Build Internal Support and Alignment
Environmental Defense Fund
An effective carbon credit program requires support from internal teams such as finance, procurement, and investor relations. Engaging key stakeholders early and throughout the process will help your company identify issues and ensure the program is aligned to broader strategic priorities.
Your team may develop a carbon credit procurement strategy that has integrity, credibility, and transparency, but effective execution will also require substantial internal support. Buy-in for carbon credit programs is an ongoing process, and engagement is key at all milestones.
Different teams in your company will have different concerns and questions about a carbon credit program. Working with your various stakeholders to identify and respond to each of their unique considerations will support the effectiveness and alignment of your credit program.
Best Practices for Internal Alignment on a Carbon Credit Program
It is important to engage key internal stakeholders throughout the process to garner support, identify key implementation hurdles and peculiarities, and incorporate feedback and perspectives into a comprehensive proposal. Key internal stakeholders are those who will most likely be involved during the carbon credit procurement process, such as the finance, accounting, procurement, legal, communications, and leadership and investor relations teams. After internal teams have signed off, pull together a core program management team.
When launching a carbon program, teams may allocate a budget to hire personnel or consultants to run specific parts or the entire procurement process to build team capacity.
If financing is a constraint, teams may also consider introducing an internal price on carbon, charging the business units responsible for residual emissions that require carbon credits. Internal carbon pricing is one way for businesses to generate funding and budget for credit procurement. An increasing number of companies are putting an internal price on carbon.1 For example, Workday, a Business Alliance to Scale Climate Solutions (BASCS) member company, implemented a carbon price to fund their renewable energy and carbon offset projects as part of their journey to net zero. For companies looking to implement an internal carbon fee, Microsoft has an open source webinar, “Accelerated Sustainability with an Internal Carbon Fee,” available.
A CEO pitch deck that consolidates key information about carbon credits and the business case for a carbon program is a useful tool for companies seeking to address business units’ concerns and get corporate leadership on board.
|Finance||Timing and magnitude of anticipated cashflows||(Co-)Develop and share multi-year volume and pricing forecasts, substantiated by market research and indicating areas of uncertainty|
|Accounting||Accounting treatment |
Evidence base for ESG and financial reporting and auditing
|Identify materiality thresholds and determine whether new, carbon credit-specific accounting policies (i.e., related to capitalization) may be required |
Confirm quality and format of data (i.e., carbon credit retirements and dashboards) to be used for auditing and reporting purposes, and prospective timeline
|Procurement||Contracting terms||Include procurement colleagues early on in contract negotiations|
|Legal||Contracting terms||Include legal colleagues early on in contract negotiations|
|Communications||Reputational opportunities and risks (i.e., related to claims)||Provide clear guidance on language and claims; consider SBTi and VCMI|
|Leadership and Investor Relations||Leadership and Investor Relations||Prepare summary materials and establish a schedule and format for executive updates|