What is carbon offsetting and how to make a start?

Carbon offset schemes are top of the agenda for many businesses looking to become more sustainable and do their bit in combating climate change.

As well as helping the environment, taking responsibility to tackle climate change can have business-related benefits, such as an improved public image.

There is a growing public concern over climate change.

A 2021 survey revealed that 45% of Irish consumers have stopped buying products from companies that had failed to take action against climate change, with 57% of consumers choosing to buy goods from companies actively trying to reduce climate change.

These figures highlight the need for organisations to take responsibility for reducing their carbon emissions. Carbon offsetting is one way an organisation can take action to reduce its carbon footprint.

The government’s Climate Action Plan has set national targets for tackling climate change, including recommendations for organisations to adopt carbon-reduction practices such as switching transport to electric fleets, cutting emissions and working towards a greener economy and society.

For organisations struggling to reduce unavoidable emissions, carbon offsetting is a viable option to decrease their carbon footprint.

Read our guide to how to make small business sustainability a priority.

carbon offsetting pros and cons - tips and advice

What is carbon offsetting?

Carbon offsetting balances out the existing greenhouse gas (GHG) emissions you produce by removing, capturing or compensating the equivalent GHGs somewhere else.

It allows organisations to balance the carbon emissions they cannot reduce by investing in environmental projects, such as capturing and storing carbon or planting trees elsewhere to compensate for their company’s carbon emissions.

The scheme can benefit energy, transportation or logistics companies, for example, that are unable to avoid the release of GHGs due to the nature of their business.

Carbon offset scheme works by removing from the environment the equivalent amount of GHG emissions produced by an organisation.

Read our guide to going green – sustainability challenges and how to overcome them.

What are carbon credits?

Essentially, carbon credits allow your business to emit GHG in the future.

Like carbon offsetting, a single carbon credit represents one tonne of carbon removed from the atmosphere for each tonne of carbon produced by an organisation. Carbon credits are a helpful way to set a cap on the amount of greenhouse gas a company emits and can be used as a ceiling on the amount of GHGs their activities produce.

Carbon credits act as a monetary incentive for companies to reduce their emissions. Organisations are capped at a certain number of credits but will not be penalised for overbuying credits as if they emit fewer emissions than the number of credits they have bought they can sell their excess credits to another business.

Carbon offsetting and carbon credits are similar, but the main difference is that carbon offsetting aims to balance created emissions with similar sustainable activities, while carbon credits give an organisation the right to produce a capped amount of carbon.

Learn more about the circular economy and what it means for organisations.

ways to offset carbon footprint - planting trees

Is carbon offsetting bad?

Carbon offsetting is a controversial subject. Critics argue that it is a cheat’s way of reducing your emissions, while supporters see it as a viable way for an organisation to do their bit in offsetting the carbon they must emit as part of their core business operations.

There are both pros and cons of carbon offsetting.

Pros of carbon offsetting

  • Funds environmental projects – Carbon offsetting helps fund environmental projects that might struggle to attract investment elsewhere.
  •  
  • Increased opportunity for businesses – For organisations that lack low-carbon options, such as those that involve heavy equipment or ocean shipping, carbon offsetting allows them to balance the emissions they can’t reduce.
  •  
  • Improve public image – Investing in environmental projects and schemes can help boost an organisation’s reputation.

Cons of carbon offsetting

  • Greenwashing – Carbon offsetting may be viewed by critics as a way for an organisation to actively avoid implementing structural changes in order to reduce emissions.
  •  
  • Accountability – Questions may be raised about whether offset schemes and projects deliver on their promise. For instance, would forest conservation in one area increase deforestation in another? Would the carbon savings happen regardless of the scheme or project? Paying into ineffective schemes might not fully compensate for your company’s emissions.
  •  
  • Companies may produce even more emissions – If profitable, instead of tackling their carbon footprint directly, some organisations may purchase carbon offsets to compensate for producing even more emissions.

Carbon offsetting is a way to do something for the environment, but it should be done alongside your organisation’s efforts to reduce emissions directly. If based solely on carbon offsetting, your organisation’s environmental activity may be viewed negatively.

How to get started

The first step is to calculate your carbon emissions.

There are many online carbon footprint calculators to help, including the Environmental Protection Agency.

After calculating your carbon footprint, consider the ways your organisation can reduce its carbon emissions, such as:

  • recycling waste
  • switching company vehicles to electric
  • switching to a renewable energy tariff
  • use sustainable products – for example, remove single-use plastics, like plastic coffee cups, from the office

While you might find methods to reduce your organisation’s carbon footprint, there might be some business activities that make this impossible – this is where carbon offsetting may be an option to consider.

Read our guide to the five ways to build a sustainable supply chain.

How to offset carbon emissions

Organisations can offset their carbon emissions by investing in various carbon offset schemes and projects.

Forestry and conservation

Forestry and conservation are popular offsetting schemes. They typically create carbon credits in two ways. The first is based on the carbon absorbed by newly planted trees, and the second is based on the carbon not released by trees under conservation. Besides carbon credits, these schemes offer additional benefits such as wildlife and ecosystem protection.

Renewable energy

By investing in renewable energy offset schemes, companies help fund the building and maintenance of renewable energy sites such as solar, wind and hydroelectricity. In these schemes, companies are contributing renewable energy to the grid, decreasing the reliance on fossil fuels.

Capture and storage of emissions

Carbon capture and storage projects use technology to capture carbon from the air and store it underground. The carbon is often stored in abandoned gas and oil reservoirs or saline aquifers.

Community projects

Community projects typically, but not always, help developing communities worldwide to be more energy efficient by implementing new processes and technology. Community projects offer a lot more benefits than just offsetting carbon.

 

A carbon offset example includes The Anakot Thmei Project, which provides rural Cambodians with clean water, reducing carbon emissions and helping prevent water-related diseases. The project builds water kiosks powered by solar technology and helps against deforestation as less wood is burnt to boil water than traditional purifying methods.

Your organisation could look to improve its carbon footprint and reduce its environmental impact by achieving the following ISO certification for your EMS and EnMS:

  • ISO 14001 – A certification for environmental management systems that can help your business manage, measure and control its environmental impact.
  •  
  • ISO 50001 – A certification for energy management systems that can help companies improve energy efficiency, save on energy expenses and reduce their environmental impact.

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Holly Fitzpatrick
Holly Fitzpatrick

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