A Guide to Carbon Credits for SMEs: Turning Climate Change Responsibility into Opportunity

Small and medium-sized enterprises (SMEs) play a critical role in the global economy and are increasingly expected to contribute to climate solutions.

One impactful way SMEs can address their carbon footprint is by engaging with carbon credits. While carbon credits offer potential benefits, it is essential to understand their limitations and alternative strategies for effective climate action.

"We need to dramatically reduce emissions and begin removing carbon from the atmosphere in a sustainable and scalable way" . (WEF)

What are carbon credits?

Carbon credits represent a quantifiable reduction of one metric tonne of CO₂ or equivalent greenhouse gases. They are part of broader carbon offset schemes designed to counterbalance emissions.

By purchasing or earning these credits, businesses can support projects like renewable energy, forest conservation, or methane capture that reduce or remove emissions globally​. (source: NXTGEN Energy Ltd)

The benefits of carbon credits for SMEs (source: Carbon Credit Capital)

1. Aligning with customer expectations: Many customers prefer businesses that demonstrate environmental responsibility. Investing in carbon credits showcases a commitment to sustainability.

2. Achieving net-zero goals: SMEs can meet their net-zero targets by offsetting unavoidable emissions.

3. Market competitiveness: Sustainability-focused businesses often enjoy stronger brand loyalty and market differentiation​.

Limitations of carbon credits

While carbon credits can play a role in a broader sustainability strategy, they are not a standalone solution. Critics argue that carbon offsetting can sometimes shift focus away from reducing emissions at the source. Overreliance on offsets might enable businesses to delay necessary transitions to low-carbon practices. Furthermore, not all offset projects are equally effective, with some criticised for lack of transparency or verifiable impact​. (source: The Australia Institute)

How to get started

For SMEs in the UK, accessing carbon credits involves the following steps:

• Understand Your Carbon Footprint: Start by measuring your emissions. Tools like the SME Climate Hub offer free resources to guide you through this process.

• Engage in Local or Global Projects: SMEs can invest in projects aligned with their goals, from renewable energy in the UK to forest restoration abroad.

Examples: impact in action

Organisations that have embraced carbon credits report positive impacts when used alongside emissions reductions:

Durham County Council Urban tree challenge

Durham County Council's Urban Tree Challenge Fund: This initiative highlights a successful local approach to enhancing urban green spaces by planting thousands of trees in deprived areas. The project improved community wellbeing, biodiversity, and carbon sequestration.(source: Durham County Council)

Devon County Council's Carbon Offset Program: This program focused on purchasing and creating local carbon offsets through verified woodland and peatland projects, emphasising nature-based solutions. Despite challenges such as land scarcity and market speculation, it highlights a pathway for regional SMEs to invest in localised climate solutions.(source: Local Government Association)

Devon County Council's Carbon Offset Program

The bigger picture

Carbon credits can serve as a tool for addressing unavoidable emissions, but they are not the ultimate solution to climate change. SMEs are encouraged to focus on reducing their emissions through renewable energy, waste reduction, and sustainable sourcing as a priority. By integrating carbon credits into a broader climate strategy, businesses can achieve tangible impact while contributing to systemic change.

How Simplify Climate can support you?

Navigating the complexities of sustainability and climate change action can be overwhelming for SMEs, but you don’t have to face it alone.

Simplify Climate is dedicated to helping businesses embrace meaningful climate strategies that align with their goals. From clarifying carbon credit options to guiding you toward impactful local projects, we ensure your efforts deliver tangible benefits while staying true to your sustainability vision.

Get in touch with us at help@simplifyclimate.co.uk to explore how we can tailor solutions to your business needs.

Together, we can simplify climate action, build resilience, and create a sustainable future.