𝗧𝗵𝗶𝘀 𝗮𝗿𝘁𝗶𝗰𝗹𝗲 𝘄𝗮𝘀 𝘄𝗿𝗶𝘁𝘁𝗲𝗻 𝗯𝘆 𝗜𝗻𝘁𝗲𝗴𝗿𝘂𝗺 𝗘𝗦𝗚 𝗮𝗻𝗮𝗹𝘆𝘀𝘁 𝗛𝗮𝘇𝗲𝗹 𝗖𝗿𝗮𝗻𝗺𝗲𝗿.

Carbon offsetting has been a hot topic in sustainability discussion circles for years and is viewed by many as a vital, if not the sole, option for some companies meeting their net-zero targets. Unless they plan on a complete product shift, Oil and Gas companies will almost entirely rely on offsetting. But how effective is it, and is it our only path forward?

Carbon offsetting is a process of compensating CO2 emissions by investing in external initiatives that actively reduce or remove GHG emissions. In practice, this looks like companies investing in reforestation or renewable energy projects, or simply buying trade-able carbon credits.

The calculated negative emissions associated with these projects (e.g. the carbon captured by newly planted trees) is presented as negating the positive carbon emissions resulting from a company’s business activities.

While offsetting projects can create genuine sustainable outcomes, they are not without criticism. They are seen by many as an attractive quick fix to achieve a clean conscience and present an illusion of sustainable practices to consumers and investors.

Disney, Shell and Gucci have all been caught up in recent backlash following a Guardian investigation into the leading carbon offsets certifier, Verra. The research concluded that more than 90% of their rainforest offset credits were worthless “phantom credits” failing to make “genuine” carbon reductions. Ultimately, it opens all Verra users up to greenwashing allegations.

At Integrum ESG, we follow guidance from the GHG Protocol and do not include Carbon offset figures when evaluating a company’s carbon footprint or when we compare their performance to their sector peers. We do this to effectively communicate the real climate change and reputational risk associated with these emissions and potential carbon inefficiencies in their business activities. Not only that, but climate commentators predict legal scrutiny and regulation to hit the $2bn voluntary carbon market in the near future.

Newly coined carbon ‘insetting’ challenges a reliance on offsetting. It advocates a proactive approach to tackling carbon emissions within a company’s supply chain. Ultimately, it aims to avoid producing emissions at the source rather than being forced to clean them up.

While it is a new buzzword, it’s not a new concept and many companies have already embraced ‘insetting’ initiatives. Examples we’ve found at Integrum ESG include Nestle’s commitment to sustainable farming practises resulting in improvements in biodiversity while reducing water consumption and GHG emissions.

Decarbonisation of a company’s supply chain is clearly the more demanding path to net-zero but it is overwhelmingly the preferred course of action.
Ultimately, carbon offsets should be used as a supplement to cross the net-zero finish line rather than the instrument we rely on to take us the whole way.

𝗪𝗵𝗮𝘁 𝗱𝗼 𝘆𝗼𝘂 𝘁𝗵𝗶𝗻𝗸?

Want to share your thoughts? Email us via contact@integrumesg.com or fill in this form HERE to book in a demonstration on our own approach to ESG analysis.