Circle of trees

As with many corporate goals, companies looking to become environmentally sustainable will look for a quick win that will allow them to achieve that goal as soon as possible. For many, they believe that carbon offsetting can be that quick win. Before we get into why carbon offsetting doesn’t provide the quick win many believe it does, it’s important to understand the term.

What are carbon offsets?

Essentially, a carbon offset compensates for your company’s emissions by funding an equivalent carbon dioxide saving elsewhere. Offsets are usually purchased by companies through credits – measurable, verifiable emission reductions from certified climate action projects which reduce, remove, or avoid GHG emissions. Once that credit has been purchased, other companies are unable to purchase it, to avoid double offset counting.

There are two categories of carbon offset businesses should be aware of. Carbon sequestration offsets (also known as carbon removal offsets) take CO2 out of the atmosphere and store it. These usually consist of nature-based projects like reforestation and afforestation, or projects which improve peatlands or coastal vegetation, all of which act as carbon stores. On the other hand, carbon avoidance offsets are projects which seek to avoid carbon being reduced into the atmosphere in the first place. These could be anything from paying to protect a rainforest from logging, to paying to have more renewable energy put into the grid. At present, avoidance projects are less popular than sequestration, as measuring how much carbon has been saved by avoiding an action is a significant challenge.

Fitting offsetting into a carbon reduction strategy

If your business is either looking to become involved in carbon offsetting, or is already involved, it is important to understand that the process should not be considered the cornerstone of a sustainability strategy. Ultimately, although your emissions can be balanced through offsetting (and you can claim to be carbon neutral), if the UK is to reach net zero emissions status by 2050, businesses must focus their energies on reducing their emissions, rather than just offsetting them. If your business invests in offsets without also taking the required steps to lower your emissions, you run the risk of being labelled ‘greenwashers’, which can cause huge reputational damage.

So, should your business still look to use carbon offsets?

In short, yes. But rather than being the centre of a sustainability plan, offsets should be used more strategically. Instead, you should look to use carbon offsets to compensate for the emissions your company is still producing once you’ve removed as many emissions as possible from your business process.

This isn’t to say that you can’t participate in carbon offsetting before that point – it can be a good way to achieve carbon neutrality (where you remove as many emissions from the atmosphere as you put in) and carbon positive status (where you remove more emissions from the atmosphere than you put in). However, with the UK’s ultimate goal being net zero – where your carbon emissions are at the lowest level possible – emission reduction should be the core of your sustainability strategy.

Considerations when buying carbon offsets

If you do decide to purchase carbon offsets, it is important that you check the offsets you are buying are verified. Verification will confirm that any offsets you are buying offer the following:

Additionality: Verification will ensure that the benefit from the offset you are purchasing would not have happened without your offset purchase. If the benefit of the offset would have occurred without your investment, the offset purchase is just a financial transaction, with no additional benefit to the planet.

Durability: Taking the example of carbon sequestration projects which aim to plant trees, verified offsets will have been confirmed as a tree-planting project which will not be at risk of being cut down in the future.

Reliable measurement: The measurement methodology of verified offset projects will offer an approved calculation technique for assessing the carbon emissions saved by the offsetting project.

There are global standards which verify carbon offsetting, such as Gold Standard, Verified Carbon Standard, and Climate Action Reserve. However, as offsetting becomes more popular, less reputable standards with lower acceptance criteria are also emerging. Therefore, make sure you check the legitimacy of any verification body used by a project, before purchasing your offsets.

What type of offsetting should I invest in?

There’s no right answer here, but a good tactic would be to look beyond tree-planting. As the most popular form of offsetting for businesses, supply of these projects will soon be insufficient to meet soaring demand. Instead, projects such as renewable mini-grids, which offer small-scale off-grid electricity generation using renewable energy sources, offer a good opportunity to diversify your offset investments. Similarly, community projects that look to invest in energy efficient technology in the developing world, offer another option, as long as the project is verified.

If you want to know more about how your company can use carbon offsetting to meet their sustainability targets, please get in touch with Hugh Williams – our Business Navigator for the Green Agenda, at [email protected] .