How Businesses Use Carbon Units: Addressing Carbon Footprints with Real Strategies

Businesses today face increasing pressure to take responsibility for their carbon footprints. Regulatory requirements, investor expectations, and consumer preferences reshape corporate strategies, making emissions management a key component of long-term sustainability planning. Carbon units play a role in these efforts, offering companies a way to offset emissions that are difficult to eliminate. However, their use varies significantly between businesses operating under compliance regulations and those taking voluntary action.

Close-up of a newly planted tree seedling in front of office buildings, with employees visible in the background. AI generated picture.

For industries such as energy and manufacturing, regulations impose strict emission caps, requiring companies to either reduce their emissions or purchase carbon units to stay within legal limits. Systems like the European Union Emissions Trading Scheme (EU ETS) have set clear frameworks, forcing businesses to integrate carbon management into their financial planning. Meanwhile, in the voluntary space, corporations are increasingly using carbon units to strengthen their sustainability credentials, with many pledging net-zero targets years ahead of regulatory requirements. The voluntary carbon market has been growing rapidly, surpassing $4 billion in value in 2024, as companies recognise the financial and reputational benefits of proactive environmental strategies.

The debate, however, is not just about buying units but about how businesses integrate them into their broader environmental commitments. The most effective approaches ensure that units serve as a complement to emission reduction efforts rather than a substitute for them.

Measuring and Reducing Emissions Before Offsetting

Before a company even considers carbon units, it must first understand its total emissions and identify meaningful ways to reduce them. Without a clear baseline, offsets become a superficial exercise rather than a credible sustainability tool. Businesses must begin with a comprehensive carbon footprint assessment, analysing direct and indirect emissions across their operations and supply chains. With the rise of carbon accounting tools and lifecycle analysis methodologies, companies can now pinpoint emission hotspots with greater accuracy, allowing for targeted reduction strategies.

CO2 expert tool, DGB. Source: https://www.green.earth/carbonfootprints 

Reducing emissions requires a strategic approach, often involving investments in energy efficiency, clean energy transitions, and supply chain improvements. Industrial manufacturers, for instance, are redesigning production processes to lower energy consumption, while global retailers are embedding sustainability criteria into procurement decisions. Some companies go further, integrating low-carbon innovations into their core business models, such as tech firms shifting data centres to 100% renewable energy or transportation companies investing in electric fleets.

View of tree seedlings and nursery employees, with the city skyline and wind turbines in the background. AI generated picture.

Carbon units enter the equation for past emissions and when direct reductions reach a practical limit. A company that has maximised its efficiency gains and transitioned to sustainable energy sources will still have residual emissions—often from logistics, raw material extraction, or product use. In these cases, investing in verified carbon offset projects, such as reforestation initiatives or carbon capture technologies, allows businesses to balance out their remaining footprint in a way that aligns with long-term climate commitments. Carbon reduction takes time and investment, and to truly address the carbon footprint of your business, you have to reduce and compensate for emissions.

Without carbon compensation, a net-zero strategy based only on reductions will leave your business with a significant historical footprint by 2030/2050. The key is ensuring that offsets are used strategically and as a complementary measure to reduction.

How Companies Use Carbon Units Strategically

The effectiveness of carbon units depends on how they are integrated into broader corporate strategies. Some companies use them as a stopgap measure, while others align them with long-term decarbonisation efforts. A closer look at industry leaders highlights the strategic implementation of carbon compensation.

In the technology sector, companies like Microsoft have committed to not only offsetting their emissions but actively removing historical emissions from the atmosphere. Microsoft’s approach goes beyond purchasing units; it invests in carbon removal technologies and nature-based solutions while systematically reducing operational emissions. Its $1 billion Climate Innovation Fund, which supports projects in direct air capture and reforestation, demonstrates how carbon units can be part of a broader sustainability framework rather than a standalone purchase.

In industries with limited short-term decarbonisation options, such as aviation, companies rely on carbon units to bridge the gap while developing long-term solutions. Airlines like Delta and Air France have incorporated offset programs into their ticket pricing, giving passengers the option to compensate for flight emissions. While these units provide an immediate way to address emissions, airlines are simultaneously investing in sustainable aviation fuels (SAF) and fleet modernisation to reduce dependency on offsets over time.

These examples illustrate that carbon units are most effective when they serve as part of a structured emissions strategy. Companies that integrate offsets alongside substantial emission reductions not only enhance their environmental credibility but also position themselves as leaders in the transition to a lower-carbon economy.

Best Practices for Using Carbon Units Effectively

For carbon units to serve as a credible tool in corporate sustainability, they must be used strategically but the selection of carbon units also plays a crucial role. Not all units offer the same level of impact, and concerns over greenwashing have led to increased scrutiny of offset programs. High-quality units come from projects that are third-party verified and provide measurable, long-term environmental benefits. Nature-based solutions, such as reforestation and wetland restoration, have gained traction due to their ability to sequester carbon while supporting biodiversity and local communities. 

Close-up of a bee in a meadow in Africa, with wild animals visible in the background. AI generated picture.

Beyond selection, transparency in reporting is essential. Investors, regulators, and consumers increasingly demand clear disclosure on corporate environmental initiatives, making it vital for businesses to communicate how offsets fit into their broader sustainability plans. Companies that openly report their carbon unit purchases, including project details and impact metrics, not only build trust but also set higher standards for accountability within the market.

Carbon Units as a Strategic Sustainability Tool

Carbon units provide businesses with an essential mechanism for managing emissions, but their effectiveness depends on how they are integrated into corporate strategies. When used responsibly—alongside significant emissions reductions and a commitment to long-term sustainability—they offer a practical way to address unavoidable and past emissions while supporting global environmental initiatives.

A newly planted forest in Africa. AI generated picture.

As the carbon market continues to evolve, businesses that take a strategic, transparent approach to carbon units will be best positioned for long-term success. Beyond meeting regulatory obligations or achieving net-zero targets, companies that leverage carbon units wisely strengthen their market position, build investor confidence, and contribute to meaningful environmental impact. In the years ahead, the most forward-thinking businesses will not just use carbon units to offset emissions but will embed them within a larger framework of environmental action, ensuring real impact and long-term sustainability.