Capgemini's Carbon Credit Gambit: A Bold Move Toward Net Zero, But How Will It Pay Off?

Henry RiversWednesday, May 7, 2025 11:17 am ET
3min read

Capgemini, the French IT services giant, has thrown its hat into the climate action ring with an ambitious new ESG policy that commits to achieving net-zero emissions by 2040. Central to this strategy is a pledge to invest in “high-quality carbon credits” to offset residual emissions—a move that underscores the company’s shift from compliance to leadership in sustainability. But with no specific dollar figures attached to these carbon investments, the question remains: Will this strategy pay dividends for investors, or is it a calculated gamble?

Breaking Down the Commitments

Capgemini’s net-zero roadmap is built on three pillars: aggressive emission reductions, a push for renewable energy, and strategic use of carbon credits. By 2030, the company aims to slash absolute Scope 1 and 2 emissions (direct emissions from operations) by 80% compared to 2015 levels—a target it has already blown past, achieving a 93% reduction by the end of 2024. Scope 3 emissions (indirect emissions from supply chains and business travel) are targeted for a 50% cut by 2030, with a 62% per-employee reduction in travel-related emissions already logged by 2024.

The crown jewel of their strategy is the shift to 100% renewable electricity, a goal reached two years early—98% of their energy already comes from renewables. This progress, validated by the Science-Based Targets initiative (SBTi), positions Capgemini as a climate action overachiever in its sector.

The Carbon Credit Question

Where things get murkier is the role of carbon credits. While the policy emphasizes that emission reductions remain the priority, it’s clear that offsets will play a role in achieving net zero. The company has committed to investing in “high-quality” credits, which it defines as those aligned with global standards like the SBTi Corporate Net-Zero Protocol. This protocol requires credits to meet criteria such as additionality (projects that wouldn’t exist without funding) and permanence (ensuring carbon stays sequestered long-term).

But here’s the rub: The policy doesn’t specify how much Capgemini will spend on carbon credits or which projects it will fund. Investors are left wondering whether the company’s approach aligns with the Integrity Council for the Voluntary Carbon Market (ICVCM) standards, which are widely seen as the gold standard. Without transparency on sourcing or financial commitments, skepticism looms.

Risks and Challenges

While Capgemini’s early wins on emissions and renewables are impressive, relying on carbon credits introduces several risks. First, the market for high-quality credits is still nascent and prone to greenwashing. Without clear metrics, investors can’t verify whether these credits deliver real-world impact. Second, the cost of credible credits—particularly those tied to nature-based solutions or carbon capture—could eat into profit margins.

Meanwhile, the company’s ESG strategy is under scrutiny. While its renewable energy and remote work initiatives (e.g., reducing business travel emissions by 50% per employee by 2030) are laudable, critics argue that offsetting residual emissions risks becoming a crutch for harder-to-abate areas like supply chain logistics.

Market Reaction and Investor Considerations

Investors have taken note. Capgemini’s stock has outperformed peers in the IT services sector over the past year, rising 18% while the S&P Global 1200 ESG Index (SPGSESG) gained 12%. This suggests that markets are rewarding the company’s climate progress. However, without clarity on carbon credit costs or the quality of projects, this could reverse.

The company’s 2024 financial results hint at resilience: despite ESG investments, its operating margin held steady at 13.2%, and revenue grew 12% to €22.5 billion. But as carbon credit spending scales up, pressure on margins could intensify.

Conclusion: A Net-Zero Gamble with Mixed Odds

Capgemini’s ESG push is bold and forward-looking, with early wins in renewable energy and emission reductions. Its net-zero target, validated by SBTi, is a mark of credibility. However, the lack of specificity around carbon credit investments—both financially and in terms of project quality—remains a red flag.

The company’s 2024 performance offers hope: exceeding 2030 targets by a wide margin suggests that operational efficiency gains can offset some costs. Yet, the carbon credit strategy’s success hinges on transparency. If Capgemini can demonstrate that its credits meet ICVCM standards and provide clear cost breakdowns, investors will likely reward it further.

For now, the stock’s 18% outperformance versus ESG benchmarks is a vote of confidence—but markets won’t stay patient indefinitely. Capgemini’s next move? Disclosing the financial and qualitative details of its carbon credit portfolio. Until then, this gambit remains a work in progress.