A carbon credit represents one tonne of CO2e avoided or removed by a project outside your company. Buying one does not change your own Scope 1, 2 or 3 inventory.
What credits cannot do
- Count as reductions. GHG inventories and the ESRS report gross emissions. Credits are disclosed separately.
- Make a product "climate neutral" for EU consumers. Directive (EU) 2024/825 on empowering consumers for the green transition bans claims that a product has a neutral, reduced or positive climate impact based on offsetting. Member states had to apply the new rules from 27 September 2026.
- Replace near-term targets. Science-based target frameworks do not let companies use credits to meet their reduction targets.
What credits can do
- Neutralise residual emissions at net zero, using permanent carbon removals.
- Support a "contribution" claim: "we funded X tonnes of verified climate action", without implying your footprint is cancelled.
- Channel finance to projects such as forest protection or clean cookstoves, if quality is high.
Quality checklist
- Is the reduction or removal additional (would it have happened anyway)?
- Is it permanent, and what happens if it is reversed?
- Was the baseline set conservatively, and is leakage addressed?
- Is it independently verified and retired in a public registry?
- Are there social and environmental safeguards for local communities?
How to report
ESRS E1 asks for removals and credits to be disclosed separately from gross emissions, with the standard and quality criteria used. Keep claims precise and evidence-based.
Last checked 12 October 2026. Educational content, not legal advice.