‘The way we think about carbon offsetting is all wrong’

We know that funding high-quality carbon credits provides vital funding to impactful projects which prevent and avoid emissions.

However, it’s vital to look at the bigger picture: how carbon credits are being used is critical in taking meaningful climate action for our planet.

Simply using carbon credits to offset our business-as-usual emissions (often referred to as becoming ‘carbon neutral’) without taking steps to reduce those emissions directly will not solve climate change. In addition, there’s increasing pressure on businesses following recent crackdowns on green claims, such as claiming ‘carbon neutrality’ through offsetting alone. So, across our industry, we need to rethink carbon offsetting completely, from the ground up.

Let’s unpack this.

Offsetting to compensate for business-as-usual emissions is OUT

Science is clear that minimising global warming requires substantial emissions reductions globally. The IPCC has called for 50 per cent  reductions in emissions by 2030, and global net-zero emissions by 2050, if we are to limit the global temperature increase to below 2°C, and as close as possible to 1.5°C. Every year that we continue to increase emissions, the steeper the curve needs to be for the world to decarbonise in time.

Traditional carbon offsetting involves paying for carbon credits, each representing one tonne of emissions reduced or avoided by a project (like a solar farm). To offset, you would produce one tonne of greenhouse gas emissions through your business activities, and then offset that tonne by buying a carbon credit.

However, traditional offsetting also gives free licence to businesses to continue generating emissions, or even increase them! Provided that they are also paying to offset them. You can see this in the visual below.

Even when businesses fund high-quality projects and offset their emissions in full, those direct emissions are still taking place. The benefits of avoided emissions are effectively cancelled-out if the projects funded are only being used to offset your business’s continued emissions. The same is true, even if you are doing your offsetting with carbon removal credits – because the climate impacts of emitting and then removing greenhouse gases are not the same as simply not emitting them.

This is unsustainable. We need to reconsider completely the way we think about offsetting.

Reducing emissions whilst committing to fund high-quality climate‌ action is IN

For businesses to align their operations with the science of climate change, making direct emissions reductions across your supply chain is paramount. That’s a separate process, which offsetting doesn’t contribute toward.

Funding impactful projects through carbon credits still has a huge role to play. The SBTi (Science Based Target initiative) deems funding carbon credits as an “essential” step in the journey towards global net-zero.

Supporting these high-quality carbon avoidance projects (that’s the same kinds of projects which are traditionally used for offsetting) is a perfect entry point for businesses to start their climate journey – while these businesses gather their plans to reduce their emissions directly.

Reducing your business emissions is a marathon, not a sprint

One of the SBTi’s core requirements for a business to achieve net-zero is to achieve a minimum 90 per cent reduction in emissions in most sectors. This emissions-reduction journey will not be easy, since that’s a BIG task!

Near-term targets are going to be crucial to break down those larger long-term goals. SBTi research in 2021 showed that if your business had set its science-based targets that year, you would need to make emissions reductions of just 4.2 per cent per year – a much more understandable and manageable target for most businesses.

Remember as well that, even if simply offsetting your business emissions was your goal, then the higher your emissions are, the more it will cost to your business to offset them. This means that whilst there’s an enormous challenge in reducing emissions over a sustained period, it will be much better in the long run, both for your business and for the planet.

This is a long-term commitment which all businesses need to undertake. That’s why funding high-quality climate action is crucial at the same time. You can give back to our planet throughout the process – and by doing so, you can have a real, measurable impact on people, communities and biodiversity.

High-quality climate action that ‘goes beyond’

This funding of high-quality climate action outside of a business’s operations is referred to by the SBTi as ‘beyond value chain mitigation’ or ‘BVCM’. They highlight this as a critical contribution to reaching societal net-zero because it has a positive climate impact outside of your business’s direct sphere of influence. Your company can leverage its BVCM strategy to generate positive global change for our planet.

The great thing about BVCM is that it allows your business to select project types and locations that matter to you: you can build your own mix of projects to support.

Don’t be put off by the scientific terminology. Simply, it means continuously funding climate action via high-quality carbon avoidance credits (and other types of impactful climate projects) whilst reducing your business emissions on your journey to net-zero.

What makes a project high-quality?

At Ecologi, we select the carbon avoidance projects we support according to ourclimate impact regionalisation strategy, which focuses on directing funding towards locations and projects with the greatest potential impact.

This approach allows our in-house team to identify which, out of the ~200 quotes for carbon credits we review every month, are the most impactful.

The projects we support – which you can fund through our Impact Shop or through our automations and integrations – are also independently scrutinised by organisations like our friends at Sylvera.

Reframing carbon offsetting in a way that makes a real difference

Don’t let your business fall into the trap of thinking that buying carbon credits gets you off the hook by compensating for emissions which you haven’t attempted to reduce. That way of thinking is all wrong.

The net-zero pathway allows you to fund carbon removal credits to ‘offset’ your unavoidable emissions. However, you need to reduce your emissions as much as possible first, and only use removals for up to a maximum 10 per cent of your initial emissions, and it has to be carbon removal, which is very expensive!

Think about your BVCM as funding climate action, full stop. It’s not about compensating to let your business keep producing emissions. It’s just one cost of running a responsible business, whilst you work to reduce your emissions directly.

Don’t think about it in the context of letting your business carry on emitting as it was before – because that won’t contribute toward solving the climate crisis.

How to take the first step on your climate journey

Every business is different, and that means that although reducing emissions is vital, funding climate action might be the most suitable entry point for you, on your climate journey.

Through Ecologi, you can do this and more:

Elliot Coad is co-CEO & co-founder of Ecologi, which serves to inspire and empower businesses to accelerate global action on climate and nature.

All photos: Ecologi 

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