A Note on the Global Carbon Credit Market

Tanmay Kandpal, Rahul Kumar

Product #:W50897

Supplier:Ivey

Discipline:Strategy, Sustainability

Setting:India, 2025

Details:Note (PDF) • 23 pages • 2026-08-24

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Carbon credit markets are becoming central to corporate climate strategy as regulation expands and integrity standards tighten. This industry note examines the structure, economics, governance, and strategic implications of global carbon markets. It explains compliance and voluntary markets, the credit lifecycle, pricing drivers, key participants, and emerging frameworks such as the Integrity Council for the Voluntary Carbon Market (ICVCM), the Voluntary Carbon Markets Integrity Initiative (VCMI), Article 6 of the Paris Agreement, and India’s carbon-market architecture. Using real-options theory and the resource-based view, the note frames carbon-credit participation as a capability-building decision, helping firms assess whether to buy, build, or wait while balancing cost, credibility, risk, and long-term competitive positioning.

Learning Objectives

This note is developed specifically for agents of corporations that have made commitments to climate change mitigation and need to make decisions related to their participation in the carbon market. After working through the note, readers will have the ability to do the following:

Distinguish between compliance and non-compliance (voluntary) carbon markets, and explain how differences in their structures create different types of strategic opportunities and risks for companies.
Evaluate the quality attributes of carbon credits, and apply the Integrity Council for the Voluntary Carbon Market (ICVCM) Core Carbon Principles (CCPs) and the Voluntary Carbon Markets Integrity Initiative (VCMI) Claims Code of Practice to inform procurement decisions.
Utilize strategic frameworks (including real-options theory, the resource-based view, and scenario planning) to develop a prototype strategy for participation in carbon markets.
Explain the regulatory landscape associated with the major markets and how regulatory shifts will alter the course of corporate decarbonization.