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Ms. Seungju Choi
Ph.D. Candidate in Business (Accounting)
Miami Herbert Business School
University of Miami

Under mounting pressure to address climate change, many companies are opting for voluntary carbon credits, sparking ongoing debate about whether these credits undermine incentives for meaningful action. This paper investigates voluntary carbon credit purchases among U.S. companies. Using firm responses to the Carbon Disclosure Project (CDP) survey, I observe a growing trend in corporate purchases of voluntary carbon credits, with a preference for third-party verified credits. Examining the characteristics of companies that voluntarily purchase carbon credits, I find significant associations between companies’ purchasing decisions and their emissions profiles. Heavy polluters tend to avoid carbon credits, while those with greater exposure to uncontrollable Scope 3 emissions are more inclined to purchase them. Notably, credit-purchasing companies show greater efforts toward emissions reduction compared to non-purchasing companies. Finally, I find that companies’ carbon credit purchases are associated with lower future emissions and higher-quality climate-related disclosure. Overall, my findings suggest that companies use carbon credits as part of their broader climate strategy rather than as a substitute for direct emissions reduction efforts.