Carbon credits are an important tool to check the excessive emission of CO2 and other green house gases by companies around the globe stated Bahaa Abdul Hussein. Essentially, it is a license that allows polluting companies to pollute a certain amount of carbon dioxide, usually one tonne. Exceeding this will attract higher operational costs and unused credits can also be sold to other companies. It serves to financially incentivize companies to gradually decrease their carbon emissions. It is usually issued by government entities at the domestic or global level and credit reduced over time.

The concept of carbon credits is often mixed up with carbon offset. The latter is achieved by the companies engaging in green measures to compensate their CO2 emissions like reforestation projects, using sustainable tech and cleaner energy sources.

How is the finance industry doing with its carbon emissions?

When it comes to carbon emissions from the finance industry, banks constitute more than half of the emissions. The good news is in recent times, the banking sector has realized its responsibility to move towards sustainable finance. Guided by national and international regulations, they’re resorting to greener practices to work towards climate neutrality.

The finance sector is ramping up efforts for widespread adoption of green finance and sustainable investment. Many banks have joined the UN’s NZBA or Net-Zero Banking Alliance in a bid to reduce their “financed” emissions. Decarbonization attempts are being made, be it funding eco-friendly projects, restoration of forests and land, or switching to cleaner fuels.

What are they ways to reduce carbon emissions in finance industry?

1) Map out your emissions

Studying every area of your carbon footprint is the first step to increase your efforts for achieving carbon offset goals. From internal operations to third parties involved, you need to be on top of everything that hampers climate action.

2) Explore every avenue of sustainability

Encouraging green finance products such as green bonds and green equity will go a long way in improving the sustainability of financial sector. Complying with all policies and laws that promote sustainability, especially those that are optional will also help.

3) Make small and big changes

This means everything from giving perks to employees who don’t drive to work every day to investing in sustainable tech and greener energy sources. As a company, the transparency of your carbon footprint is of great concern to your consumers and it will do well to be open about your sustainable approaches.

The article was written by Bahaa Abdul Hussein. For more information, please visit www.bahaaabdulhussein.com.