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Carbon Offsetting: What Does It Mean and How It Works

Carbon offsetting has become an increasingly highlighted part of climate action strategies. It’s a great opportunity to drive investment in nature, at the same time as making things easier for businesses on their journey to net-zero.

For those activities in your business that prove more challenging to carbon mitigation solutions, joining an offsetting scheme is a great way to make a positive impact. This means investing in projects designed to reduce current and future emissions.

What is Carbon Offsetting?

Carbon offsetting allows businesses to neutralise their CO2 emissions by funding carbon-reducing projects in order to balance their carbon footprint. Investing in carbon offsetting schemes is a great way for businesses to counter emissions generated from their activities, or elsewhere in their value chain.

Some common examples include forest preservation or tree planting, while other projects focus on renewable energy or waste management.

How can companies offset their carbon footprint?

Businesses can buy carbon credits or permits from green projects corresponding to the volume of their greenhouse gas emissions, where 1 carbon credit is a financial unit of measurement that equals 1 tonne of CO2 avoided.

However, there are some pitfalls to look out for when seeking an offset programme. Several characteristics of offsets are necessary to ensure that they deliver genuine emissions reductions:

  • Durable and real - Offsets must lead to an actual net reduction in emissions.

  • Verifiable by an independent third party to ensure that they meet the criteria mentioned above.

  • Enforceable in order to avoid “double-counting “.

To acquire carbon credits you can approach suppliers directly or purchase through brokers or intermediaries who bring buyers and suppliers together.

To avoid greenwashing, businesses should take the following recommendations into account:

  • Transparency about the carbon offsetting strategy

  • The investment in carbon credits must always be in addition to your business’s strategy to reduce its carbon footprint.

Why Carbon Offset?

Carbon offsetting offers solutions to reduce those emissions that are harder and more expensive to remove permanently. Additionally, by investing in green projects you can make a positive impact much faster than you can as a single company.

Carbon offsetting schemes also care for impoverished communities by providing employment, better healthcare, reforestation and other social benefits.

Together towards Net-Zero

For more insight on ways to approach your net-zero journey, download our #NetZeroKnowHow FREE GUIDE. Subscribe and get your free copy of our guide.

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