Amy Bann, head of the registries network and integration at Xpansiv, a global market for ESG-inclusive commodities, said the market for offsets has seen “enormous growth.” Indeed, trading on the company’s voluntary carbon offset exchange increased 288% in 2021 from 2020 levels. The demand for carbon credits could increase “by a factor of up to 100 by 2050,” according to The Taskforce on Scaling Voluntary Carbon Markets (TSVCM) and McKinsey. The market for these credits may be worth up to $30 billion by 2030, the firms said.
“Offsets should be gap filling,” said Bann. For example, if there isn’t enough supply of certain products to scale up the energy transition or if the technology to reduce emissions in certain sectors isn’t available yet, companies “view [offsets] as a bridge to get to the ultimate reduction goal,” said Bann, who formerly served as the director of sustainability strategy at Boeing.
Boards need to have the final approval of the climate strategy, including offsets, Bann said. Directors should ask management to share offset data along with the annual greenhouse gas emission accounting, in line with the standard frameworks available, she added. Additionally, boards should be “in tune” with banks’ and investors’ expectations regarding offsets.