Climate Change - Is Offsetting the Answer?

• While carbon offsetting can support sustainability efforts, it should complement (not replace) direct emissions reductions as the primary path to meaningful climate action.
• Many offset projects lack credibility or additional impact, often distracting businesses from addressing their own emissions and exposing them to growing regulatory and reputational risks.
• Offsetting can be valuable only after a company has measured its full carbon footprint, implemented a robust reduction plan, and minimised emissions.

Over the last few decades, carbon offsetting has become a go-to strategy for businesses looking to demonstrate sustainability commitments and enhance their external credibility. Offsetting takes many forms, from tree planting and forest conservation to providing communities with clean cookstoves and renewable energy. However, with a vast number of offset providers offering projects of varying credibility, navigating this landscape can be confusing for businesses and consumers alike.

While carbon offsetting can play a role in broader climate action, it is not a substitute for direct emissions reductions. Protecting and enhancing nature and biodiversity should be seen as complementary to carbon reduction—not a replacement for it.

• Lack of Additionality - Many offsetting projects do not actually remove additional carbon from the atmosphere beyond what would have happened anyway.

• Distraction from True Action - Offsetting can divert attention from the urgent need to tackle emissions at the source, delaying meaningful business-wide carbon reductions.

• Regulatory and Reputational Risks - The EU is set to ban terms like "climate/carbon neutral" or "climate positive" based on offsetting from 2026, increasing the risk of greenwashing accusations for businesses wishing to claim climate positives from offsetting projects. Several large companies have already rolled back offset-based sustainability claims after using unreliable carbon offsets.
  

Not necessarily. High-quality carbon offsets can still be a useful tool to support broader sustainability efforts, and often provide social benefits, while supporting the United Nations Sustainable Development Goals (SDGs). However, they should only come after a business has taken concrete steps to measure and reduce emissions. The Science-Based Targets initiative (SBTi), a leading assessor of corporate science-based Net Zero targets, only permits the offsetting of residual, unavoidable emissions (less than 10% of a company's total emissions) after all other feasible reduction measures have been implemented. This further highlights the importance of prioritsing direct emissions reductions before considering any forms of offsetting.

Before Investing in Offsets, Ensure You:

1. Measure Your Carbon Footprint - This should include Scope 1, 2 and 3 emissions, to provide a full picture of your environmental impact. Without this data, you are unable to make informed carbon reductions.
2. Develop a Robust Carbon Reduction Plan - Your plan should cover Scope 1, 2 and 3, align with the goals of the Paris Agreement, and set ambitious reduction targets.
3. Take Action and Track Progress - Implement emissions reduction initiatives and continuously monitor progress towards Net Zero.

If your business meets these criteria, investing in credible, high-quality offsetting schemes can be an additional way to contribute to climate action. However, if these foundational steps are not in place, offsetting alone is not the answer for your business - it does little to drive real change.

edenseven, the sustainability sister-company of Cambridge Management Consulting, helps businesses to design and implement data-driven sustainability strategies that prioritise real emissions reductions. edenseven's cloud-based platform, cero.earth, simplifies carbon accounting and management, ensuring compliance with climate regulations and providing a clear roadmap to Net Zero. With expert guidance from edenseven, your business can avoid greenwashing pitfalls and take meaningful action to cut emissions, comply with regulations, ensure credibility with stakeholders, and reduce costs.

Go to the edenseven website if you would like to learn more about how the team can support you to build a credible, impactful sustainability strategy.