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Carbon credits explained

In this guide we’ll cover:
<ul>
<li>What are carbon credits?</li>
<li>How do carbon credits work?</li>
<li>How are carbon credits created?</li>
<li>How are carbon credits bought and sold?</li>
<li>How much are carbon credits worth?</li>
<li>Why should a business consider buying carbon credits?</li>
<li>Are carbon credits a good investment for businesses?</li>
<li>Are carbon credits tax deductible?</li>
<li>How Ecologi can support your business&#8217; carbon reduction strategies</li>
</ul>

The climate challenge requires a range of innovative solutions. As businesses work to decarbonise their value chains they must also invest in emission avoidance or removal projects beyond their own operations, the SBTi refers to this as &#8220;<a href="https://sciencebasedtargets.org/beyond-value-chain-mitigation" target="_blank" rel="noopener">beyond value chain mitigation</a>&#8220;.
Reducing operational emissions is key, but it can take time. So while on the journey to net-zero it’s also important for businesses to make a more immediate impact by funding high quality climate action today. Purchasing carbon credits helps businesses do just that.
Purchasing carbon removal credits is particularly beneficial towards the end of the net-zero journey, because once a business has reduced its emissions by at least 90%, it can use these carbon credits to balance its remaining, unavoidable emissions and reach net-zero.

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Net-zero graph

<h2>What are carbon credits?</h2>
Carbon credits provide funding (‘carbon finance’) to projects in exchange for activities which avoid or remove emissions from our atmosphere, while also achieving other benefits such as community development, protecting vulnerable ecosystems or installing energy-efficient technology. When your business purchases carbon credits it directly funds these projects, and after purchase that credit is permanently retired so it can&#8217;t be reused.
They are referred to as either ‘Carbon Avoidance’ and ‘Carbon Removal’ credits. Each carbon credit represents one metric tonne of greenhouse gas emissions that’s been avoided e.g. through <a href="https://ecologi.com/projects/morocco-solar">switching to renewable energy</a>, or removed from the atmosphere, e.g. by locking carbon safely away through the production of <a href="https://ecologi.com/projects/carbon-hill-biochar">Biochar</a>.

<h2>How are carbon credits created?</h2>
The process begins with project developers designing projects with the aim of avoiding or removing carbon dioxide/ carbon dioxide equivalent emissions.
When the developer establishes their project – such as a solar power plant – they can opt to go through a stringent assessment methodology developed by a carbon standards organisation (like the Gold Standard and the Verified Carbon Standard), to assess the real-world reductions of emissions which will be caused as a result of the project activity.
This impact is measured in tonnes of carbon dioxide (tCO2) or tonnes of carbon dioxide equivalent (tCO2e). Carbon dioxide equivalent refers to a unit of measurement that is used to standardise the climate effects of various greenhouse gases based on their global warming potential over a specific timeframe. The tonnes of carbon dioxide equivalent that has been reduced (or removed) by the project activity, is represented by a ‘carbon credit’ which is issued to the project developer. The carbon credit is often considered as a permit or licence to emit that one tonne of carbon dioxide (or carbon dioxide equivalent).

<h2>How do carbon credits work?</h2>
Carbon credits are generated through various emission reduction or removal projects, including <a href="https://ecologi.com/impact-shop/support-certified-afforestation-projects">afforestation</a>, <a href="https://ecologi.com/impact-shop/support-biochar-carbon-removal-projects">biochar</a>, <a href="https://ecologi.com/impact-shop/support-certified-blue-carbon-projects">blue carbon removal</a> and <a href="https://ecologi.com/impact-shop/support-renewable-energy">renewable energy production</a>. 
These projects are rigorously assessed and verified to ensure that they result in real and measurable emissions reductions. Once validated, the projects are issued carbon credits proportional to the amount of CO2 equivalent emissions they prevent or remove from the atmosphere.
Carbon credits are issued to projects by carbon standards, which are organisations that set criteria for how projects can earn credits. There are several carbon standards, and each one has its own set of criteria.

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At Ecologi, we work with three carbon standards: 
<a href="https://verra.org/programs/verified-carbon-standard/" target="_blank" rel="noopener">Verified Carbon Standard</a> includes the Climate, Community and Biodiversity Standard (CCBS) and the Sustainable Development Verified Impact Standard (SDVista) certifications.
<a href="https://www.goldstandard.org/" target="_blank" rel="noopener">Gold Standard</a> assesses projects based on their contributions to the UN Sustainable Development Goals (SDGs), as well as emissions avoidance or removal.
<a href="https://puro.earth/puro-standard-carbon-removal-credits/" target="_blank" rel="noopener">Puro Standard</a> is a dedicated standard for carbon removal credits (which actively absorb existing emissions out of the atmosphere through natural or technological processes).

<h2>How are carbon credits bought and sold?</h2>
Carbon credits are bought and sold on the Voluntary Carbon Market (VCM) through various platforms and exchanges, similar to how stocks are traded. Businesses can purchase carbon credits either directly from project developers, through brokers, or on carbon credit trading platforms.
Trading carbon credits can happen in both voluntary and compliance markets. In the voluntary market, businesses purchase credits voluntarily to balance their emissions, demonstrate environmental responsibility and meet their sustainability goals. 
The compliance market on the other hand operates within regulated emissions trading schemes, where businesses must acquire a sufficient number of credits to comply with regulatory requirements.

<h2>How much are carbon credits worth?</h2>
The carbon credits price fluctuates based on factors such as market demand and regulatory frameworks. The forces of demand and supply apply, just as they do with other commodities traded in financial markets. The credibility of the emission reduction project, its co-benefits beyond emissions avoidance or removal reduction, the scale and location of the project, and the technologies used, will also all influence credit pricing.
The carbon credit price can range from around £3 to £50 per tonne (or even higher for innovative removals technology) of carbon dioxide equivalent (CO2e) on the voluntary carbon market.

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Verified Afforestation, Reforestation and Revegetation ARR projects

<h2>Why should a business consider buying carbon credits?</h2>
Investing in carbon credits offers numerous benefits for your business:
Environmental responsibility: By purchasing carbon credits, your business can demonstrate its commitment to mitigating climate change, supporting climate impact and assisting the transition to a more sustainable and resilient future.
Brand reputation: The purchase of carbon credits on the journey to net-zero can enhance a company&#8217;s reputation and drive competitive advantage by appealing to environmentally-conscious consumers.
Investor appeal: Contributing to carbon avoidance and removal projects through the purchase of carbon credits can appeal to environmentally-responsible investors, attracting investment capital to the business.
Risk management: Investing in carbon credits can hedge against future regulatory changes or carbon pricing mechanisms, reducing the financial risks associated with carbon emissions.
Employee engagement: Supporting climate impact by buying carbon credits can engage employees and foster a sense of pride and purpose among staff members.

<h2>Are carbon credits a good investment for businesses?</h2>
Financially supporting carbon avoidance and removal projects through the purchase of high-quality carbon credits is crucial for our transition to net-zero, as it decreases the amount of greenhouse gases entering our atmosphere. 
Ultimately, the decision to invest in carbon credits will be led by a businesses sustainability goals, regulatory environment and financial considerations. 
Carbon credits can offer great environmental benefits and enhance corporate reputation, but not all carbon credits are created equal. Like all markets, there will be some carbon credits that are low quality, but there are also many high-quality carbon credits that finance real, verifiable emissions avoidance and removals. Businesses should carefully assess the credibility and impact of the projects associated with the credits before making investment decisions.
At Ecologi, we only work with carefully selected partners, and all of our projects are verified and high quality.

<h2>Are carbon credits tax deductible?</h2>
In the UK the purchase of carbon credits can be tax deductible under certain circumstances. However, tax regulations can vary, and the deductibility of carbon credits depends on factors such as the purpose of the investment, the nature of the business, and compliance with the relevant tax laws and regulations. 
Businesses should consult with tax professionals or legal advisors to determine the tax implications of carbon credit investments specific to their situation.

<h2>How Ecologi can help you fund high-quality carbon credits</h2>
At Ecologi, we understand that carbon markets can be complicated and hard to navigate. Our expert team can consult with your businesses and help you take the right steps to choose the highest quality projects when you purchase carbon credits. 
We select the projects we support according to our climate impact regionalisation strategy, which focuses on directing funding towards locations and projects with the greatest potential impact. We will only ever support high-quality projects that meet our strict criteria and are verified by the Gold Standard, Verified Carbon Standard or Puro Standard.
The projects we support, which you can fund through our Impact Shop or through our automations and integrations, are also independently scrutinised by organisations like our friends at Sylvera.
We’re committed to trust and transparency, which is why we never re-trade carbon credits (we only retire them ourselves) and publish all carbon credit retirements on our Public Impact Ledger.

<h3>Read our guide to funding high-quality carbon credits</h3>
<div class="ecologi-video-full-width"><iframe src="https://cms-assets.offset.earth/app/uploads/20230914115954/Document_Ad_Funding_Carbon_Credits_01-1.pdf" width="960" height="1357" frameborder="0" allowfullscreen="allowfullscreen"></iframe></div>
 📁 Download the guide <a href="https://cms-assets.offset.earth/app/uploads/20230914115954/Document_Ad_Funding_Carbon_Credits_01-1.pdf" target="_blank" rel="noopener">here</a>

<h2>How Ecologi can support your carbon reduction strategies</h2>
We’re your trusted partner in taking climate action, offering a range of products and services to businesses of all sizes. From <a href="https://zero.ecologi.com/signup">calculating your company’s carbon footprint</a>, to tree planting and reforestation, to funding certified carbon avoidance and reduction projects via our <a href="https://ecologi.com/business/impact-shop">Impact Shop</a>, we’re here to support your entire climate journey. 
If you’re looking for a custom climate impact solution, or for those who are not sure where to start, our team of experts can create a tailored solution to suit your needs.

Speak to our team about funding high impact, high integrity climate solutions

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Hopescrolling: The good news timeline

It’s not all bad. While there’s a lot of negative news about the climate, let’s not forget the good stuff. Find climate wins, reasons to be hopeful and plenty of positivity in our good news timeline.

The good news timeline

Ready to make a difference for our planet? Get in touch, and let’s chat about how we can help you on your climate journey. 

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Ecologi acquires Net Zero Now

In a landmark move set to reshape corporate climate action, we’re excited to announce that Ecologi, the UK&#8217;s most trusted climate action platform, has acquired <a href="https://netzeronow.org/" target="_blank" rel="noopener">Net Zero Now</a>, the sector-specific carbon measurement and reduction platform for businesses.
The combined entity operating under the Ecologi brand will create a single solution for industry climate leadership towards net zero. The integration combines sector-specific carbon measurement and reduction with world class verified climate projects that supports businesses wherever they are on their net zero journey.

<h2>The game-changing impact of this acquisition</h2>
The strategic acquisition solves two fundamental challenges in corporate climate action: businesses have been forced to choose between fragmented solutions and generic ‘one size fits all’ approaches that ignore crucial sector-specific needs. By combining Net Zero Now&#8217;s sector-specific protocol expertise with Ecologi&#8217;s platform funding top-tier climate projects, we&#8217;re creating a tailored and complete solution helping businesses lead their industries towards net zero.

Reduce emissions.
<ul>
<li style="font-weight: 400;" aria-level="1">Measure Scope 1, 2 &amp; 3 emissions with sector-specific industry GHG protocols</li>
<li style="font-weight: 400;" aria-level="1">Set short term and long term reduction target emissions aligned to SBTi</li>
<li style="font-weight: 400;" aria-level="1">Tailored reduction plans for sector-specific emissions pathways</li>
</ul>
Restore our planet.
<ul>
<li style="font-weight: 400;" aria-level="1">Compensate for unavoidable emissions as you reduce them through 
funding verified, high-quality carbon avoidance and removal credits</li>
<li style="font-weight: 400;" aria-level="1">Contribute to global climate goals by funding climate Impact Funds for 
beyond value chain mitigation and/or as part of your products &amp; services</li>
</ul>
Report on progress.
<ul>
<li style="font-weight: 400;" aria-level="1">Corporate sustainability standards e.g. CSRD, SECR, SBTi, CDP, B Corp</li>
<li style="font-weight: 400;" aria-level="1">Sector specific standards e.g. Accountancy, Hospitality, Public Sector</li>
<li style="font-weight: 400;" aria-level="1">Custom climate impact reports and embeddable dashboards</li>
<li style="font-weight: 400;" aria-level="1">Communications toolkit for board and stakeholder engagement</li>
</ul>

Climate leadership starts here

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Neil Ross Russell, Managing Director of Net Zero Now, said:
<blockquote>Businesses want to take climate action, but they want to know they’re doing it right and what’s right for a restaurant business is not the same as what’s right for an accounting firm.  They need industry-specific guidance and clear pathways to climate leadership. By joining forces with Ecologi, we&#8217;re creating a platform that allows us to provide credible, simple and affordable, sector-specific, end-to-end climate solutions for businesses in our existing sectors and collaborate with industry partners on new sector-led solutions.</blockquote>

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Adobe Express - file

The acquisition aligns with Ecologi&#8217;s mission to accelerate business climate action and grow our 24,000 strong customer base. Established sector protocols including hospitality and professional services will be the initial focus with plans to expand across additional industries throughout 2025.
With organisations under increasingly complex stakeholder and industry compliance demands for environmental accountability, this end-to-end solution also ensures streamlined reporting, monitoring progress, supply chain transparency, and voluntary disclosures. This transforms business leaders into climate leaders with the confidence to tackle their climate commitments head-on, communicating and meeting critical regulatory requirements like SECR, CSRD and SBTi.

<h2>More about Net Zero Now</h2>
Founded in 2021, Net Zero Now has developed a proprietary sector-led approach, which combines climate expertise alongside the sector knowledge and experience of relevant industry bodies, industry influencers and larger businesses to reach a consensus around what Net Zero means in practice for businesses in each sector. To date, the company has measured and validated 1.8 MtCO2e lifetime emissions supporting more than 50+ leading brands including Coca Cola Europacific Partners, L&#8217;Orèal, Heineken, Pernod Ricard, Subway, Hard Rock Cafe, Adnams, Edgbaston and James Cowper Kreston.

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Case studies

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4 hospitality companies leading the way on climate action

Sustainability is no longer a nice-to-have in the hospitality industry — it&#8217;s a business necessity. With increasing regulatory pressure, shifting customer expectations, and the growing impact of climate change, hospitality businesses are finding that taking action isn&#8217;t just about responsibility—it&#8217;s about resilience. This is particularly evident as 70% of Brits are now actively trying to live a more sustainable lifestyle (Nutritics, 2024), and 44% say sustainability is important in their choice of venue to visit (Morning Advertiser, 2023). From tackling food waste to cutting carbon emissions, the sector is facing both challenges and opportunities to drive meaningful change.
At the heart of this transformation is the food system. The hospitality industry relies on farming—a sector responsible for nearly 20% of global greenhouse gas emissions and one that is increasingly vulnerable to climate disruption. Rising temperatures, unpredictable weather, and supply chain instability are already affecting food availability and costs, making sustainability not just an ethical priority but a commercial imperative. This is reflected in consumer behavior, with 47% of consumers wanting more information about carbon footprints on menus, and 41% saying this information would influence their order (CGA Strategy, 2023).
Fortunately, forward-thinking hospitality businesses are stepping up, driven by clear market demand—34% of UK pub and restaurant goers are prepared to spend more in venues with strong sustainability credentials, increasing to 47% for Gen Z and Millennials (Sustainability Beat, 2023). This generational shift is significant, with consumers aged 18-34 being nearly twice as likely to pay more for sustainability than those aged 55+ (WaterAid, 2023).
As the food and beverage industry awakens to its environmental responsibilities, and with climate change threatening to fundamentally disrupt global food security, restaurants and food service enterprises are stepping up to take meaningful climate action. These pioneering businesses are demonstrating how sustainability can enhance business performance while making a positive environmental impact, even as they navigate the unique challenges of being both a contributor to and victim of climate change.
Read about four hospitality companies that are championing climate action, and explore how they are turning environmental challenges into business opportunities.
Whether it&#8217;s engaging employees, measuring carbon footprints, or developing new sustainable service offerings, these venues are setting the standard for a greener future in hospitality.
<ol>
<li>Hawksmoor: Leading Sustainability in Fine Dining</li>
<li>Freemans Event Partners: Pioneering Sustainable Event Catering</li>
<li>Lisini Pub Co: Family Legacy Meets Sustainable Innovation</li>
<li>The Assemblies: Pioneering Sustainable Hospitality in Bristol</li>
</ol>

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<h2>Hawksmoor: leading sustainability in fine dining</h2>
Key Improvements:
<ul>
<li> Achieved B Corp certification in September 2022</li>
<li>Comprehensive review of operational sustainability across all locations</li>
<li>Implementation of energy reduction initiatives</li>
<li>Enhanced waste management systems</li>
<li>Water conservation measures</li>
<li>Integration of sustainability into staff training programs</li>
</ul>
Hawksmoor&#8217;s journey exemplifies how restaurant groups can lead in sustainability within the hospitality sector. Their comprehensive approach includes setting ambitious net-zero targets for 2030 while focusing on immediate operational improvements. The restaurant group&#8217;s commitment is evidenced by their systematic review of day-to-day operations across their locations in London, Manchester, Edinburgh, and New York. What sets them apart is their holistic approach to sustainability: examining energy usage, waste management, and water consumption while maintaining their reputation for quality dining. Their structured approach to employee engagement includes a two-day intensive induction program that emphasises sustainability, making it a core part of their culture.
Ellie Besley-Gould, Head of Purpose at Hawksmoor, said:
<blockquote>We&#8217;ve been heavily involved with the Sustainable Restaurant Association since about 12 years ago&#8230; It&#8217;s a really important area for us to be stepping up the work in, looking at how we can inspire change.</blockquote>

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<h2>Freemans Event Partners: pioneering sustainable event catering</h2>
Key Improvements:
<ul>
<li>Achieved 38.4% reduction in emissions compared to projections</li>
<li>Implemented innovative &#8220;Zero Zone&#8221; testing area</li>
<li>Introduced shuttle buggies for reduced transport emissions</li>
<li>Deployed hybrid power generators</li>
<li>Established carbon menu labelling</li>
<li>Enhanced waste management through compostable solutions</li>
</ul>
Freemans Event Partners&#8217; journey demonstrates how large-scale event catering can embrace sustainability without compromising service quality. Their innovative approach at the British Grand Prix showcases their commitment to reducing environmental impact in high-pressure environments. The company&#8217;s dedication is evidenced by exceeding their initial 5% emissions reduction target and implementing a groundbreaking &#8220;Zero Zone&#8221; area for testing new sustainability initiatives. What sets them apart is their data-driven approach to sustainability: measuring and analysing emissions across all aspects of their operation, from food stalls to logistics and waste management.
Richard West, Sustainability Manager at Freemans Event Partners, said:
<blockquote>Through partnering we&#8217;ve realised that collaboration is key to making lasting and impactful environmental changes in the events catering industry. The process has been much more straightforward than we thought it would be and we look forward to setting even bigger reductions targets as we go forward.</blockquote>

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<h2>Lisini Pub Co: family legacy meets sustainable innovation</h2>
Key Improvements:
<ul>
<li>Reduced scope 1 and 2 emissions by 48% through renewable electricity</li>
<li>Won the Flor de Cana Rum Sustainability Award</li>
<li>Achieved lowest electricity demand in 10 years</li>
<li>Implemented LED lighting and sensor systems</li>
<li>Launched biodiversity project at Dalziel Park</li>
<li>Developed sustainable kitchen practices and menu innovation</li>
<li>Created venue-specific green teams</li>
</ul>
Lisini Pub Co&#8217;s journey demonstrates how family-owned hospitality businesses can transform their environmental impact while preserving their heritage. Their comprehensive approach combines traditional Scottish hospitality with modern sustainability practices across their venues, including the historic Angels hotel in Uddingston. What sets them apart is their innovative approach to sustainability: implementing competitive green teams across venues, achieving dramatic emissions reductions, and maintaining their commitment to quality service. Their structured approach includes both operational improvements and employee engagement, making sustainability a core part of their 45-year family legacy.
Siobhan Edwards, Director Lisini Pub Group, said:
<blockquote>It&#8217;s not until we&#8217;ve been working in the last year that we&#8217;ve really truly understood our carbon footprint. It&#8217;s the right thing to do, it&#8217;s the right thing for our customers, for our planet, for the environment, and actually it saves us money at the same time.</blockquote>

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<h2>The Assemblies: Pioneering Sustainable Hospitality in Bristol</h2>
Key Improvements:
<ul>
<li>Established 100-mile radius local sourcing policy</li>
<li>Implemented full venue LED lighting systems</li>
<li>Introduced reusable cups for music events</li>
<li>Developed nose-to-tail food waste reduction policy</li>
<li>Created vegetarian menu options to reduce emissions</li>
<li>Enhanced supplier partnerships for sustainability</li>
<li>Achieved an impressive 3-star rating in the Food Made Good Standard, scoring 92% overall and 91% specifically in environmental practices</li>
</ul>
The Assemblies&#8217; journey showcases how urban hospitality venues can lead in sustainability while building strong community connections. Since their inception in 2009, they&#8217;ve demonstrated that local sourcing and environmental responsibility can coexist with business success. What sets them apart is their data-driven approach to sustainability: analysing carbon ratings, implementing local sourcing policies, and creating innovative menu solutions. Their comprehensive strategy includes everything from sound system upgrades to waste reduction initiatives, making sustainability integral to their operation.
Anna Blightman, Brand Marketing Manager, said:
<blockquote>Something that our partnership has allowed us to do, is lay all the data out on the table so that we can actually look at it, and stand to analyse it and understand where we can make changes. If we don&#8217;t start now, when will we start?</blockquote>

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As these leading hospitality companies show, meaningful climate action can drive significant business benefits—from stronger customer and employee engagement to enhanced brand reputation and risk mitigation. By taking a thoughtful, transparent, and impactful approach, businesses can pave the way for a sustainable future.
Ready to take the lead in climate action? Book in a 30 minute discovery call with our Hospitality sector experts and find out more about partnering with Ecologi to measure your emissions, set reduction goals and fund high-quality climate action on the road to net-zero.

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