Carbon Credit Procurement Is a Risk Function, Not a Marketing Function

For many businesses, buying carbon credits still sits somewhere between sustainability reporting and corporate communications.

A company identifies residual emissions, selects a project or portfolio, retires credits and then uses the retirement to support a climate-related statement. The purchase may be approved by a sustainability team, a procurement function or a senior executive. Often, the board sees only the headline: tonnes acquired, projects supported and claims proposed.

That approach is no longer adequate.

A carbon credit is not simply a certificate. It is a climate claim linked to a project, a methodology, a geographic location, a delivery timeline, a registry, a counterparty, a set of assumptions and — in many cases — a long-term promise that a claimed climate benefit will endure.

In other words, it carries risk.

The voluntary carbon market will not rebuild trust through better branding alone. It will rebuild trust when buyers begin to treat procurement as a risk-management function: structured, documented, independently reviewed and connected to the organisation’s wider transition plan.

A credit purchase creates several risks

The phrase “carbon-credit quality” can make the task sound simple. In practice, a buyer is managing several different risk categories at once.

Project risk

Will the project generate the climate benefit it claims?

This includes questions around additionality, baseline setting, leakage, monitoring, verification, social safeguards, land tenure and operational execution. A project can look attractive in a presentation while still carrying a material risk that its underlying assumptions are weak.

Permanence risk

Will the climate benefit last?

For nature-based projects, carbon stored in forests, soils, wetlands or biomass can be reversed by fire, drought, pests, illegal harvesting, land-use change or political instability. For engineered removals, the relevant questions may be storage duration, measurement reliability, energy use, feedstock sourcing and long-term liability.

A credit buyer should not only ask whether a tonne was issued. They should ask what happens if the tonne is reversed, who bears the economic and reputational consequences, and whether the project’s buffer or insurance arrangements are sufficient.

Counterparty risk

Can the seller deliver what it has promised?

Forward purchases, pre-purchase agreements and long-term offtake arrangements can create exposure to project developers, brokers, intermediaries and marketplaces. Buyers need to understand who is legally responsible for delivery, what happens if issuance is delayed and what remedies exist if credits do not meet agreed specifications.

Registry and title risk

Can the buyer verify ownership, retirement and claims status?

A buyer should be able to trace units through a recognised registry, confirm serial numbers or batch information, verify retirement and retain a clear audit trail. This matters not only for compliance and assurance, but also for defending against claims of duplicate issuance, double retirement or misleading communications.

Claims risk

What can the company honestly say after it buys the credit?

A well-managed procurement process can still be undermined by exaggerated language. “Carbon neutral”, “net zero”, “climate positive” and similar claims may imply more than a credit purchase can substantiate.

The carbon credit should sit within a transparent claims policy that explains:

What emissions have been measured.
What emissions have been reduced directly.
What residual emissions remain.
What type of credits have been purchased.
Whether those credits represent avoidance, reduction or removal.
What limitations and uncertainties remain.
How the company distinguishes a contribution claim from a claim of neutralisation.

The strongest climate communications are specific, evidence-based and proportionate to the underlying action.

The procurement mistake: buying tonnes, not managing exposure

The most common procurement mistake is to treat credits as comparable commodities.

They are not.

Two credits may both represent one tonne of CO₂ equivalent on paper, but differ profoundly in their delivery confidence, permanence profile, project governance, social safeguards, methodology, monitoring regime, vintage, geographic exposure and claims suitability.

A very low price can be a commercial opportunity. It can also be a warning that the market is pricing material uncertainty.

That does not mean every business needs to purchase only the most expensive credits available. It means price should never be the sole decision criterion. The question is not simply, “What does this tonne cost?” It is, “What risk-adjusted climate value does this tonne represent for our transition strategy and public claims?”

The Integrity Council for the Voluntary Carbon Market’s Core Carbon Principles provide an increasingly useful quality threshold. The Principles address governance, tracking, transparency, independent validation and verification, robust quantification, additionality, permanence, avoidance of double counting, sustainable development and contribution to the net-zero transition. The associated Assessment Framework is designed to evaluate carbon-crediting programmes and categories of credits against those standards.

But an external label should be the beginning of due diligence, not the end of it.

Ten questions every credit buyer should ask

A robust procurement process should require clear answers to the following

questions before contract signature.

What exactly is being purchased?

Identify the registry, programme, project name, project ID, methodology, credit type, vintage, geography and expected issuance or delivery date.

Does the project demonstrate additionality?

The buyer should understand why the project requires carbon finance and whether the claimed climate activity would have happened without it.

How are emissions reductions or removals quantified?

Ask for the applicable methodology, baseline assumptions, monitoring approach, verification records and any material changes to the methodology or project design.

What is the permanence profile?

For nature-based projects, assess reversal risk, buffer-pool arrangements, insurance, monitoring period, landscape-level climate exposure and contingency planning. For engineered removals, examine the durability of storage and the associated lifecycle emissions.

How is leakage addressed?

If an activity is prevented in one area, could it move elsewhere? This is particularly important for avoided-deforestation, land-use and supply-chain interventions.

Who owns the credits, and who is responsible for delivery?

The contract should identify the legal seller, the delivery timetable, title-transfer mechanism, replacement obligations and remedies for non-delivery or non-conformity.

Can the credits be independently traced and retired?

The buyer should be able to verify issuance, ownership and retirement in the registry and retain documentary evidence for audit and assurance purposes.

What safeguards protect communities and rights holders?

Review free, prior and informed consent processes, benefit-sharing arrangements, grievance procedures, land-tenure considerations and evidence of local participation in project design and monitoring.

What climate claim will the purchase support?

Set the claim before buying the credit, not afterwards. The intended communication should be reviewed against the company’s actual emissions-reduction progress and the characteristics of the credit.

Who has internal accountability?

Procurement, sustainability, legal, finance, communications and risk teams should not operate in isolation. A defined approval process should allocate decision rights, assurance responsibilities and escalation routes for higher-risk purchases.

Build a portfolio, not a press release

A mature carbon-credit strategy should look more like portfolio construction than campaign planning.

That means avoiding unnecessary concentration in one project, one methodology, one geography, one developer or one risk type. It also means matching credit types to stated objectives.

For example, a company with hard-to-abate residual emissions may choose to build an increasingly durable-removal-oriented portfolio over time. A business with a strong nature dependency may decide to allocate some finance to high-integrity landscape restoration, while being explicit that this supports climate and biodiversity outcomes rather than substituting for operational decarbonisation.

The point is not to create a universal purchasing formula. Different companies have different residual emissions, budgets, sectoral exposures, supply chains and transition pathways.

The point is to make the strategy explicit.

A portfolio policy might define:

The maximum exposure to any one project or developer.
Minimum standards for verification and registry transparency.
Required safeguards for communities and rights holders.
Minimum durability or permanence expectations by credit type.
Conditions for using forward credits versus issued credits.
Rules for claims, public disclosure and retirement.
A phased shift toward higher-durability removals as residual emissions decline.
Annual review requirements for project performance and market developments.

Governance belongs at the centre

Carbon credits often fall between organisational functions. Sustainability teams understand the climate objective. Procurement teams negotiate commercial terms.

Legal teams review contracts. Communications teams develop public messaging.

Finance teams assess budgets.

Yet no one function necessarily owns the full risk.

That is why carbon-credit procurement needs a formal governance model.

For lower-value, low-risk purchases, a standard approval process may be sufficient.

For larger commitments, long-dated offtakes, pre-purchases or credits supporting high-profile public claims, companies should use an investment-committee-style process.

This should include documented diligence, conflict-of-interest review, legal and claims sign-off, independent technical advice where necessary, and a clear record of why the purchase fits the company’s transition plan.

The board does not need to approve every credit retirement. But the board or an appropriate board committee should understand the organisation’s carbon-credit policy, claims framework, financial exposure and principal integrity risks.

The transition-plan test

Carbon-credit procurement cannot stand apart from direct emissions reductions.

A company that has not established a credible transition plan, made meaningful operational reductions or identified its material emissions sources will struggle to make a persuasive case for purchasing credits. Credits should support climate action beyond the value chain and address clearly defined residual emissions; they should not become a substitute for changing the business model where change is possible.

This is especially important because the next phase of climate scrutiny will focus less on whether companies have made commitments and more on whether their capital allocation, procurement choices, operating model and public claims are consistent with those commitments.

The question a company should ask is not: “Which credits can help us tell the best story?”

It is: “What carbon-credit strategy can we defend to our investors, customers, employees, regulators, auditors and affected communities?”

That is a risk question.

And it is now a core climate-governance question too.