What is carbon offsetting?

Blogs 14 Oct 2021

Curious about how carbon offsetting fits into the move towards net zero? Learn more about what it is and how it’s used.

A field of young sapling trees

Achieving net  zero, or carbon neutrality, is an excellent end goal for any small or medium business. It’s a worthy goal for the moral reasons of being involved in the solution to the climate crisis. The UK has committed to achieving net zero by 2050 and need businesses like yours to do your bit. Another incentive is the improved reputation with new customers, future employees, and potential investors.  

What is carbon offsetting? 

Net zero is the scenario where your business has a carbon footprint of zero. Ideally this would be achieved by eliminating your greenhouse gas emissions completely. However, sometimes it is not financially feasible to eliminate them and in other situations it is impossible. For example, if your business involves concrete then carbon dioxide will be emitted during the process of making it.  

The United Nations recognised the difficulty of reaching net zero at the Kyoto Protocol in 1992. They created a concept called carbon offsetting. Carbon offsetting is the removal of carbon dioxide from the atmosphere to counter the greenhouse gases that you have put into it. If you think of your carbon footprint as a form of accounting, then your emissions are your expenditure and any carbon offsets you buy is your revenue. You want to breakeven each year to achieve net zero. 

It’s vital that you do not use carbon offsetting to get away with business as usual. If your emissions (or your carbon expenditure) are as low as possible, then the amount of offsetting (or your carbon revenue) to breakeven can be as low as possible also. Lower emissions means that it is easier for the country to achieve net zero and it’s cheaper for you as you can purchase less carbon offsets. The internationally recognised carbon neutrality standard, PAS 2060, insists that reduction comes before offsetting for these reasons. Carbon offsetting without reducing emissions first has come to be seen as greenwashing and could ultimately hurt, rather than enhance, your business’s reputation. 

How can a business offset carbon? 

To achieve net zero, you must follow these steps: 

  1. Calculate your carbon footprint 
  2. Reduce your greenhouse gas emission in a way that is financially and technically possible  
  3. Buy carbon offset to cancel the rest 

There are lots of carbon offset options available should you want to invest. They range from planting trees and preserving wildlife to installing insulation and renewable energy. Carbon offsets as an industry is still in its infancy. As demand grows and this industry accelerates, expect many more schemes to form and become eligible carbon credits.  

In 2021, the only two offsets accredited by the UK’s Environmental Agency are the Woodland Carbon Code and the Peatland Code. More will join it and you can use the Environmental Agency’s guidance to find the best carbon credits. More schemes are recognised internationally. If you wish to pursue these then groups like Verra and Gold Standard offer verification. If you reach net zero, then you might want to get this independently verified.  

Next steps 

Carbon offsetting is the final step to achieving net zero. Net zero is a great goal for your business because of the reputational improvements of your company that comes with doing your bit for the climate crisis. Before carbon offsetting occurs, you must first work out your company’s carbon footprint and reduce your emissions as much as possible. You may wish to consider investing in carbon offsets to cancel out any emissions remaining, making yourself a truly carbon neutral business.  

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