2.12. Offsetting negative impact
Key Takeaways 2.11
In a nutshell
Review how your feel about offsetting and insetting.
Is this approach right for your business?
What is offsetting?
Once you have done everything you can to reduce your carbon emissions, there may well be some that you simply cannot reduce any further. These unavoidable emissions can be compensated for through offsetting or neutralised through removal programmes.
For example, for every ton of unavoidable CO2e produced by a company’s business operations, it can fund offset projects to reduce the amount of CO2e in the atmosphere. Common carbon reduction projects include protecting forests, developing clean energy sources, or more efficient energy products.
A strong word of caution though. From a commercial perspective, if a business relies heavily on proceeding straight to purchasing offsets without a robust reduction strategy, the amount that it pays out every year will inevitably keep going up. From an environmental standpoint, offsetting can be viewed as mopping up the floor without turning the tap off. Neither is good.
To ensure that you are offsetting with integrity, always consider the following:
Is it real?
Has the emissions reduction actually happened? In practice, carbon credits are only issued after the emission reduction has taken place - not on the “promise” of a future emissions reduction.
Is it measurable?
All emissions reductions must be quantifiable using recognised measurement tools, against a credible baseline.
Is it permanent?
In practice this means that carbon credits represent emissions reductions for up to, at least, 100 years.
Is it unique?
No more than one carbon credit can be associated with one ton of CO2 reduced. Carbon credits are stored and recorded on an independent registry, which ensures no double counting.
Has it been independently verified?
Emission reductions should be verified by an independent third party that is approved by one of the international standards.
Was offsetting the only way?
Can the project demonstrate that the reduction in emissions could not have occurred if it were not for carbon finance?
What is insetting?
As well as carbon offsetting, there is carbon insetting. This refers to businesses removing emissions from within their own operations and supply chains, making them more nature positive.
It usually involves investing in nature-based initiatives like reforestation, renewable energy, or agricultural practices with regenerative properties – without handing the responsibility or funds to an outside party.
