Carbon Credit Markets

This case focuses on a cloud-based software company’s efforts to reduce its greenhouse gas (GHG) emissions. While the company has already taken steps to achieve this goal—purchasing renewable energy and reducing electricity usage, for example—it will not reach its target of reducing 50% of these emissions by 2030. An internal sustainability council has recommended the purchase of carbon credits, which would have an annual price tag of approximately $8 million. Company leadership is aware that the use of carbon credits is complicated and has both positives and negatives. Many companies that have adopted this approach have, for example, been accused of “greenwashing,” or making claims about sustainability results despite those results being questionable. If the company opts for the carbon credits route, how will it ensure that this approach is truly effective, with tangible results and responsible, honest players throughout the process? Should the purchase be publicized (with the risk of a “greenwashing” accusation), or should it be kept under the radar? This case explores the background, technology, logistics, and complexities of carbon credits, as well as potential other strategies for reducing GHG emissions.