In the world of corporate responsibility and social entrepreneurship, there is a belief that business can be both good for the environment and highly competitive. Advocates of this view say the key is to increase the demand for a particular product, so that more manufacturers will create it, supply will go up and the cost will come down. That is, the consumer controls demand. The challenge is to create an incentive system. This is the purpose of carbon credits. They allow you to buy or sell "credits" from a collective emissions limit. While there are markets for gases and acid rain, carbon is the largest emissions market.
Determine the amount of emissions set for your firm by contacting your local government. Usually the local government will place a cap on the amount of emissions each firm is allowed to have. This cap is equivalent to a certain number of credits. You do not need to physically claim the credits.
Understand your company's framework. Firms are provided with emissions permits from the state government and are required to hold a certain amount of credits. Economic incentives (credit amounts) vary depending on geography.
Create credits. Credits represent a right to emit a specific amount. If a company's carbon emissions fall below a set allowance, the company can sell the difference in the form of credits. This is how a credit can be created.
Trade credits. Transfer leftover emission allowances between local companies sharing the same credit cap. Ask the agency providing the cap for a listing. If you need to purchase credits (charge for polluting), you will trade credits with a company that wants to sell credits (get paid for reducing emissions). The system is driven by an economic incentive to reduce emissions.
Working as a full-time freelance writer/editor for the past two years, Bradley James Bryant has over 1500 publications on eHow, LIVESTRONG.com and other sites. She has worked for JPMorganChase, SunTrust Investment Bank, Intel Corporation and Harvard University. Bryant has a Master of Business Administration with a concentration in finance from Florida A&M University.