Why carbon offsetting is not the answer to net zero

Carbon offsetting

Carbon offsetting, compensating for emissions by investing in schemes designed to make reductions elsewhere, has been hailed by many as the be-all and end-all when it comes to businesses addressing their carbon footprints. But, while offsetting is a necessary part of the puzzle, Mauro Cozzi, co-founder of carbon management specialist Emitwise, believes it is not all that it is cracked up to be, and suggests where business focus should be instead.

We are seeing businesses proclaiming that they are net zero because they have invested heavily in carbon offsets, Cozzi says. This is misleading and it undermines the gold standard set by the Science Based Targets Initiative (SBTi) – businesses should first address 90 percent of their emissions before thinking about offsets. Of course, there is nothing to prevent businesses doing both in parallel; in fact, the best businesses do exactly this. Companies that only talk about offsetting are greenwashing – end of story.

Another point worth mentioning is that there is a huge difference in the quality of offsets available on the market – a huge difference in robustness. Companies that offset must look for high-quality offsets from trusted providers, such as Climate Care. If a business is only interested in buying the cheapest offsets, you can bet that it will be guilty of greenwashing.

Undoubtedly, the price of an offset per tonne of carbon it claims to compensate is indicative of its quality. We are seeing offsets listed at £10 per tonne of carbon compensated – this is ridiculously cheap and will be ineffective. Businesses that take offsetting seriously will be looking at closer to £100 per tonne of carbon addressed.

Cutting carbon footprints

Turning our attention to cutting business emissions, as advised by the SBTi, the hardest thing is knowing where to cut and then implementing reduction strategies – all while getting credit for it. 

The first step for businesses is to get a strong baseline of where they are at when it comes to carbon emissions. The best way to achieve this involves taking a data-driven approach – just as businesses would with other serious business programmes, such as finances. This will highlight which manufacturing sites, suppliers, or activities, for example, need to be addressed.

A great example can be found with Unilever. The organisation publishes great data on its carbon outputs and it discovered that its biggest source of emissions came from the electricity generated in order to enable its customers to run their washing machines – they required hot water. Taking action, Unilever designed a detergent that runs on cooler water – hence customer washing machines use less electricity. The data showed that this was having the desired impact – and Unilever rightly got credited for its work.

The next step

For businesses, although reducing direct emissions is vital, the next step to achieve net zero involves supply chain decarbonisation – what we call scope three emissions, the result of activities from assets not owned or controlled by a reporting organisation, but that the organisation indirectly impacts in its value chain.

While we are starting to see more talk on the subject, action has not been forthcoming with the urgency warranted. At Emitwise, we are working to make the solutions for businesses clearer – we map out business supply chain carbon footprints and advise on actionable ways in which steps can be taken to make a positive difference.

Given that up to 80 or even 90 percent of organisational carbon footprints owe to supply chains, it must be a focus for the business community. I’m afraid that businesses turning a blind eye to this reality are greenwashing. 

Carbon offsets have been positioned as an attractive, low-hanging fruit for businesses to reach net zero – but this has been deceiving. Any solution that positions itself as one that just requires money to be thrown at it is unlikely to be a serious one. Point and case – carbon offsetting.

The businesses that are serious about hitting net zero before 2050 need to invest in transforming their activities that are emission-heavy and take stock of their supply chain.

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