What Is Carbon Offsetting and Why Every Business Owner Should Know About It


With the effects of climate change intensifying, environmental awareness is at an all-time high. Consumer behavior has greatly shifted — with 85% favoring brands that provide sustainable products and services. This has made corporate sustainability a prime strategy for businesses in every industry. Being eco-friendly is no longer just a moral choice. It’s now a business decision.

Of course, as a business owner, your priority is the interests of your company. But that doesn’t mean you can’t be sincere in your sustainability efforts. After all, being sustainable helps your company as much as it helps the environment.

If you’re a business leader looking for ways to make your business greener, you should consider carbon offsetting.

Carbon Offsetting
Carbon Offsetting

What is carbon offsetting?

When a company does carbon offsetting, it invests in environmental projects to cancel out its greenhouse gas emissions. The goal of this offset is to make a company’s operations carbon neutral — as the carbon released into the atmosphere is soaked up or saved in another way, typically in developing countries. Common offset projects include the distribution of sustainable technologies and tree planting.

Carbon offsetting: good or bad?

As widespread as carbon offsetting is as a practice, it’s highly controversial. Critics argue that carbon offsetting is just a way for major carbon polluters to avoid having to change their environmentally damaging ways. For instance, it can allow an industry giant to be cleared of responsibility without having to bother with switching to renewable energy, reducing plastic use, and other sustainable practices. While that is true, it doesn’t automatically make carbon offsetting an evil that needs to be vanquished.

Criticism of carbon offsetting is often directed at tree planting. Investment in tree planting projects is beneficial to the environment in the long term, but it doesn’t offer any real benefits to the environment and communities right at the get-go. Fortunately, most methods of offsetting have shifted to projects that offer a real and immediate effect. The challenge then for businesses is to ensure the projects they invest in aren’t just balancing out their emissions, but also providing positives to the communities involved.

Carbon offsetting, when done right, is good for the environment. It isn’t ideal, but it’s infinitely better than nothing. Assuming offsetting is done correctly, it can:

  • help fund environmental projects that couldn’t secure funding;
  • be an added opportunity for businesses to cut their carbon footprint;
  • help in tracking a company’s carbon footprint;
  • immediately reduce global carbon emissions in the short term.

Many companies can’t feasibly commit to large reductions in carbon emissions — either the nature of their business prevents it or they emit little to no carbon at all. Carbon offsetting presents these businesses with an opportunity to improve their contribution to global decarbonization efforts.

Why your business should offset carbon

It’s great for the short-term

Ideally, being zero-carbon or carbon positive should be the long-term goal for every business. Realistically, businesses have financial obligations that complicate achieving these goals. Many businesses can only contribute so little with their sustainability plans still in progress. If your business is in the same boat, carbon offsetting can allow you to immediately neutralize your carbon footprint while you work to achieve your long-term sustainability goals.

It helps align your business with ESG standards

Should you choose to offset your carbon emissions, you’ll be putting your business in better alignment with ESG (Environmental, Social, and Governance) standards. ESG stands at the forefront of today’s business culture, and it’s how investors gauge whether a company is socially responsible or not. You want your company to have a higher ESG rating so you can attract more investors.

It’s an excellent way of protecting destinations you rely on

Directly or indirectly, every business is reliant on nature and its resources. Investing in offsetting projects that help safeguard sites your business depends on allows you to hit two birds with one stone. This is especially true for tourism operators. If you’re in the travel and tourism industry, it’s in your best interest to maintain the beauty and integrity of the attractions you offer. Putting your money into these projects guarantees these destinations can survive and they can continue supplying the resources you need.

How to offset carbon properly

Conduct carbon accounting

You can’t improve what you don’t measure. Before you can start offsetting carbon, you first need to know how much carbon you’re emitting in the first place. There are carbon accounting software and services your business can avail of to get an accurate measurement of your carbon emissions. Once you’ve taken into account the footprint of all your business operations, you’ll know how much you need to offset.

Invest only in credible projects

A primary concern for both businesses and offsetting critics is the actual effectiveness of the projects being invested in. Once a business has purchased carbon offsets, the rest will depend on the organization handling the project. To make sure your money is going to projects that are doing what they ought to do, various standards have been developed.

These certifications help ensure the credibility of offset projects:

Voluntary Gold Standard (VGS) – VGS-certified projects are projects that are determined to be contributing to the United Nations’ Sustainable Development Goals and help to improve neighboring communities. Furthermore, this certification ensures an offset project has long-lasting social, economic, and environmental benefits.

Verified Carbon Standard (VCS) – like VGS, being VCS-certified requires projects to fulfill a rigorous set of rules and requirements. But unlike VGS, it’s less expensive and less bureaucratic — allowing a wider range of smaller projects to be certified.

Is carbon offsetting cost-effective?

Perhaps the main concern for businesses is the cost-effectiveness of purchasing carbon offsets. Is it a good investment? Yes, when done correctly. As discussed, it’s critical that you invest only in credible projects to ensure your emissions are really being absorbed or saved.


Carbon offsetting is controversial, but it’s ultimately a good thing for the environment provided everything goes as planned. Still, businesses that are considering offsetting should keep in mind the world needs every bit of help if it has any chance of preventing a climate catastrophe. Offsetting carbon should only be viewed as a short-term solution and the priority is still to achieve net-zero emissions.