Companies play a crucial role in the decarbonization of the planet, and as a result, various tools have been developed to assist them in achieving their objectives (Zhou & When, 2020). One such tool is carbon credits, a tradable commodity, each representing one ton of CO2 equivalent (Oliveira, 2022). Carbon credits can be traded in markets known as Voluntary or Regulated (Souza et al., 2012) and, in Brazil, Bill nº 412/2022, which regulates the carbon market, was approved in October 2023 (Feitosa, 2022).
Within the context of potential carbon constraints affecting Brazilian organizations, this study aligns with the recommendation postulated by Zhou and When (2020) advocating for regional investigations. Thus, we analyse the financial impact on a local publicly traded company regarding different strategies to meet the constraints. We assess the offsetting of Greenhouse Gas (GHG) emissions through the purchase of carbon credits versus the impact of implementing decarbonization projects. While the expenses related to the compulsory purchase of carbon credits are simulated as a baseline scenario in which the company mitigates 100% of its emissions, the feasibility and financial impact for the company of two fictional decarbonization projects (fleet electrification and tree planting) that aim to reduce GHG emissions are analysed. The results show potential and limitations of projects, contributing to the discussion about firms’ carbon constrain decisions.
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