Companies across the globe are working on plans to reduce their carbon emissions. The popularity of environmental credits has grown as a way for companies to meet their emission reduction targets.

“Many companies are already using or plan to use environmental credits as part of their overall strategy to achieve sustainability goals,” said Eric Knachel, senior consultation partner at Deloitte & Touche. “A lot of companies that set voluntary targets for carbon emission reduction may be realizing that relying on more efficient equipment or new technologies may not be sufficient to achieve their goals.”

Environmental credits include carbon allowances and offsets, renewable energy certificates (RECs), and other credits related to climate and emissions. These arrangements and the definitions of the related credits are complex but fundamental to companies developing strategies and seeking to understand the accounting and disclosure implications.