Offsetting emissions is hot right now. The carbon capture market is expected to grow to €6bn by 2026, as companies and entire industries announce new ambitious goals to reach net zero emissions.
The industry’s fast-accelerating growth has attracted a number of new climate organisations to the field — but not all of them are in the business for the right reasons.
In a recent expose, Disney, BlackRock and J.P. Morgan were all found to have invested in carbon offset projects that in reality had no additional positive impact on the climate. What these firms didn't know was that one of their chosen offsetting climate organisations, Nature Conservancy Group, claimed to be preserving forests that were in fact never threatened to begin with.
In the age of social media, these corporate missteps are easily magnified. Getting caught as part of a dubious carbon offsetting campaign can be harmful to a brand’s reputation, not to mention the environment. The other extreme — not doing anything — is equally damaging.
It’s on managers to become savvier about their company and climate partners’ actual climate impact. Here are five warning signs that it’s time to do a temperature check on your climate efforts.
1. You’re doing the bare minimum
Carbon neutral is not good enough. At this stage of the ever worsening climate crisis, we need to get to carbon negative. That means removing significantly more carbon dioxide than what is produced.
The atmosphere is already full of excess carbon dioxide. While minimising new emissions, we also have a historical responsibility to remove existing CO₂: the ‘safe level’ of 350 parts per million (ppm) was surpassed back in 1987, and total CO₂ now hovers at around 417 ppm. A lot more needs to be done to redress this.
2. Your climate partners aren’t transparent about their work
The offset industry is still a relatively young one, and it’s going through growing pains. There are a lot of unknowns and uncertainties, especially when it comes to evaluating actual impact. All climate organisations should be transparent about these shortcomings.
If there’s little information on a partner’s website about where its money is going, what cut the organisation takes from compensation payments, or how its carbon capture projects are evaluated and improved on, it’s best to assume that the enterprise is driven more by profit than by climate integrity.
3. You’re not consulting independent experts
Climate science is complicated, and anyone who says it isn’t is lying. Trying to calculate the right amount of emissions to offset any given product, service or action is a complex equation that has a large margin for error. Most of the time, academics or independent scientific advisory panels are the only bodies who can create actually reliable data.
Watch out for climate organisations that try to simplify the maths.
‘Double compensation’ has become a trendy buzzword as awareness of ‘carbon negative’ has increased, yet often, even doubling the amount of carbon that’s being compensated for is not enough to reach carbon negative. It’s too simplistic an equation.
Each carbon capture project has its own individual success rate: forest protection efforts in the Amazon rainforest, for example, can have a sizeable impact on the climate, but might have completely different risks compared to a conservation project in the Nordics. That means the overcompensation factor needs to be separately calculated and readjusted for each carbon capture initiative — every time.
4. You’re not acting globally
Climate change is a complex global problem that knows no borders, so to only act locally is to disregard the magnitude of the crisis. Many companies take pride in taking climate action in their own neighbourhoods, for example by planting trees or protecting local forests.
Yet many of the most cost-effective carbon capture projects are located in the Global South where additional climate financing is also desperately needed. If firms were to invest in projects there, they would have much more of an impact, not only on the climate, but also on biodiversity, human rights and social issues. In the end, for the climate, it doesn’t matter where carbon capture takes place, so long as it works.
5. You’re not educating your customers
The central point to understand is that offsetting shouldn’t be a get-out-of-jail-free card to increase emissions — it should only be used for the emissions that remain unavoidable. That is also why accurately calculating carbon footprint can have such a large impact beyond climate projects.
[Offsetting] should only be used for the emissions that remain unavoidable.
Carbon offsetting data can drive future business decisions in a more environmentally friendly direction, and the same data can be used to better educate consumers. By embedding carbon offsets as an optional add-on in the purchase journey — and weighing different products with varying compensation cost according to their individual carbon footprint — companies can help consumers become more aware of the environmental impact of their consumption choices.
The optional carbon offset add-on can guide customers to view compensation for emissions less as an act of charity and more as a responsibility that must be carried. The higher the compensation cost, the more likely the consumer is to wake up to the adverse impact from their consumption and take action.
81% of global respondents in a Nielsen survey said they feel strongly that companies should help improve the environment. When consumers see a firm do due diligence with climate efforts — and be transparent about its initiatives — they’re more likely to favour the brand and trust it. That in turn drives further shopping intent, while making sure all consumption stays sustainable.
