Carbonomics: How offsets and removals fit into corporate net zero strategy

As climate targets loom, attention is shifting to the complex and fast-evolving world of carbon markets. While most companies are focusing on reducing emissions, many will also need to invest in carbon removal and high-quality credits to achieve net zero. Governments are pushing the agenda too, not just for climate reasons, but for cost control and energy security.

It’s widely acknowledged that global emissions cuts alone won’t deliver full net zero by 2050. When the Science Based Targets initiative (SBTi) set its standard, the goal was clear: reduce emissions by 90%, then neutralise the final 10% using high-quality carbon dioxide removals (CDRs) [1]. Companies powered mostly by electricity, such as tech firms or office-based businesses, are more likely to hit that 90% reduction. But others, including retailers, food outlets, and FMCGs, face a tougher path. Their emissions are tied to sprawling, multi-tiered supply chains and agricultural processes that they can’t fully control. For these companies, a 90% reduction may be out of reach. They will likely need to remove more than 10% of emissions to credibly claim net zero.

Increasingly, our clients ask us: what happens in 2050 when we have to do carbon removals? 

Understanding carbon pricing mechanisms

Carbon pricing is gaining traction globally as a tool to internalise the environmental cost of emissions, driven by the emergence of carbon taxes and greater regulation of carbon markets.

Recent developments include:

• Carbon Border Adjustment Mechanisms (CBAM) in the EU and UK will tax imports based on heavy carbon intensity.
• Denmark’s new tax on agricultural emissions, including flatulence by livestock.
• China’s national emissions trading scheme, which covers over 2,000 power companies and is set to expand across heavy industry.
• COP29 negotiations, which introduced a global carbon market framework under UN oversight, enabled credit trading between countries and companies.

Despite the momentum, investor confidence hinges on governance and transparency. Recent studies suggest that only 16% of credits issued in voluntary carbon markets represent real, additional emissions reductions.

The controversy around carbon offsets

Offsets can be controversial and are criticised for enabling “pay to pollute” behaviour. Their effectiveness hinges on four core principles: additionality, permanence, quantifiability, and social benefit.

It is often hard for companies to judge the credibility of offset schemes when relying on them for carbon neutral claims. Major brands like Nestlé and Ryanair are moving away from offsets, shifting focus toward direct emissions reductions and carbon removals [2].

That said, offsets can play an important role in offering an entry point for companies to decarbonise. The SBTi promote the use of offsets via their Beyond Value Chain Mitigation (BVCM) criteria, recognising that investment in offsets promotes change. It encourages companies to support climate action even where they don’t directly control emissions.

The opportunities behind carbon removal solutions

By 2050, up to 10 billion tonnes of CO₂ will need to be removed annually to stay on track for global climate goals [3]. Companies preparing for this future need to understand the key options. There are two main approaches:

Technology-based:

These include methods like bioenergy with carbon capture and storage (BECCS), direct air capture (DAC), and ocean-based approaches such as alkalinisation, which involves adding minerals to seawater to enhance its ability to absorb and store carbon dioxide. These removal options offer high levels of permanence and scalability, but are still early-stage, in fact they must scale up by a factor of 1000 on today’s levels to remove sufficient CO2 by 2050. And they’re expensive.

For example, direct air capture currently costs between $600 and $1,000 per tonne, largely due to the high energy requirements and the complexity of capturing and compressing CO₂ from ambient air. This must fall below $200 to be viable at scale.

Nature-based:

These solutions restore ecosystems, such as forests, wetlands, or soil health, to sequester carbon. They offer wider benefits, from cleaner water to increasing biodiversity and cleaner air to preventing habitat loss. However, unlike ‌permanent reservoirs, the carbon stored in plants and soils is vulnerable to reversal from wildfires, drought, or land-use change.

Nature-based removals are growing rapidly in regions such as Latin America and Southeast Asia, where large-scale reforestation and regenerative agriculture projects are underway. For many companies, these options offer a compelling ‘triple win’ in addressing the interconnected challenges of climate change, biodiversity loss, and sustainable food systems. But quality and permanence must be carefully assessed.

While carbon markets evolve, a growing number of companies are also exploring how nature-based solutions can support both climate and biodiversity goals.

Next, Caroline takes a closer look at the rise of nature and biodiversity credits, and why the real opportunity may lie in projects that deliver more than just carbon removal.

Nature credits: a new frontier or a risky proposition?

A few months ago, a few colleagues and I sat down to discuss the intersection of natural capital and carbon credits.While there is an established market for carbon credits, it’s not without controversy [4]. Nature-based solutions for carbon capture and storage are increasingly seen as a no-brainer, but as with most things in sustainability, how it's done really matters.

Despite the best intentions, there’s a risk that our already nature-depleted landscapes could end up hosting monocultures intended for carbon offsetting - well-meaning but ultimately damaging. The good news? It doesn’t have to be this way. We believe there’s a much better route forward. At SLR, we’re building a practical, science-led approach to help our clients navigate this space with clarity and confidence. Our focus is on combining technical integrity, biodiversity uplift, and community benefits in a way that’s both credible and achievable.

Rising demand for nature-based solutions

Carbon sequestration via nature-based solutions (natural climate solutions) represents an obvious holistic solution to the above challenges [5]. Many organisations have committed to becoming carbon neutral or have set science-based targets, which will require offsetting their residual emissions in addition to traditional abatement strategies [6]. Offsetting and insetting will likely become even more mainstream, with the Science-Based Targets initiative (SBTi) already including Forests, Land, and Agriculture (FLAG) in its framework [7]. Clearly, there’s an opportunity to integrate the carbon credit and nature credit markets more effectively.

At SLR, we’re helping clients improve the credibility of their projects through better monitoring and data. We've partnered with rePLANET to support biodiversity and carbon credit initiatives using satellite imaging and AI-based monitoring. In parallel, we worked with St. Modwen using a tool originally developed to assess Biodiversity Net Gain (BNG), adapting it to also estimate Forests, Land and Agriculture (FLAG) emissions and advise on carbon stock loss mitigation in development planning. We’ve also used FLINTpro with our GIS team to estimate emissions from land use change across client estates, enabling spatially targeted interventions.

But it’s not just about technology. Advancements in biodiversity monitoring are also opening up new opportunities to involve local communities through field-based data collection. This reduces reliance on professional ecologists for routine tasks, cuts costs, and empowers communities, while enabling ecologists to focus on higher-value activities such as study design, coordination, and data interpretation. Ultimately, the goal is not just to measure carbon, but to embed biodiversity outcomes into the design of credit-generating projects from the outset.

Nature and carbon: two sides of the same coin 

We can’t afford to tackle climate change and biodiversity loss separately. Today’s nature crisis, the rapid decline in biodiversity, is one of the most pressing challenges we face. From depleting ecosystems to disappearing species, the loss of nature is not just an environmental issue; it’s a business imperative. We depend on healthy ecosystems for clean water, food, and the climate services that sustain us. Without them, no amount of carbon credits or emissions reductions will be enough.

By not integrating biodiversity into the carbon credit system, we risk missing out on a holistic solution. Biodiversity net gain should be prioritised alongside carbon sequestration. Companies with a clear focus on biodiversity and ecosystem protection can secure a competitive advantage while contributing meaningfully to a sustainable future.

With the market for biodiversity and natural capital credits set to grow significantly in the coming years, it’s essential that we seize this opportunity now.

This growth is driven by the increasing need for transparency and robust reporting, as seen in the evolution of frameworks like the EU’s Corporate Sustainability Reporting Directive (CSRD) and the Taskforce on Nature-related Financial Disclosures (TNFD).

Navigating complexity: credibility, quality, and risk

While interest in carbon and nature credits is rising, so is scrutiny. These markets remain complex, fragmented, and difficult to assess at the point of purchase. “Junk” credits, which fail to deliver real environmental outcomes, can pose major reputational risks for buyers.

Biodiversity uplift is particularly hard to measure and verify. Quantifying biodiversity or natural capital net gain, while achievable, is not as straightforward as measuring carbon emissions reductions. Methodologies such as Operation Wallacea’s monitoring approach are currently under consultation for use in UK woodland and peatland projects. Meanwhile, the IUCN Global Standard for Nature-based Solutions offers a broader framework, with eight criteria and 28 indicators to assess quality and effectiveness.

Even with clear standards, risks remain. Nature-based projects can unintentionally lead to land conflicts or human rights issues if poorly designed. Credible due diligence must go beyond the carbon metric, addressing social, ecological, and governance dimensions.

Clearly, anyone looking to leverage the opportunity presented by carbon or natural capital credits will have to navigate a complex web of technical, ethical, and financial considerations.

Bringing it all together: risk, rigour, and opportunity

While low-cost carbon offsets are available today, they don’t guarantee a credible pathway to decarbonisation. Carbon removals, particularly nature-based solutions, are still developing. They can be costly, hard to compare, and often lack standardisation. Yet the market is moving quickly. Investment is flowing into both natural capital and engineered solutions, and new tools are making it easier to assess credibility and impact.

At SLR, we see this as a pivotal moment. Choosing the right projects, at the right time, with the right safeguards in place will be essential to delivering on both climate and nature goals. That’s why we’re investing in science-led methodologies and partnerships, from satellite imaging and AI-powered monitoring to spatial planning and stakeholder engagement, to help clients act with confidence.

It’s the same question that kicked off the conversation with colleagues that inspired this piece: how do we make this work, credibly and meaningfully? As historian and author Rutger Bregman puts it, “ambitious people should focus on noble causes”. That’s what drives us, and it’s why we’re helping clients navigate these emerging markets with clarity, care, and purpose.

This isn’t just a technical challenge. It’s a strategic one. Nature and carbon markets are complex, and there’s no one-size-fits-all approach. But companies that combine ambition with rigour and bring biodiversity into the heart of their climate strategies, are better positioned to create long-term value for both their business and the world around them.

Advisory Digest

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References:

[1] https://sciencebasedtargets.org/ 

[2] https://www.esgtoday.com/nestle-moves-away-from-carbon-offsets-to-focus-on-emissions-reductions-across-brands/ 

[3]https://www.weforum.org/stories/2025/06/net-zero-entering-an-era-of-quiet-progress/#:~:text=To%20stay%20below%201.5%20degrees,exceeding%20a%20single%20election%20cycle.

[4] https://www.theguardian.com/environment/article/2024/may/30/corporate-carbon-offsets-credits 

[5] https://www.slrconsulting.com/insights/the-journey-to-nature-positive-unlocking-the-power-of-nature-based-solutions/

[6] https://sciencebasedtargets.org/target-dashboard 

[7] https://sciencebasedtargets.org/sectors/forest-land-and-agriculture 

[8] https://www.meticulousresearch.com/product/biodiversity-and-natural-capital-credit-market-6154%22%20/l%20%22:~:text=The%20biodiversity%20and%20natural%20capital%20credit%20market%20analysis%20indicates%20a,and%20natural%20capital%20credit%20market%3F