Corporate Net-Zero Strategy: Building a Credible Carbon Removal Portfolio

August 18, 2024 Earthmover Markets Team

The corporate sustainability landscape has shifted dramatically over the past five years. What began as voluntary, aspirational net-zero pledges from a handful of leading corporations has expanded into a near-universal expectation across major economies. More than 5,000 companies globally have now set net-zero targets, according to data from the Net Zero Tracker initiative. But as the initial wave of pledge-making subsides, a harder question is emerging: how do companies actually get to net-zero in a way that is scientifically credible, practically achievable, and resilient to the growing scrutiny from investors, regulators, NGOs, and the press?

The answer requires more than a decarbonization roadmap. It requires a coherent carbon removal strategy — a plan for how the company will address the residual emissions that cannot be eliminated through operational changes, supply chain transformation, or energy procurement, and how it will build the carbon removal portfolio that will neutralize those residuals by the net-zero target date. This article provides a framework for corporate sustainability professionals and CFOs to think about carbon removal strategy, covering portfolio construction principles, credit quality considerations, the role of advance market commitments, and the reporting and disclosure requirements that are rapidly becoming mandatory.

The Science Behind the Net-Zero Requirement for Removal

The Science Based Targets initiative (SBTi) Net-Zero Standard, published in October 2021, established the most widely adopted corporate net-zero framework. Under SBTi's standard, achieving net-zero requires a company to reduce its scope 1, 2, and 3 emissions by at least 90% from a validated baseline, and to neutralize any remaining residual emissions (the remaining 10% or less) through permanent carbon removal. Critically, the SBTi standard specifies that neutralization must use carbon removal — not just avoided deforestation or renewable energy offsets — and that the removal must be permanent. This requirement reflects the scientific consensus that net-zero must involve a balance of greenhouse gas emissions and removals, not merely a reduction in emission intensity.

This specification has profound implications for corporate procurement strategy. A company that reaches its 2050 net-zero target with residual emissions of, say, 500,000 tonnes per year — from hard-to-abate processes in manufacturing, aviation, or agriculture — will need to procure 500,000 tonnes per year of high-quality, permanent carbon removal credits every year in perpetuity. At current DAC credit prices of $400–$1,000 per tonne, that represents an annual cost of $200 million to $500 million. Even at the projected long-run DAC price of $100–$150 per tonne, the annual commitment would be $50–$75 million. For most companies, the economics of carbon removal argue powerfully for maximizing emissions reductions now, to minimize the permanent removal burden that will be needed at net-zero.

Portfolio Construction: Diversification and the Removal Hierarchy

Carbon removal credit portfolios, like financial portfolios, benefit from diversification — across project types, geographies, delivery timelines, and price points. A well-constructed corporate removal portfolio should include a mix of near-term, lower-cost removal credits that provide carbon accounting coverage for near-term claims, and long-term advance market commitments to higher-quality, more permanent removal approaches that will be needed for genuine net-zero claims.

The "removal hierarchy" that many leading companies are now adopting distinguishes between carbon removal approaches based primarily on their permanence and verifiability. At the top of the hierarchy are geological storage approaches — direct air capture with carbon storage (DACCS) and bioenergy with carbon capture and storage (BECCS) — which provide near-certain permanence of thousands of years. Below these are other engineered approaches like biochar (hundreds to thousands of years) and enhanced weathering (thousands of years, subject to measurement uncertainties). Further down are biological approaches like afforestation and reforestation (decades to centuries, subject to fire, disease, and land use reversal) and soil organic carbon (decades, subject to management change). At the bottom are avoided emissions approaches (avoidance, not removal) which many companies are now being counseled to treat as separate from their removal portfolio entirely.

Microsoft's carbon removal program is perhaps the most transparent example of this hierarchy in practice. Microsoft publishes annual reports on its carbon removal procurement, disclosing volumes, prices, project types, and quality assessments for every credit purchased. Their portfolio has progressively shifted toward higher-quality, more permanent removal credits — a trend other companies are likely to follow as investor and regulatory scrutiny intensifies.

Advance Market Commitments: Securing Future Supply

The supply of high-quality carbon removal credits — particularly engineered removal credits with geological storage — is currently very limited relative to corporate demand. DAC capacity globally is less than 100,000 tonnes per year as of 2024, compared to corporate demand that some analysts project at hundreds of millions of tonnes per year by 2050. This supply-demand imbalance creates both a risk for companies that delay procurement commitments and an opportunity for companies that are willing to make advance market commitments that provide capital to project developers and lock in supply at today's prices.

Frontier, the advance market commitment initiative launched by Stripe, Alphabet, Shopify, McKinsey, and Meta, has demonstrated the value of this model. By committing $925 million to purchase carbon removal credits from technologies not yet at commercial scale, Frontier provides revenue certainty to project developers that enables them to raise capital, build capacity, and drive down costs. Companies that make similar long-term offtake agreements — even at today's high prices — are essentially investing in the development of a supply chain they will need at scale in the future, while also building credibility with stakeholders who want to see concrete, not just aspirational, climate action.

Quality Assessment and Due Diligence

As the corporate carbon removal market matures, the sophistication of buyer due diligence is increasing rapidly. Companies that simply bought registry-certified credits without deeper quality assessment are finding that this approach is increasingly inadequate in a world of heightened scrutiny. The questions that rigorous buyers are now asking include: What is the measurement methodology, and what is its uncertainty? Has the measurement been independently verified by a qualified third party, or only by registry-affiliated auditors? What is the permanence risk, and how is it accounted for? Does the credit include any co-benefits (biodiversity, community development, water quality) that are independently verified?

Earthmover's platform is specifically designed to support this level of due diligence. We provide independent, data-driven quality assessments of carbon removal credits that go beyond registry certification — quantifying measurement uncertainty, evaluating permanence risk, assessing additionality robustness, and scoring co-benefit claims against verifiable evidence. For companies that are building large, long-term carbon removal portfolios, this kind of independent assessment is not a luxury — it is a fiduciary and reputational necessity. The companies that are most exposed to scrutiny are exactly those with the highest-profile net-zero commitments, and the reputational cost of a quality failure is enormous.

Disclosure Frameworks and Regulatory Trends

The regulatory and disclosure environment for corporate carbon claims is tightening rapidly. In the United States, the SEC's proposed climate disclosure rule would require listed companies to disclose their greenhouse gas emissions and the use of carbon offsets in their climate targets. In the European Union, the Corporate Sustainability Reporting Directive (CSRD) and the upcoming EU Carbon Removal Certification Framework will create mandatory disclosure and quality requirements for carbon removal claims. In the UK, the Financial Conduct Authority's sustainable finance disclosure rules and the emerging British Carbon Market are creating similar pressures. In all jurisdictions, the direction of travel is clearly toward more transparency, more rigor, and more legal accountability for climate claims.

For corporate sustainability teams, this regulatory trajectory argues for building carbon removal procurement practices that are disclosure-ready from the start — with well-documented quality assessments, independent verification, and clear alignment with recognized frameworks like the SBTi standard, the ICVCM Core Carbon Principles, and emerging ISO standards. Companies that are already working with measurement-focused partners like Earthmover are better positioned to demonstrate the rigor of their procurement practices when regulators or investors ask the hard questions.

Key Takeaways

SBTi's Net-Zero Standard requires genuine carbon removal — not just avoidance offsets — to neutralize residual emissions at a company's net-zero target date.
A removal hierarchy (geological storage > engineered removal > biological removal > avoidance) should guide portfolio construction and long-term procurement planning.
Advance market commitments lock in future supply and support technology cost reduction — but require careful due diligence on project developer credibility and delivery risk.
Rigorous buyer due diligence should go beyond registry certification to assess measurement uncertainty, permanence risk, additionality robustness, and co-benefits.
Disclosure requirements are tightening globally — SEC, CSRD, FCA — and carbon removal procurement practices need to be disclosure-ready from the start.
The companies most exposed to scrutiny are exactly those with the highest-profile net-zero pledges; quality failure carries enormous reputational cost.

Conclusion

Building a credible corporate net-zero strategy in 2024 and beyond requires treating carbon removal as a strategic capability, not a compliance afterthought. The companies that are doing this well — Microsoft, Stripe, Swiss Re — share a common approach: they treat their carbon removal portfolios with the same rigor and transparency they apply to financial investments, they invest in the supply of high-quality removal before it is abundant and cheap, and they disclose their methodology and results in sufficient detail to withstand expert scrutiny. For companies earlier in this journey, the most important first step is understanding what you are actually buying when you purchase a carbon credit — and building the internal or external expertise to assess quality independently. That is exactly the expertise Earthmover provides, and we are ready to help.