Corporate motivations and co-benefit valuation in private climate finance investments through voluntary carbon markets

The paper examines why corporations participate in voluntary carbon offset (VCO) markets and how these motivations influence project selection and pricing, especially regarding local co-benefits. Placed in the broader context of rising climate risks and the role of corporate action aligned with the SDGs and the Paris Agreement, the study focuses on voluntary (non-regulatory) initiatives where companies adopt environmental targets. Unlike compliance markets, voluntary markets allow broader participation and flexibility, with buyers often motivated by social responsibility, reputation, and branding, alongside emissions reductions. The study addresses two questions: (1) What motivations drive corporations to purchase offsets? (2) How does willingness to pay for additional co-benefits vary by motivation? The authors hypothesize that firms primarily motivated by emission reduction seek cost-effective (lower-cost) credits (H1), while firms motivated by market competitiveness or corporate values place higher value on co-benefits and are willing to pay premiums (H2).

Prior work has scrutinized the environmental integrity of VCOs and questioned whether claimed emissions reductions and sustainability benefits are realized. Unlike compliance markets, voluntary buyers are influenced by social responsibility, brand value, and perceived co-benefits, with some paying premiums for independently verified co-benefits. Motivations may evolve from initial emissions targets toward broader sustainability and community impacts. Existing studies highlight participation trends, branding and reputation value, and willingness to pay for co-benefits, but data limitations have constrained systematic categorization of corporate motivations and valuation of co-benefits. Literature on voluntary initiatives positions VCOs within broader CSR, eco-labeling, and green product strategies, and identifies narratives such as emissions efficiency, global–local co-benefits, and addressing unavoidable emissions. Research on standards (e.g., Gold Standard, VCS) indicates market preferences for credits with stronger co-benefit certifications. However, there is a gap in systematically linking corporate motivations to specific purchasing behaviors, project types, and price willingness within VCO markets.

Design: Mixed-methods approach linking qualitative corporate-level motivations from CSR reports to quantitative project-level choices from CDP data for the same firms (data linkage via NVivo 'case' structure). Timeframe: 2017 (reported in CDP 2018), the first year after Paris Agreement entry into force. Data sources: (1) Corporate CSR/sustainability reports (qualitative motivations and co-benefit priorities); (2) Carbon Disclosure Project (CDP) Climate Change Questionnaire (Questions C11.2/C11.2a) self-reported project-level details of offsets purchased (project type, standard, location, price where available). Sample: From 414 candidates in CDP 2018 who originated/purchased project-based credits in 2017, firms involved in compliance or as originators were excluded, yielding 306. Of these, 186 firms had CSR reports mentioning offset purchasing; those 186 purchased 534 projects across 28 countries, 12 sectors, 39 industries, and 73 sub-industries. Qualitative coding: Content analysis of 186 CSR reports. A coding scheme (14 indicators, 9 metrics) was developed from literature and a pilot study, then aggregated into three primary motivations: M1 (company carbon management and efficiency), M2 (company market competitiveness), M3 (company values). CSR text was coded to identify motivations and co-benefit priorities (e.g., project selection criteria, location preferences, intended benefits). Quantitative analyses: Linked motivations to CDP project choices and prices. Conducted t-tests to compare average number of projects purchased across project types and standards by motivation groups, interpreting preferences as higher-priced vs lower-priced choices. Assessed significance across 11 project categories (e.g., forestry, household devices, renewable energy, chemical processes, EE/fuel switching, waste disposal, transportation). Tested interactions with offset standards (Gold Standard, CCBS, ACR, VCS, CAR, CDM, VER+/VCR). Performed balancing tests across groups (size, revenue, emissions, etc.) to ensure comparability; estimated a hedonic model on a subset of 37 firms with reported prices (2018) to assess the impact of corporate features on offset prices (no significant effects found). Validation/visualization: Mapped global-to-local investment flows for 20 firms (92 projects) to test alignment with stated value-chain/local market commitments. Employed word-tree analysis of project descriptions to identify dimensions of 'local' benefits, beneficiaries, and action verbs. Generated descriptive stats of project selection criteria and benefits prioritized (e.g., improving quality of life, jobs, health).

• Three primary motivations identified: M1 (carbon management and efficiency), M2 (market competitiveness), M3 (company values). Counts: 155 companies (M1), ~60 companies (M2), 59 companies (M3).
• Co-benefits are central to decision-making: among selection criteria cited, 'benefit local communities' ranked highest; companies favored projects in low- and lower-middle-income countries and chose community-based projects more often than commercial-based ones; top prioritized benefits included improved quality of life, health, local job creation, and biodiversity.
• Global-to-local financing alignment: Investment flow maps for 20 firms showed offset purchasing aligned with major operating markets and value-chain geographies, confirming CSR-stated global–local strategies.
• Local benefit translation: Project narratives emphasized delivery of benefits to communities and vulnerable groups (e.g., smallholders, farmers, women); most frequent benefit dimensions included job creation and environmental/biodiversity improvements.
• Purchasing behavior by motivation and price: Firms driven by M2/M3 purchased more higher-priced project types (notably household devices and forestry; also chemical process) than M1 firms; M1 firms favored lower-priced options (renewable energy, chemical processes, EE/fuel switching, waste disposal, transportation). Across 11 project categories, 6 showed significant differences by motivation (p ≤ 0.090).
• Renewable energy offsets were broadly favored (lowest average price) over several alternatives; however, when compared to forestry or household device projects, low price was less decisive for some buyers.
• Standards preferences mirrored project findings: M2/M3 firms favored higher-priced/charismatic standards (e.g., Gold Standard, CCBS, VCR/VER+); M1 firms favored lower-priced standards (VCS, CAR, CDM). Gold Standard was widely preferred except where M1 firms chose lower-priced VCS.
• Market coverage and scale: 186 firms represented ~$3.5T revenue, ~$0.4T profits, ~$3.1T assets, and ~9M employees; they purchased 534 projects totaling 16.2 MtCO₂e—about one-third of 2017 voluntary market volume.
• Hypotheses validated: H1 supported—emissions-focused firms (M1) prioritize cost-effective projects; H2 supported—non-emissions motivations (M2/M3) are associated with paying premiums for co-benefits.

The study links stated corporate motivations in CSR reports with revealed purchasing choices in VCO markets, demonstrating that motivations materially shape project selection, standards, and price willingness. Results confirm that firms whose primary aim is emissions reduction (M1) tend to purchase lower-cost credits, especially from renewable energy and other inexpensive project types and standards. In contrast, firms motivated by market competitiveness and corporate values (M2/M3) favor higher-priced projects and standards that deliver visible local co-benefits and reputational value, aligning with branding, customer engagement, and SDG support. These findings address the research questions by clarifying why companies buy offsets and how willingness to pay for co-benefits varies. The mixed-method linkage validates that claimed global–local strategies translate into financing flows and on-the-ground benefits for local communities, offering evidence that co-benefits are a salient value proposition in corporate offset portfolios. The results align with prior literature on preferences for forestry/household-device projects and premium standards, while extending it by systematically categorizing motivations and quantifying purchasing differences across project types and standards.

This paper advances understanding of corporate engagement in voluntary carbon markets by: (1) identifying three dominant motivations (M1 emissions management/efficiency; M2 market competitiveness; M3 corporate values), (2) demonstrating that co-benefits to local communities are central to firms’ offset strategies, and (3) empirically linking motivations to distinct purchasing patterns across project types, standards, and price levels. Emissions-focused firms prioritize low-cost credits, while firms driven by values and competitiveness pay premiums for projects and standards with stronger co-benefits. These insights help explain demand heterogeneity and suggest pathways to better align voluntary markets with sustainable development outcomes. Future research should include targeted interviews across motivation groups, investigate firms that do not disclose offset use in CSR reports, develop richer choice models for offset purchasing, and extend analysis beyond 2017 to assess temporal dynamics. Strengthening market architecture to credibly integrate co-benefits into credits could help reconcile supply–demand discrepancies and channel finance to regions and project types with high sustainable development value.

• Reliance on CSR reports for qualitative motivations introduces potential self-reporting and framing biases; not all firms disclose offset purchasing in CSR documents.
• Self-reported CDP project data may be incomplete; internal decision processes and negotiated prices are not publicly accessible.
• Lack of standardized CSR formats may lead to coding inconsistencies despite careful procedures.
• Analysis is limited to one year (2017), constraining assessment of motivation and purchasing dynamics over time.
• Price data availability is limited (hedonic checks based on a subset), and market opacity limits full price comparisons.