Last Updated:
February 14, 2024
Co-Benefits explained
The transition to a low carbon economy is on every CEO's agenda nowadays. The impacts of climate change and responses to it will transform every business sector in the coming decades. Although Climate change will affect a majority of companies, all will be expected to contribute to its solution.
Nevertheless, it is challenging for most companies to devise and implement a credible decarbonisation strategy. The transition requires new ways of doing business, including new ways of displaying capabilities and resources and new ways of thinking. But despite the challenges, companies around the world are scaling up their decarbonisation commitments.
We can see this trend with the number of companies committing to reducing emissions. More than 2000 companies have confirmed emissions reduction targets under the Science Based Target initiative (SBTi). Additionally, more than 370 have committed to The Climate Pledge, pledging to achieve net zero emissions by mid-century or sooner.
For most companies and investors, carbon credits play a crucial role in their Net-Zero strategy. They allow companies to make earlier and more ambitious commitments. Credits allow companies to reduce their current emissions through offsets, while taking cost-effective steps to reduce future emissions through asset rotation and business model development. In the long term, credits can play an essential role in offsetting difficult-to-avoid emissions from products for which no low- or zero-emission options exist.
The growing interest in recent years is also reflected in the Voluntary Carbon Market (VCM), which organises the pledging and trading of carbon credits. In 2022, the demand for carbon credits is at its peak. Prices have increased by more than 140% since 2021 and forecasts assume that demand for credits will increase 15-fold by 2030, to $50 billion per year.
But the voluntary carbon market has a problem. It cannot cope with demand. Access, which plays a crucial role in the global effort to combat climate change, is often limited to large organisations and is characterised by opaque pricing and market inefficiencies. Furthermore, due to a lack of transparency and credibility, it has faced a number of problems in recent years.
This report examines the key role for on-chain carbon credits as part of net zero strategies and the VCM. It was prepared by senken to help business decision makers identify and understand the best use of credits for their business.

What are Co-Benefits?

Co-benefits refer to any positive outcomes that a carbon credit project generates in addition to the primary goal of emission reductions or removals. These benefits support broader sustainability objectives, which align with social, environmental, and economic development goals.

Types of Co-Benefits

Co-benefits manifest in various forms:

  • Environmental Co-Benefits: These include improved air and water quality, biodiversity conservation, and enhanced ecosystem services.
  • Social Co-Benefits: Benefits such as improved public health, job creation, poverty alleviation, and education advancements fall under this category.
  • Economic Co-Benefits: They involve stimulating local economies, creating sustainable business practices, and elevating income levels.

Measuring Co-Benefits and Alignment with SDGs

Co-benefits are often aligned with the United Nations' Sustainable Development Goals (SDGs), providing a framework to assess the wider impact of carbon projects.

For example, a conservation project such as Rimba Raya not only aids in climate action (SDG 13) but also supports 16 other SDGs covering social goals such as no poverty (SDG 1), zero hunger (SDG 2), gender equality (SDG 5), and decent work and economic growth (SDG 8).

The United Nations Sustainable Development Goals
The 17 Sustainable Development Goals

Utilising Co-Benefits in Carbon Credit Portfolios

Incorporating co-benefits into a portfolio of carbon credits provides companies with a way to optimise their sustainability impact and potentially address other ESG goals in the process. A balanced portfolio with a mix of technological and non-technological credits can achieve comprehensive climate action while addressing a range of environmental and social issues.