- 92% of senior decisionmakers are confident that their organisations will meet their net zero targets
- 73% of organisations are planning to offset their hard-to-abate emissions using carbon credits
- 64% of senior decisionmakers say their companies have already bought carbon credits
- 76% of senior decisionmakers would be more likely to buy carbon credits if they were in the UK
Octopus Investments (Octopus), an investment manager on a mission to invest in the people, ideas and industries that will change the world, has today published landmark research to provide clarity and confidence in the carbon credit market.
The comprehensive report entitled “Net Zero: The Second Stage – the need for quality in the carbon credit market” is based on a survey of 300 UK-based senior business leaders across multiple sectors, data analysis from third party platforms such as the Science Based Targets Initiative (SBTi) and qualitative interviews with industry experts and investment professionals.
The data shows that almost all (86%) organisations surveyed have net zero targets in place. As for what those targets are, the most common response of 39% of respondents was net zero by 2035. The second most popular target is the more pressing target of 2030 (33%), followed by 2040 (19%). When they were then asked how confident their organisation was that it would meet these net zero targets, the results were extremely high, with 92% expressing confidence in meeting these deadlines.
However, this confidence may indicate an underestimation of what is required to truly get to net zero. In fact, when asked how their companies intend to reach net zero almost a fifth (19%) believe that their organisation will eradicate emissions altogether – but this is near impossible.
The report comes at a time where UK businesses are accelerating toward net zero but are realising that while decarbonisation has taken them part of the way, hard-to-abate emissions will require an additional tool: carbon credits. The data revealed that 73% of businesses have had this realisation and are already planning to offset the hard to abate emissions by buying carbon credits.
Despite this majority, the data shows that the knowledge of the carbon credit market remains low among decision-makers. Less than half (42%) of the senior leaders surveyed got the right answer when asked to define carbon credits. When asked more specifically what the definition of carbon removal credits was, only 46% answered correctly, showing that the nuance of the market is even less understood. Moreover, when looking at the data around the obstacles to UK businesses buying carbon credits, the leading factor cited was the lack of understanding around credits (30%).
High-quality removal credits are essential for offsetting emissions that cannot be directly reduced. Removal credits, those that physically remove carbon dioxide from the atmosphere, represent an opportunity to provide measurable environmental impact and align corporate investments with national and global sustainability goals. This is opposed to avoidance credits, which focus on preventing future emissions and often fail to deliver tangible reductions.
Knowing the difference between carbon removal and carbon avoidance is key when the data shows that 64% companies have already started buying carbon credits. If this figure is considered alongside the knowledge gap it becomes clear to see why past scandals have arisen. It has left businesses vulnerable to missteps, relying on lower-quality credits that risk accusations of greenwashing or failing to deliver meaningful environmental impact.
The problem is further compounded by the absence of guardrails and transparency issues, which has been exacerbated in emerging markets where the majority of credits have originated. This “double whammy” of avoidance credits and insufficient oversight has eroded trust in the market. This came through in the data, with 28% of businesses citing transparency as a key barrier to purchasing carbon credits.
Addressing these shortcomings is essential to restoring confidence in carbon markets and ensuring that credits deliver real, measurable benefits. The hesitancy to navigate a system perceived as opaque and unreliable, risks stalling progress on hard-to-abate emissions at a time when urgent action is needed to meet climate goals.
In order to combat these issues, targeted efforts to educate decision-makers and equip them with the tools to make informed choices is required. Two of the most important lessons that the report aims to make clear are that not all carbon credits are created equal and what makes a high-quality carbon removal credit.
The latter is particularly important according to the survey results; when senior leaders were asked their top reason for selecting a carbon credit provider, quality was ranked the top priority at 62%. This is also why the report refers to the ‘The Second Stage’ of the carbon market, the evolution of what is known as of the Voluntary Carbon Market from 1.0 to 2.0, which is really tackling quality as a
key priority.
One aspect of quality that the report explores is the role of the location of carbon credits. The lack of traceability, often seen with emerging markets projects, ranked 5th of 12 options for why companies hadn’t bought carbon credits. Significantly, when UK businesses were asked if they would be more likely to buy credits if they were produced in the UK, an overwhelming 76% said they would be. This could be due to the UK’s favourable legislative landscape and strong government support for carbon credits or could be down to businesses wanting to have a clear, domestic line of sight on projects depending on where they are based.
The report also looks at the cost of delaying the purchase of carbon credits, the need for cross-industry collaboration and the role of institutional investment in this nascent asset class. This comes following the launch of Octopus’ own Natural Capital Strategy last year, which looks to deliver tangible benefits for investors, communities, and the planet.
Lieven Debruyne, CEO of Octopus Investments’ institutional business, said:
“At Octopus Investments, we’re committed to supporting a more sustainable future. The path to net zero is about more than meeting regulatory targets – it is about building a lasting legacy of climate leadership and ensuring a resilient planet for future generations. By moving forward together, businesses, governments, and investors can ensure their actions contribute to achieving net zero goals and leave a lasting, positive impact on the planet.”
Mike Toft, Senior Fund Manager at Octopus Investments, said:
“This report emerged from our firmly held belief that businesses need access to high-quality, traceable credits that align with their sustainability goals and the UK government’s legislated net zero target of 2050. To help businesses along the way, we wanted to address the challenges we’ve observed from our research– from understanding the role of carbon credits to navigating the complexities of transparency and accountability – and then offer actionable insights to empower businesses on their path to net zero.
“For the UK’s corporate sector, bridging the knowledge gap around carbon credits isn’t just beneficial – it’s necessary. By focusing on education, collaboration, and high-integrity solutions, we can help restore trust in the market and set a new standard for climate action. The findings presented in our report are an invitation for UK businesses to take charge of shaping a transparent, trustworthy carbon credit market because the cost of inaction is too great.”