Carbonomics 101: Is carbon offsetting a form of greenwashing?

Published: October 24, 2022

Is carbon offsetting an effective way to reduce greenhouse gas emissions or is it simply a form of greenwashing? Divisive though it may be, carbon offsetting is an essential part of the sustainability toolkit – and here’s why.

Voluntary carbon credits have come under fire in recent years, from environmental activists and media pundits, for different reasons. While some see offsetting as a means of buying one’s way out of other polluting behaviour – and thus, a form of greenwashing – others challenge the effectiveness of the projects underlying those credits and intended to remove carbon from the atmosphere.

While we think it’s right that sceptics challenge the effectiveness of the tools used to achieve net-zero emissions, the picture they paint of carbon markets and offsetting is not.

No single action will get us to net zero. Successful climate strategies aim for incremental progress on multiple fronts.

Part of a larger sustainability strategy

Emissions offsetting is an essential part of the corporate sustainability toolkit. Yet it must be viewed as just that: part of a larger transition strategy that also aims to reduce or eliminate emissions and helps accelerate the move to a low-carbon economy.

Low-carbon technologies are coming to market faster than ever before, but innovation still takes time. Due to technology and cost, it’s simply not possible for most to completely eliminate or reduce emissions. The Science-Based Targets initiative (SBTi), the foundation behind the SBTi Corporate Net-Zero Standard, suggests that by setting long-term science-based targets companies could eliminate or reduce up to 90% of emissions from their operations and supply chains. But that still leaves residual emissions in need of removal.

Carbon credits can do just that. Removal credits are those that result from projects that directly remove carbon from the atmosphere; these are distinct from avoidance credits, which result from projects that avoid producing new greenhouse gas (GHG) emissions (for example, off-grid renewable energy projects). At present, removal credits are usually issued from nature-based projects such as afforestation or rewilding. Nature-based solutions alone won’t be enough to tackle emissions: tech solutions, such as Direct Air Carbon Capture and Storage (DACCS) and Bioenergy with Carbon Capture and Storage (BECCS) will be instrumental in the wider transition to net zero.

Due diligence is key

Buyers must be cautious. Investigations undertaken by activists and media have rightly called out ‘phantom projects’. This is where projects intended to capture carbon – and used for carbon credits – haven’t actually materialised, have lapsed or expired, or have been neglected to such a degree that they don’t remove GHGs at anywhere near the levels specified.

These situations are avoidable, with the right due diligence. As we’ve stressed in previous articles, carbon credits must be certified to a high standard. The long-term nature of projects that underpin credits underscores the need to understand the risks inherent to them, which we outline here.

But ensuring the carbon credits you buy are certified to a high standard (which also means the underlying projects are auditable and verifiable) is the single most effective thing you can do to mitigate the risk of phantom projects.

The importance of standards

The integrity of carbon offsetting relies wholly on the environmental additionality of the credit, which all standards define in the same way: a carbon credit is considered additional if the emissions reduction/removal that underpins the credit would not have occurred without the project that generates the credit.

It’s also important to stress that standards are becoming stronger and increasingly multilayered as more organisations become involved in their development. A good example of this is the Core Carbon Principles (CCP), a new internationally recognised standard for global voluntary carbon markets to be soon developed by the Integrity Council for the Voluntary Carbon Market (ICVCM). It sits alongside a range of other frameworks, legal principles, and contracts developed by other standard setters providing better governance, transparency, and scalability in global voluntary carbon markets.

Some are also helping to deliver incremental sustainability benefits beyond decarbonisation. Developed by the Climate Community and Biodiversity Alliance, the Climate, Community and Biodiversity Standards (CCB) standard for land-based projects can deliver climate biodiversity and community benefits simultaneously.

Get on the front foot

As long as carbon credits are truly ‘additional’, companies that use them correctly greatly reduce the risk of exposing themselves to charges of greenwashing. But there are activities companies can undertake to further mitigate that risk:

• Create the right culture: from the mailroom to the boardroom, employees need to believe in why the transition to net-zero matters. Lack of buy-in for ‘why’ makes the ‘how’, from the smallest behaviour changes to the biggest operational pivots, nearly impossible to embed.
• Set meaningful, science-based targets: sustainability strategies need to be grounded in real, science-based targets, not vague commitments to ‘doing more’ for the environment and society. The SBTi Corporate Net-Zero Standard is an excellent starting point for translating long-term science-based targets into tangible action.
• Report, disclose, and communicate progress: tracking and regularly communicating progress on your transition strategy – including emissions offsetting activities – to a broad range of stakeholders is an important part of driving accountability when it comes to reducing emissions.

Finally, it’s important to stress that the transition to a more sustainable future won’t be won by striving for perfection. No single action will get us to net zero; success can be achieved only through incremental progress on multiple fronts. But speedy action is essential.