India has now entered this arena in a structured way, in 2023 the government launched the Carbon Credit Trading Scheme (CCTS), a domestic market meant to encourage both demand and supply of credits. India's potential in renewables, afforestation, and carbon capture makes it a strong candidate to supply credits globally, not just consume them. This move signals ambition: India aims to use carbon markets to attract climate finance while also advancing its own energy transition. But the effectiveness of this system will depend on credibility whether the credits truly reflect additional reductions and whether they are monitored with rigor but without trust, the market risks collapsing under accusations of greenwashing.

The Mirage of Offsetting

For all their promise, carbon credits are fraught with controversy. Critics often describe them as a mirage appealing from a distance, but hollow upon closer inspection. The most common critique is the charge of greenwashing, a company can loudly declare itself carbon neutral by purchasing credits, while its own operations continue to release significant emissions. An airline, for example, may offer passengers the option of buying a “carbon-neutral ticket,” but the reality of burning jet fuel at 35,000 feet does not disappear with a financial transaction.

There is also the problem of questionable integrity, some credits are issued for projects that were already viable without them. A wind farm in Gujarat that would have been built anyway may still generate credits, but those credits do not represent genuine additional savings. Similarly, large-scale tree-planting projects often fail to guarantee permanence. If the trees die after a decade, what becomes of the offset claim? In such cases, the neutrality is an illusion.

The reliance on credits can also act as a delay tactic. Rather than overhaul systems built on coal or fossil fuels, corporations find it easier to write a cheque for offsets. This buys time, satisfies shareholders, and creates an appearance of progress, but it does little to tackle the structural causes of emissions. Finally, the global imbalance cannot be ignored. Many credits are generated in the Global South India, Kenya, Brazil while the bulk of their consumption happens in Europe or North America. This raises questions of climate justice that developing countries being used as carbon sinks for wealthier economies unwilling to change their own habits.

The Enduring Relevance of Carbon Credits

Yet dismissing carbon credits altogether would be unwise, they can play a useful role when applied responsibly. Consider the financing dimension: renewable energy projects in India, whether vast solar farms in Rajasthan or wind projects in Tamil Nadu, often require heavy capital. Carbon markets help funnel international finance into these ventures, enabling cleaner infrastructure that might otherwise struggle to find funding.

Credits also provide breathing room for industries that are central to development yet hard to decarbonize. Cement, steel, and aviation are sectors where technological solutions are still evolving, expecting overnight change is unrealistic. In the meantime, credits allow such industries to share responsibility and participate in the global effort, rather than sit on the sidelines.

Another advantage lies in their measurability. Unlike vague corporate statements about “sustainability” or “green values,” credits correspond to concrete projects. The clarity makes them a more tangible tool than broad promises and as technology advances, verification is becoming more robust. From blockchain-backed registries to satellite monitoring of forest cover, innovations are helping restore some trust in carbon markets. India's CCTS, if managed well, could set a benchmark for credibility in the region.

Lessons from Corporate India

The Indian corporate landscape offers useful case studies in both promise and caution. Reliance Industries, for example, has pledged to reach net zero by 2035. While carbon credits are likely to play a role, the company has also committed billions of dollars toward green hydrogen and renewable infrastructure. This signals an attempt to balance credits with genuine systemic change.

Infosys declaring itself carbon neutral in 2020, the company achieved this goal largely through efficiency improvements and renewable adoption, relying only sparingly on offsets. This balanced approach has earned it credibility in sustainability circles. Tata Group companies too have made bold announcements, though the challenge for its steel and automotive divisions will be ensuring that credits are not used as a substitute for genuine transformation.

These examples highlight the delicate line between using credits as a responsible bridge and hiding behind them as an excuse. They also show that corporate strategies are not monolithic; some firms use offsets responsibly, while others treat them as a convenient end in themselves.

Looking Ahead: The Future of Carbon Credits

Carbon credits are projected to grow into a $100 billion global industry by 2030, and India's entry into this arena is significant. The credibility of this system, however, will depend on rigorous oversight. Only genuine and additional reductions should qualify, and verification technologies must be deployed at scale to ensure integrity. Drones, satellites, and artificial intelligence already offer tools to monitor forests, renewable projects, and carbon capture initiatives in real time.

Just as important is corporate honesty, if companies clearly communicate the extent to which credits are supplementing internal reductions, the market can serve as a catalyst for progress. If, however, credits continue to act as a smokescreen for inaction, the system risks collapsing under its own contradictions. The direction of carbon markets will thus shape not only the credibility of corporate sustainability but also the trajectory of global climate action.

Carbon credits are neither inherently good nor inherently bad. They are tools powerful in their potential, dangerous in their misuse. The determining factor is corporate intent. If companies treat credits as the sole pathway to net zero, then the climate narrative will remain stuck in the realm of marketing illusions. But if credits are paired with genuine operational changes transitioning to renewable energy, reforming supply chains, investing in cleaner technologies they can serve as a bridge to real milestones.

Ultimately, the atmosphere does not respond to slogans, pledges, or clever accounting. It responds only to real reductions in emissions. For corporations, the responsibility is clear: climate action cannot be indefinitely outsourced, and environmental accountability cannot be endlessly deferred. In the journey toward net zero, the true test will not be how many credits a company buys, but how fundamentally it changes its own way of doing business.

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