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Not so long ago, companies saw climate action as a side project - something that looked good on their CSR page. But with growing regulations and increased awareness around climate change, that approach no longer cuts it. Companies are having to take a closer look at how their activities impact the environment.
Carbon offsetting is increasingly being deployed by companies as a means of reducing their carbon emissions when reduction alone isn't enough. It allows them to take responsibility for emissions that can't yet be eliminated by supporting projects that remove greenhouse gases from the atmosphere.
What carbon offsets are and how they work
The difference between carbon offsets and carbon credits
The pros and cons of offsetting carbon emissions
How to choose credible, high-impact offset projects
Five standout carbon offset projects making a real difference
First up, let's define what the term 'carbon offset' actually means.
In a nutshell, a carbon offset is a way to compensate for emissions by funding an equivalent carbon dioxide saving elsewhere.
It's a method used by individuals and businesses to balance out their carbon footprints. This involves investing in environmental projects around the world that reduce future emissions or absorb carbon dioxide already in the atmosphere. These projects can range from renewable energy initiatives to reforestation efforts. The goal is to create a net-zero carbon footprint by offsetting the amount of carbon dioxide (or carbon dioxide equivalent) with an equal amount of reduction or removal elsewhere.
At its core, carbon offsetting is about making up for the emissions that we can't avoid by actively removing or reducing carbon elsewhere.
It starts with understanding your carbon footprint - ie, how much greenhouse gases your activities produce. Once you have that number, you can take action to reduce it. But it's unlikely that you'll be able to eliminate all emissions entirely, which is where carbon offsetting comes in.
Unavoidable emissions can be countered through carefully chosen carbon offset projects. These projects help balance out greenhouse gas emissions by reducing or removing an equivalent amount of carbon from the atmosphere.
Examples of common carbon offset projects include:
Reforestation
Planting trees or restoring forests to remove CO₂ and rebuild habitats.
Avoided deforestation (REDD+)
Protecting existing forests to prevent emissions from land-use change.
Improved forest management
Better harvesting/rotation to increase carbon stocks and reduce degradation.
Renewable energy
Wind, solar, small hydro or geothermal displacing fossil-based electricity.
Landfill methane capture
Capturing CH₄ from landfill sites to flare or generate power.
Livestock biogas
Digesters capture manure methane for heat/electricity, cutting farm emissions.
Clean cookstoves
Efficient stoves or cleaner fuels reduce biomass use and indoor air pollution.
Peatland restoration
Re-wetting drained peatlands to halt large CO₂ emissions from peat oxidation.
Blue carbon
Protecting/restoring mangroves, saltmarshes, seagrass that store coastal carbon.
Soil carbon
Regenerative practices (cover crops, no-till) to increase soil organic carbon.
Biochar
Converting biomass into stable charcoal added to soils for long-term carbon storage.
Rice methane reduction
Alternate wetting and drying (AWD) or improved practices to cut paddy CH₄.
The key is that for every ton of carbon emitted, an equivalent ton must be removed or prevented elsewhere. This means that individuals and companies can proactively take responsibility for their environmental impact, while also reducing global emissions.
While carbon offsetting is a valuable tool in the fight against climate change, it's important to remember it complements, rather than replaces, the need for direct emission reductions.
Carbon offsets work by counterbalancing emissions that have already occurred. They are a reactive measure, allowing individuals and organizations to invest in environmental projects that reduce or absorb carbon dioxide, effectively balancing out their own emissions. However, it's crucial to note that while offsets can compensate for emissions, they don't directly prevent them.
How effective carbon offsetting projects are in reducing overall carbon emissions depends on the nature and execution of the projects funded. Different projects bring different kinds of value.
Take restoration projects, for example. This kind of initiative doesn't just cut future emissions; it also absorbs the carbon already in our atmosphere, helping to rebuild ecosystems while it's at it.
Renewable energy projects, on the other hand, work to phase out emissions-heavy fossil fuels by providing cleaner alternatives.
Then there are community projects - things like improved cookstoves or solar lighting initiatives, which have the dual benefit of reducing emissions while also improving the lives of local communities.
However, it's important to recognize that carbon offsetting is not a cure-all solution. The ideal approach to tackling climate change is a combination of reducing emissions at the source and offsetting the remaining, unavoidable emissions. In other words, while carbon offsets are valuable, they are most effective when used as part of a broader strategy that includes direct actions to reduce emissions.
While carbon offsetting plays an important role in tackling climate change, it's not without its flaws. The real impact of any carbon offsetting project depends on many factors, including both the quality of the project and how it fits into the wider emissions reduction strategy.
Offsetting channels climate funding across borders — especially to developing countries where it has the most tangible impact. By supporting renewable energy, forest protection, and clean technology, companies help accelerate the global energy transition.
Carbon markets help scale emerging climate solutions such as direct air capture, biochar, and methane recovery — technologies that rely on early investment to reach commercial maturity and global impact.
Nature-based projects like reforestation, mangrove restoration, and soil carbon programmes capture CO₂ while supporting biodiversity, improving soil health, and protecting water systems.
Many offset projects generate social co-benefits — from clean cookstoves to solar electrification and sustainable agriculture — reducing emissions while improving livelihoods, health, and resilience.
Offsets allow companies to recognize and address their residual emissions, demonstrating genuine accountability and long-term commitment to sustainability — not just empty promises.
These benefits mean that carbon offsetting - when done right - can be an important tool in battling climate change. But the true value depends on the integrity and transparency of the projects funded.
Risk of delay and complacency
Offsets can act like a pressure release valve: organizations feel they’ve “done their bit” and postpone the harder (but essential) work of cutting emissions within operations and supply chains. Over-reliance can dilute incentives for efficiency, electrification, and supplier engagement.
Variable quality and over-crediting
Weak baselines, inflated assumptions, or poor monitoring can lead to credits that aren’t real, additional, or durable. If a project would have happened anyway, those tonnes aren’t truly offsetting anything.
Permanence (reversal) risk
Nature-based projects store carbon in living systems that can burn, be logged, or degrade. Reversals (wildfire, pests, land-use change) re-emit stored carbon, undermining balance against long-lived fossil CO₂.
Leakage and shifting emissions
Protecting one forest patch can push logging or agriculture to another area. Without strong regional planning, reductions inside a project can be offset by increases next door.
Double counting and attribution
If both a host country and a buyer claim the same reduction, accounting is distorted. Clear rules (eg. corresponding adjustments) and transparent registries are essential.
Timing mismatch (ton-year)
A one-off credit often “balances” fossil emissions that affect climate for centuries. Temporary storage windows don’t perfectly match the permanence of fossil CO₂.
Equity and community consent
Projects can overlook land rights or deliver few local benefits. High-quality efforts require FPIC, fair revenue sharing, and real co-benefits.
Market opacity & credibility
Complex methodologies and opaque pricing make quality hard to judge. If credits later prove weak, greenwashing risk can outweigh intended benefits.
Price signal distortion
Cheap, low-quality credits can crowd out higher-integrity projects and make offsets seem cheaper than on-site decarbonization, undermining real cuts.
Policy & regulatory uncertainty
Rules evolve fast. Credits acceptable today may not meet tomorrow’s standards, creating legal and disclosure headaches.
Admin load & MRV costs
High-integrity MRV is resource-intensive. Smaller buyers can struggle to vet projects properly, raising the risk of unintentionally low-quality purchases.
The bottom line is that offsets contribute to climate action, but only as a complement to genuine emissions reductions.
While carbon offsets can help valuable climate projects, many fail to deliver on their promises. In recent years, serious issues have been uncovered with how carbon offset programs operate:
When thinking about whether or not to invest in carbon offset projects, it's best to see them as a complement, not a substitute.
If your company has already worked to cut the main sources of emissions and has the means to go even further, carbon offsetting can be a great next step.
It's a way to support broader climate efforts while also shrinking your own carbon footprint.
With so many carbon offsetting options on the market these days, it can be difficult to know what to look for. For companies committed to genuine environmental impact, it's important to select the most impactful and reliable ones. Let us help demystify the process.
✅ Third-party verification and credibility: Opt for programs that are verified by reputable third parties. This ensures that the carbon offsets are real, quantifiable, and make a genuine difference in reducing CO₂ emissions.
✅ Tangible and measurable impact: Choose programs where the impact on CO₂ emissions can be clearly measured and is permanent. The program should have a transparent method for quantifying its environmental benefits, ensuring that your investment is actually contributing to reducing carbon emissions.
✅ Efficient management and supervision: A well-managed program that is run efficiently and with transparency is more likely to achieve its goals. Look for programs that have a track record of successful implementation and are managed by competent, experienced teams.
✅ Community benefits: Consider programs that go beyond just offsetting carbon emissions and also provide socio-economic benefits to local communities. This could include job creation, biodiversity conservation, or improved local environmental conditions.
✅ Compliance with international standards: Ensure that the program adheres to international standards and best practices in carbon offsetting. This not only lends credibility to the program but also ensures that your investment contributes towards globally recognized environmental goals.
When selecting a carbon offset program, you should look beyond the surface and evaluate the program’s real impact. This helps prevent any risk of ‘greenwashing’ and means that your investment genuinely contributes to combating climate change.
Here are our picks for the top 5 carbon offset projects:
Established in 2003 in Geneva; known for high-integrity climate projects with strong, measured SDG co-benefits.
Launched in 2007 and administered by Verra; one of the most widely used greenhouse-gas crediting programmes globally.
Founded in 2004 in the US; a platform that curates third-party verified projects for individuals and organizations.
Established in 1996 by Winrock; one of the longest-running voluntary carbon registries with growing international reach.
Founded in 1996 in the UK; a standard dedicated to community-led, nature-based climate solutions with strong livelihood benefits.
Have more questions? Check out our complete FAQs in the Knowledge Base, or contact sales to get the answser you’re looking for.
A carbon offset funds an equivalent reduction or removal of greenhouse gases elsewhere. A carbon credit is the unit (usually 1 metric tonne CO₂e) issued by a program/registry that verifies the reduction or removal. Offsets use credits in both compliance and voluntary carbon markets.
Additionality (wouldn’t happen without carbon finance), robust MRV (measurement, reporting, verification), permanence safeguards, low leakage risk, transparent registry issuance/retirement, and alignment with ICVCM Core Carbon Principles (CCPs).
SBTi only recognizes direct emissions reductions for achieving near-term targets. High-quality carbon removals can be used after those targets are met, to neutralize any residual emissions on the journey to net zero. CSRD requires companies to report transparently if they use offsets, including the standard or registry, project type, and amount retired - but offsets cannot be used to meet emission reduction obligations. They can, however, be disclosed as part of a broader climate strategy.
Common offsetting projects include nature-based (reforestation, REDD+, blue carbon, soil carbon), methane capture (landfill, livestock), improved cookstoves, biochar, and engineered removals like direct air capture (DAC).
Reductions avoid emissions that would have occurred (eg. renewable energy replacing fossil power). Removals take CO₂ out of the atmosphere (eg. reforestation, biochar, DAC). Most net-zero frameworks require reductions first, then removals for residuals.
Search the project ID on the relevant registry (eg. Verra Registry, Gold Standard, ACR, Plan Vivo) and confirm the retirement transaction details - quantity, vintage, date, and beneficiary.
No. Offsets complement - never substitute - direct decarbonization. Prioritize real reductions across operations and the value chain, then use high-quality credits for the residual footprint.
Vague documentation, no third-party verification, unclear baselines, weak community/biodiversity safeguards, missing registry entries, and claims of instant “carbon neutrality” without transparent MRV (measurement, reporting, and verification).
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