Our use of carbon credits
Since 2019, Schroders has purchased carbon credits to mitigate impacts beyond its value chain. In this overview, we explain how carbon credits contribute to, but not replace, our corporate climate strategy towards net zero.
What are carbon credits?
A carbon credit is a tradable unit that represents one metric tonne of greenhouse gas (GHG) emission reductions or removals. When a carbon credit is purchased and retired for offsetting purposes, it is sometimes referred to as a carbon offset credit.
How do carbon credits fit into Schroders’ corporate climate strategy?
Our primary focus is our decarbonisation plan, which leverages our actions and influence to reduce GHG emissions. We believe that, while reducing our emissions in absolute terms and transitioning to net zero, there is a role for purchasing high-integrity carbon credits.
Is this a way for Schroders to avoid taking action within its own operations?
We do not view carbon credit purchases as a substitute for reducing emissions throughout our value chain; rather, we believe that by acquiring high-integrity carbon credits alongside reducing emissions on a science-based trajectory can contribute to the global transition to net zero. These credits can help neutralise emissions released during our transition and any residual emissions at the point we achieve net zero.
It is important to note that carbon credits do not count as emissions reductions towards the progress of our validated science-based targets under the Science Based Targets initiative.
What is the role of the voluntary carbon market?
There is a limited carbon budget to prevent global warming of 1.5°C above pre-industrial levels, and carbon credits help preserve and extend this budget. The voluntary carbon market directs finance to climate action projects, often providing additional benefits such as biodiversity protection, pollution prevention, public health improvements, and job creation. Carbon credits also support investment in the innovation required to reduce the costs of emerging climate technologies.
What emissions has Schroders compensated for?
Since 2019, we have purchased carbon credits to mitigate impacts beyond our value chain. We have compensated for our Scope 1, 2, and all relevant operational Scope 3 emissions, including those from business travel, employee homeworking, and commuting. The only exclusions are emissions associated with suppliers and our investments, for which we have engagement programmes.
We do not intend to imply that these carbon credits "net out" our operational emissions, as we have absolute emissions reduction targets in place. Instead, they provide funding for actions beyond our value chain, contributing to overall climate mitigation efforts.
What does Schroders’ carbon credit portfolio look like?
In 2022, we expanded our global carbon credit project portfolio to meet our future needs, which includes six projects, five of which (69% by volume) are nature-based solutions focused on forest protection and reforestation. Our supported projects aim to protect and enhance biodiversity by avoiding and reducing emissions through nature conservation or by removing emissions through nature restoration.
How does Schroders select high-integrity carbon credits?
The carbon finance projects we support through Climate Impact Partners are verified to an International Carbon Reduction and Offset Alliance-approved certification standard and have passed Climate Impact Partners’ proprietary enhanced due diligence process.
We believe we comply with the Voluntary Carbon Markets Integrity Initiative’s foundational criteria and that we use high-quality carbon credits that align with the Integrity Council for the Voluntary Carbon Market Core Carbon Principles. We will continue to assess the developments in the market to align with best practice.
For more information on our carbon credit projects, see our latest CDP response.