Voluntary Carbon Credit Market Poised for Growth in Emerging Economies

 In January 2024, Thai Smile Bus, a private bus operator in Thailand, became the first bus operator in the world to trade carbon credits from its operations. TSB traded carbon credits with Switzerland’s Klik Foundation. In other news, a U.S.-based carbon credit startup, CNaught, raised $4.5 million in a seed funding round in May 2025.

So, what exactly is this voluntary carbon credit? Why do organizations buy/sell them, and why has it become a huge market worldwide?

A voluntary carbon credit represents one metric ton of carbon dioxide reduced or removed from the atmosphere. These credits are traded in the voluntary carbon credit market, where private actors voluntarily buy and sell them to offset their greenhouse gas emissions. Unlike compliance markets, where participation is mandatory, the VCM is driven by individual companies and organizations setting their own emissions reduction targets. That’s why the term ‘voluntary.’ The purchase of carbon credits funds projects that reduce or remove carbon emissions, contributing to climate change mitigation.

In 2024, the global market for voluntary carbon credits was pegged at $4.04 billion. This is expected to reach $24.0 billion by the year 2030, growing at a significant CAGR of 34.6%. Among all the end-users, private companies dominate the market and account for over 60% share. Here’s why private companies take an interest in trading carbon credits:

Sustainability Goals and Climate Commitments

Many companies have set net-zero or carbon-neutral targets as part of their environmental, social, and governance (ESG) strategies. Since not all emissions can be eliminated immediately, buying carbon credits allows companies to offset their residual emissions while they work on long-term decarbonization plans. This is especially applicable in sectors such as aviation, shipping, and manufacturing.

Reputation and Brand Value

Demonstrating a commitment to environmental sustainability can enhance a brand’s image and differentiate it in competitive markets. Companies that proactively invest in carbon offsets often position themselves as leaders in climate responsibility, earning goodwill from customers, investors, and stakeholders. A 2023 survey by IBM indicates that about 70% of consumers are ready to pay a premium for brands that are environmentally responsible and sustainable.

Investor and Regulatory Pressure

Large institutional investors are incorporating ESG metrics into their decision-making. Companies perceived as lagging on climate action may find it harder to attract capital or favorable terms. While voluntary, participation in carbon markets signals to investors and regulators that a business is forward-thinking and serious about sustainability.

The European Union’s Corporate Sustainability Reporting Directive (CSRD) is one such example. This directive requires detailed disclosure of environmental impact, which may impact at least 50,000 companies! These companies may turn to carbon credits as part of their emissions management and to demonstrate progress while decarbonizing core operations.

Supporting Innovation and Global Impact

By purchasing carbon credits, companies also help fund innovative environmental projects in both developed and developing countries. These initiatives not only combat climate change but also promote biodiversity, improve public health, and generate local employment. For example, Infosys claims its biogas and cookstove projects in India have generated over 2,400 jobs and benefited over 102,000 families. Such initiatives also garner reputational benefits for the company.

Upshot

As climate change takes center stage in global policy and business discussions, companies are exploring ways to reduce their environmental impact. One mechanism gaining attention is the carbon credit, a system that enables businesses to compensate for their greenhouse gas emissions. The voluntary carbon credit industry offers private companies a powerful tool to accelerate climate action and bridge gaps in their sustainability efforts.

Gather more insights about the market drivers, restrains and growth of the Voluntary Carbon Credit Market