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The Pros and Cons of Carbon Offsetting: What you need to know
Carbon offsetting is one of the most common ways businesses try to reduce their environmental impact. But while offsetting can play a role in your Net Zero journey, it is not a perfect solution. Used incorrectly, it can become a shortcut or even a risk to your credibility.
This guide explores how offsetting works, when to use it, and why it should never replace emission reductions at the source.
How Does Carbon Offsetting Work?
Offsetting means investing in projects that reduce or remove greenhouse gases from the atmosphere. These can include:
- Renewable energy projects
- Reforestation
- Carbon capture and storage technologies
When you buy carbon credits, you are not reducing your company’s emissions directly. Instead, you are compensating for them after they have entered the atmosphere.
When Should Businesses Offset?
Offsetting should only come after you have done everything possible to reduce emissions through operational improvements, supply chain changes, and innovation.
Think of it like an emissions tax — a way to balance out what is unavoidable each year.
The Science Based Targets Initiative (SBTi) recommends this five step approach:
- Measure: Track emissions across Scopes 1, 2, and 3
- Analyse: Identify your biggest sources and compare to industry averages
- Target: Set reduction goals aligned with SBTi
- Reduce: Cut emissions through changes in operations, facilities, partners, and products
- Remove & Offset: Only after reductions do you purchase offsets for what remains
👉 Example: The aviation industry cannot reach Net Zero by offsetting alone. The sector is relying on innovations like sustainable aviation fuels (SAFs).
Why Offsetting Alone Will Not Work
Offsetting sounds simple: if you cannot reduce, pay someone else to absorb it. But the scale required is unrealistic.
- Global emissions = ~40 gigatons of CO2e per year
- Reforestation to absorb this would need ~2 billion hectares of land — about the size of South America
Offsets can help, but we cannot plant our way out of the climate crisis. The focus must remain on reducing emissions at the source.
How to Offset Responsibly
The offsetting industry is not always well regulated. Choose certified providers that follow credible standards, such as:
- Verified Carbon Standard (VCS)
- Gold Standard
- Clean Development Mechanism (CDM)
- Climate, Community, and Biodiversity Standards (CCBS)
All Futureproof partners align with these standards to ensure offsets are genuine and verifiable.
Is Carbon Offsetting Reliable?
Not always.
In 2023, an investigation found that more than 90% of rainforest credits from Verra, the largest carbon credit provider, were likely “phantom credits” that did not represent real reductions.
This highlights why companies cannot rely on offsetting as their primary climate strategy. Offsetting is useful, but reduction and transparency must come first.
Pros and Cons of Carbon Offsetting
Pros
- Provides a way to balance unavoidable emissions
- Supports renewable energy, reforestation, and community projects
- Can be part of a broader Net Zero roadmap
Cons
- Risks being seen as greenwashing if used instead of reductions
- Some projects fail to deliver promised benefits
- Cannot scale to meet global emissions on its own
The Future of Offsetting
Carbon offsetting can play a role in climate strategies, but companies must:
- Prioritise reductions first
- Offset only what remains
- Be transparent about methods and results
At Futureproof, we help companies go beyond offsets with an Emissions Manager, Net Zero Roadmap, and expert support. Measure, analyse, and reduce emissions before using offsetting as a final step.
👉 Want to get started? Explore our Emissions Manager today.
