Seeking Net Zero? You Should Know Not All Carbon Offsets Are The Same

Tree planting features heavily in offset projects. Is that enough to combat climate change? Image by Alejandro Cuevas from Pixabay

Transactional carbon offsets

  1. Companies are paying others to change, not changing themselves. Offsets don’t require a company to make any substantial changes to its own operations. The company can continue to emit carbon at the same rate and simply pay for others to do better. In the end, offsets compensate for the company’s carbon being emitted, which can give it a licence to continue to emit. Amazon, for example, pays other companies to build solar farms or plant trees to balance out its carbon footprint. This approach is particularly tempting for a company with a market cap approaching $2 trillion.
  2. Creative bookkeeping. Offsets are susceptible to creative bookkeeping, as they require determining what carbon emissions would have been had the emissions not been offset. Not only is the baseline a moving target, the proposed projects can also be pretty shifty. In other words, the carbon that is presumed to be offset is chocker block full with assumptions. As well, there is no assurance that the solar farm is built to specification, or the trees planted thrive after the offset is sold. These brokered offsets can involve considerable sleight of hand and leave companies exposed to reputational risks, if the offsets are found to be simply greenwashing. There are third-party agencies, like Pachama, who build their business around brokering offsets that they carefully verify.
  3. Doing less harm, rather than doing good. Ultimately, carbon offsets often do not actually reduce the carbon in the atmosphere, they simply prevent the addition of more carbon. To deal with the climate crisis, companies need to not just turn down the faucet in the bathtub, they need to open the drain. Although companies are investing in projects that limit emissions, they are still adding emissions by putting their business operations and growth at the centre.

Relational offsets through long-term regenerative projects

  • They seek not to do less harm by reducing the increase in carbon emissions, but do good by removing carbon from the atmosphere.
  • They involve long-term agreements that require the third-party agency to steward the project and the land. The company can then account for the credit in actual carbon sequestered, not in the fictional account of carbon not emitted.
  • Finally, these regeneration projects have numerous knock-on effects, such as improving water quality, air quality, and biodiversity. They also foster positive relationships with local communities.
Regenerative agriculture is one type of project that cna be used. Photo by Immo Wegmann on Unsplash

The Climate Crisis Requires Immediate Action

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Professor and Canada Research Chair in Business Sustainability, Ivey Business School. Founder of the Network for Business Sustainability (www.nbs.net).

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Tima Bansal

Tima Bansal

Professor and Canada Research Chair in Business Sustainability, Ivey Business School. Founder of the Network for Business Sustainability (www.nbs.net).

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