Welcome, {{user.DisplayName}} My Hub Logout
News

What are the potential costs of carbon offsetting for your company?

The benefits of carbon offsetting are clear, but what are the potential costs of this solution? Find out on our blog today.
By Hubert Day,

Pressure is growing on business leaders to clean up their carbon footprint, as the effects of climate change continue to be felt across the globe. There are many ways for companies to cut down on carbon emissions, from producing their own renewable energy to using green web hosting.

But where emissions are unavoidable, carbon offsetting can come in to reduce a business’ footprint. It works by companies buying carbon credits, which are used to fund emission reduction projects around the world, such as reforestation or renewable energy generation. 

Carbon offsetting has proven to be an effective approach for cutting net emissions, but what are the costs? Here are three potential drawbacks to consider before investing in carbon credits. 

Upfront cost

The most obvious cost of carbon offsetting is the financial burden of the initial investment. With so many different factors affecting the cost of carbon credits, like the location or quality of the project, their price tag can vary. But, with more companies and governments setting net-zero targets than ever before, research suggests that carbon offsetting could cost ten-times more by 2030. 

It’s suggested that by the start of the new decade, business owners can expect to pay somewhere between $20 and $50 per metric tonne of CO2 offset. As the need to respond to the climate crisis becomes more urgent, this trend is set to continue, and prices could continue to surge. 

Some businesses may choose to pass this additional expenditure onto the consumer, but this could encourage customers to look elsewhere, which will further impact your profits. 

Greenwashing

Greenwashing has been happening for decades, but is becoming increasingly prevalent in the public eye as the climate emergency accelerates. Companies who are greenwashing essentially purport to be making environmentally-conscious decisions for marketing or PR purposes, but in reality they aren’t backing this up with tangible action. 

In the UK, the Competition and Markets Authority (CMA) is starting to carry out full reviews of companies who aren’t fulfilling their sustainability claims. If it’s suspected that your business is using carbon credits as a greenwashing ploy, not only will it affect consumer confidence, but it could lead to investigations by the CMA. In this way, it’s imperative to know exactly where your carbon credits are being spent – simply purchasing and sending credits out into the aether may not be enough. 

Return on investment (ROI)

There are many different steps businesses can take towards becoming more sustainable whilst also reaping some financial benefit in return. For example, investing in solar panels to use on-site will allow you to reduce your carbon footprint by using renewable energy, whilst also being able to sell back any extra power back to the grid. 

When it comes to carbon offsetting, whilst it will go a long way to helping cut your net emissions, there is no tangible ROI when investing. It’s generally hoped that being seen to be more eco-conscious will help to improve customer confidence and loyalty, since consumers have shown to care about brands’ sustainability policies. Be sure to do your research and due diligence before investing in carbon offsetting to ensure you know that your money is being used on an effective project.