(Bloomberg) -- There’s a clear need to include carbon credits in the palette of products at the disposal of corporations trying to reduce their reported carbon footprint.

Most Read from Bloomberg

• Eric Adams' Vanishing Promise to Fix NYC's 'Unfair' Property Taxes

• Unlocking the Hidden Power of Zoning, for Good or Bad

• Waiting for the Miracle of Church-to-Housing Development

• NY’s MTA Warns Against Borrowing More Than $13 Billion

• Belfast’s Grand Central Station Creates New Era for Northern Ireland’s Public Transport

That’s according to Henry Fernandez, the chief executive officer of MSCI Inc. Such credits, bought and sold on the Voluntary Carbon Market, have faced increasing scrutiny amid accusations of greenwashing from climate experts and nonprofits. At the same time, policymakers in the US and elsewhere are working on frameworks designed to restore credibility to the VCM.

“We believe strongly that voluntary carbon markets have to be part of the process” of transferring value and risk when it comes to addressing climate change, Fernandez said in an interview with Bloomberg Radio on Tuesday. It would be “crazy” to think that such credits shouldn’t be part of the solution, he said.

MSCI estimates that the market for carbon credits shrank 22% last year to just $1.1 billion. The firm announced its new carbon credits rating product last week, and is in the process of assessing 4,000 projects. Its analysis to date suggests that just 5% of those projects can be considered high quality.

“We’re going to bring more integrity, more data, and quality,” Fernandez said.

The process isn’t “different to how we classify countries, how we classify ESG companies, how we look at carbon,” he said. “We collect an enormous amount of data from independent sources and then package it into a classification system, and create the ratings.”

Most Read from Bloomberg Businessweek

• Palantir’s CEO and Wall Street Annoy Each Other Straight to the Bank

• Five Reasons to Be Optimistic About the Entertainment Business

• Threats to Local US Election Officials Are Rising, and More Workers Are Quitting

• The Man Who Made Nike Uncool

• In Yosemite, Problems With Concessions Keep Piling Up

©2024 Bloomberg L.P.