After a turbulent year for sustainability in 2025, many businesses are reassessing how to move forward on climate action. While the impacts of global warming are accelerating, political and regulatory support for climate initiatives has become increasingly uneven across regions. For companies navigating climate risk, sustainability disclosures, and reputational exposure, this uncertainty raises a critical question: how will climate action be credible and valued over the long term?
As we look to 2026, two clear themes are emerging. First, businesses need a steady, long-term approach to managing carbon emissions that is resilient to political shifts. Second, governments, global coalitions, and leading climate frameworks are reinforcing the role of high-integrity carbon credits—providing clearer rules for how credits can be used alongside decarbonization, establishing global quality standards, and offering guidance that protects companies from greenwashing accusations. Together, these developments signal an important evolution in how carbon credits fit into credible climate strategies.
Executive Takeaway
In 2026, credible climate action is no longer about choosing between decarbonization and carbon credits—it is about using both correctly. New guidance from global coalitions and frameworks such as The Coalition to Grow Carbon Markets and the Science Based Targets initiative (SBTi) is clarifying how high‑integrity carbon credits can complement sustained emissions reductions, mobilize global climate finance, and support transparent, defensible climate claims. For businesses, these developments reduce uncertainty and greenwashing risk while reinforcing the need for disciplined project selection, clear disclosures, and alignment between carbon credit attributes and their intended climate use.
Businesses Need a Steady, Long‑Term Strategy for Carbon Footprint Management
Global warming and climate change are happening, and they are not going away. Businesses and individuals are feeling the effects in very real ways. Higher temperatures are increasing our energy consumption and costs. (2) More frequent and severe storms are driving up insurance costs. (3) Tidal flooding events are more common. (4) While more talked about signs of global warming like shrinking glaciers and retreating sea ice feel like another world, global warming will increasingly affect all of us.
Businesses need to view carbon emissions are a long-term liability risk in addition to corporate environmental responsibility. Companies already face negative public and customer perception for greenhouse gas emissions, and regulatory penalties could increase over time. 2026 will have several new regulatory requirements in sustainability and climate. Australia, Hong Kong, Indonesia, Malaysia, Singapore and Thailand have enhanced their climate-related disclosure requirements. (7) EU’s Carbon Border Adjustment Mechanism (CBAM) also enters its definitive phase. This trend will only continue. As the effects of global warming build, the historical impacts that a business has not addressed become an increasing liability concern. advances
Advances in understanding climate science, developments in zero emission technology, and progress in greenhouse gas regulation teach us that climate action will not be an abrupt shift. It will be a long-term sustained transition by businesses, governments, and society. Good business leaders recognize the difference between short-term political fluctuations and long-term drivers like global warming. It is inefficient for businesses to reactively stop and start programs based on the trends of the moment. Successful business leaders recognize long-term drivers and maintain programs to create future competitive advantages. The best way to mitigate the liability of greenhouse gas emissions is with consistent progress and action over time. Businesses who continue to implement and advance their climate programs will reduce their historic greenhouse gas liability and position their companies for long-term success. This is also an important way for a business to show customers that it cares about its impact on the planet.
Carbon Credits are an Important Part of Climate Action, Especially in Times Like This
Widespread and consistent government support for the transition to a net-zero economy has been difficult to achieve. Progress is challenging when government programs stop and start with political changes. A major benefit of voluntary carbon projects is that they don’t rely on government support. They rely on climate finance from businesses and individuals who purchase carbon credits to take responsibility for their footprint by contributing to global greenhouse gas reduction. Carbon credits are a way for businesses and individuals to drive carbon reduction and sustainability independent of the politics of the moment.
Carbon markets also help reduce the cost to society for climate action by directing funding to projects that achieve the biggest impact at the lowest cost. Even long-time climate activist Bill Gates acknowledged that social well-being must be maintained while we address global warming. (1) With limited funds to drive economic growth, social welfare, and carbon reduction, it is in everyone’s best interest to make climate action as efficient as possible.
Lastly, while the priority is eliminating our own carbon emissions wherever possible, we know that is not enough. Our global carbon reduction needs are bigger than our ability to eliminate our emissions. Supporting high-quality voluntary carbon projects alongside science-aligned carbon reduction is the new formula for leading climate action.
Governments and Climate Leaders want Aggressive Carbon Reduction and Global Climate Finance
Government and climate leaders focused on achieving the greatest climate progress to recognize the value of carbon credits in climate action. The governments of UK, France, Switzerland, Luxembourg, Canada, New Zealand, Kenya, Panama, Peru, and Zambia are leading The Coalition to Grow Carbon Markets which launched at London Climate Action Week 2025. The goal of The Coalition is to, “drive climate-positive growth and accelerate the pace of emissions reductions worldwide by strengthening the incentives businesses need to invest in high-integrity carbon credits across carbon markets, including voluntary and Article 6 markets.” (5) It recognizes that carbon credit markets are an under-used tool to drive investment to the global low-carbon transformation and put a value on the greenhouse gas (GHG). (5)
“With a $1.3 trillion annual climate finance gap, we must unlock the full potential of private sector action to accelerate emissions reductions and drive investment at scale.” Philippe Varin, Chair, International Chamber of Commerce (ICC). (5)
Coalition partners include World Business Council for Sustainable Development (WBCSD), Integrity Council for the Voluntary Carbon Market (ICVCM), World Bank, International Chamber of Commerce (ICC), and International Emissions Trading Association (IETA), which have worked closely with the Coalition to inform and shape the outputs.
The Coalition’s Shared Principles aim to align private sector action with national and global climate goals by providing direction, clarity, and confidence for companies to grow their voluntary carbon credit demand, alongside deep decarbonization, and to make credible claims regarding these actions. Companies who follow these rules ensure a high standard for carbon project integrity and also have important protection against greenwashing accusations. The Shared Principles include: (5)
- Use carbon credits in addition to decarbonization
Companies should prioritize measurable and sustained direct and indirect emissions reductions with carbon credits used in addition to decarbonization, in line with the mitigation hierarchy
- Use carbon credits with high environmental integrity
Companies should retire carbon credits of high environmental integrity
- Uphold fair price, social safeguards, and, where applicable, support co-benefits for people and nature
Companies should source carbon credits from activities that meet rigorous requirements for social, economic, and environmental safeguards
- Disclose carbon credit use publicly and transparently
Companies should publicly and transparently disclose how carbon credits are used as part of their climate strategies
- Make accurate, substantiated claims involving carbon credit use
Companies should ensure that claims involving carbon credits are clear, truthful, and substantiated, avoiding greenwashing and misleading representations
- Support growth of high-integrity carbon credit markets
In a rapidly evolving market for voluntary carbon credit use, companies should cooperate with other market participants to help improve market functionality.
SBTi and the Evolution of Business Climate Claims
Science Based Targets Initiative (SBTi), the leading global framework for business climate action, is also undertaking its first broad revision of the Net Zero Standard. Among other changes, SBTi will add rules for the use of permanent carbon removals in business net-zero plans and recognition for addressing ongoing emissions with high-integrity carbon credits. The new Net Zero Standard is expected to be published in spring 2026 and becomes mandatory beginning January 1, 2028. There are two Key Elements of the Net Zero Standard Revision Related to Carbon Credits: (6)
- Companies can start using durable Carbon Removals now to achieve near-term and long-term carbon removal goals for Scope 1 Residual Emission requirements in their net-zero plan.
- SBTi will also recognize companies who use high-integrity carbon credits to address “ongoing emissions” (those released during the decarbonization journey), if they also achieved their carbon reduction goals for the year. SBTi states that by taking responsibility for these ongoing emissions, companies can help limit temperature overshoot, reduce transition risks, and support climate solutions.
This also reflects the increasing importance of aligning the attributes of a carbon reduction project with the intended use. SBTi identifies that only durable removal credits can be used for science-aligned global net-zero progress because the carbon removal has the same lifetime as carbon emitted. Non-durable carbon removals and carbon reductions/avoidances can be used to address ongoing emissions because they are not tied to a science-aligned net zero goal. This element of SBTi focuses instead on driving climate finance that supports the transition to a net-zero economy and invests in natural climate resilience.
SBTi also provides support for businesses who make climate claims when they follow these rules. The latest update on the Corporate Net Zero Standard Revision says, “Companies that meet the recognition criteria and public reporting criteria in CNZS-C25 shall be eligible to make claims related to Ongoing Emissions Responsibility. (6) Similar to The Coalition to Grow Carbon Markets, companies who follow SBTi rules ensure a high standard for carbon project integrity and have important protection against greenwashing accusations. SBTi also provides sample statements on how to make a credible claim about addressing ongoing emissions: (6)
- “Between 2025 and 2030, we took responsibility for 50% of our ongoing emissions over the five-year target timeframe as a contribution to global net-zero, achieving SBTi Ongoing Emissions Responsibility Recognized status.” Mandatory elements:
- “We funded 100,000 t CO2e of third-party verified emissions reductions beyond our value chain to take responsibility for 50% of ongoing emissions as a contribution to global net-zero.”
- “We supported 800,000 tCO₂e of verified ex-post mitigation outcomes (40% of our total ongoing emissions) through emission reductions and carbon removals.”
It is worth mentioning that many, including SBTi, have moved away from the phrase “offsetting” because some interpreted it to suggest that carbon emissions have been cancelled. Instead, the climate science community is moving towards the view of carbon credits as a positive contribution to the global climate. At Terrapass we also increasingly refer to carbon credits as a climate contribution. However, “carbon offsetting” is historically and today one of the most widely recognized terms for climate action. Many people and companies who want to make a climate contribution still use this phrase. It is important to connect with everyone looking for help with climate action. For this reason, Terrapass still references carbon offsetting as we also transition towards climate contribution language.
Resolving Critical Needs for Business Climate Action
The Coalition to Grow Carbon Markets and SBTi Net Zero Standard 2.0 solve problematic gaps in sustainability and climate action. Companies are not in the business of creating sustainability rules. They need independent organizations with scientific and administrative rigor to set rules that can be followed with confidence. Globally aligned standards for carbon project quality are essential. That was lacking historically and led to inconsistencies in project quality that drove much of the controversy about carbon markets. However, new global quality standards like ICVCM have addressed this gap, and we are seeing climate initiatives across the world align with this standard.
In addition to rules for project quality, we also need independent organizations that define how businesses should use carbon credits and promote their climate contributions. The new rules from The Coalition to Grow Carbon Markets and SBTi drive climate progress by giving businesses confidence in how to use carbon credits and how to talk about it. This gives businesses much needed protection from greenwashing accusations by pointing to the rules created by independent global climate leaders.
Build a Credible Climate Strategy
If your organization is evaluating how carbon credits fit into your climate strategy — whether you’re
prioritizing decarbonization, addressing ongoing emissions, or navigating evolving disclosure and climate
claims guidance — Terrapass Advisors can help.
Our team works with businesses to assess project integrity, align carbon credit use with leading global
frameworks, and support transparent, defensible climate claims as part of a long-term sustainability strategy.
Get Started on Your Sustainability Journey
Sources:
(1) https://www.gatesnotes.com/home/home-page-topic/reader/three-tough-truths-about-climate
(2) https://www.climatecentral.org/climate-matters/record-heat-rising
(3) https://www.usnews.com/insurance/homeowners-insurance/climate-change-and-rates
(4) https://www.noaa.gov/news-release/us-high-tide-flooding-continues-to-break-records
(5) https://coalitiontogrowcarbonmarkets.org/shared-principles/
(6) https://sciencebasedtargets.org/developing-the-net-zero-standard
