Corporate Carbon Offsetting: Progressive or Greenwashing?

Is corporate carbon offsetting a genuine step toward saving the planet, or just clever greenwashing? By purchasing carbon credits to claim carbon neutrality, corporations promise sustainability — yet critics expose flaws, and ethics issues. So far it has fallen short in delivering the environmental benefits promised, and has been masking the need for real, lasting change. 

Image 1: Cartoon illustrating greenwashing (Source: Johan Eklund, Wikimedia) – title visual

Corporate carbon offsetting is a scheme utilised by large corporations to balance out and compensate for their environmental footprint by investing in projects that reduce or remove emissions from elsewhere. A company is able to purchase carbon credits, a tradable permit representing the right to emit one metric ton of any greenhouse gas (GHGs). The carbon credits they purchase equals the amount of GHGs emissions they produce. Hence, they can claim to be carbon neutral. The past few years, carbon offsetting has risen in popularity, however, so have its critiques. Is corporate carbon offsetting honestly progressive and the solution to the climate crisis, or is it merely greenwashing?

Offset schemes vary depending on the offset method and therefore differ in cost, however, the typical fee for a tonne of CO2 is £8. To put into perspective this cost, for a year’s worth of electricity and gas this would cost a standard British family approximately £45. According to a PwC’s 2022 report, FTSE 350 companies reported purchasing up to £38 million worth of carbon credit — equalling to the total amount of emissions produced by both Kenya and Ethiopia. In 2030 the same amount is predicted to rise to £135 million. Theoretically one would expect that a cost this high would encourage companies to reduce their ecological footprint and put this money towards that goal. Nonetheless, this progressive method, is performative, and serves like a pat on the back for larger corporations, further delaying the transition to renewable energy and thus achieving Net Zero.

There is a strong basis to argue that carbon offsetting is a valuable and effective practice. There are inevitable and unavoidable GHGs released in the atmosphere, such as methane and CFCs, that cannot be eliminated, at least not yet. At the same time, there are nature-based projects in developing countries, including forest and coastal restoration, or prevention of GHGs release that are in need of funding. Thus, partnering these organisations with wealthy corporations appears to be a logical step towards Net Zero.

The first argument against carbon offsetting is grounded in errors within the entities, such as their ethics concerning indigenous populations, logistically accounting their actual success and impact, especially in tree-planting, or even some of the projects being scams. Yet, the most fervent criticisms concern the mentality and the morals behind the scheme which at times ends up being counterproductive. George Monbiot, an environmental and political activist, and journalist advocating for climate action and sustainability, compared carbon offsets to the ancient Catholic church’s tradition of selling indulgences, which offered absolution of sins as a reward for donations to the church. Ironically, wealthy Catholics seized the opportunity to further sin without consequences, and the church manipulated the rising influx of donations, instead of fixing the underlying harmful behaviour. Likewise, carbon offsets seem to function as a ‘license’ for companies to pollute or a ‘green tax’ to alleviate the guilt for the environmental harm, rather than incentivising them to alter environmentally unfriendly behaviour.

Image 2: Technological Advancement at the Expence of Nature (Source: Freepik)

This is most common in large corporations such as Chevron, which aims to achieve Net Zero by 2050 — however, currently, their only means of reaching that is carbon offsetting. Research by Corporate Accountability proved that their scheme was a greenwashing mechanism to relieve accountability and pressure. In a recent report, Corporate Accountability found that more than 90% of their offsets ‘seem to be worthless’, and they ‘invest millions annually to manipulate the political will for climate action, seeking to shape climate policy to its will’, highlighting the ethical dilemma of carbon offsetting. This contrast between promises for Net Zero and the reality of the results is unfortunately not an isolated phenomenon, with many corporations including Amazon, Ikea, and Nestlé, missing their net-zero deadline. This defeats the purpose of carbon offsetting: cutting down footprint as an incentive to improve.

Corporate carbon offsetting initiated with a noble aim centred on environmentalism and accompanied with reduced emissions and harmful practices, would be a huge move for the fight against climate change. Both corporations and participating schemes have taken advantage of the loose and unregulated system resulting in its ultimate failure to meet the promised outcomes. Nevertheless, it does not seem that it will be going out of style any time soon. Optimistically, an improvement in the management and regulation, exemplified by the recent growth of removal-based schemes like Swiss Climeworks, which are more credible and effective than avoidance-based schemes, partnered with a ‘greener’ corporate mindset, can potentially deem carbon offsetting legitimate and effective.

Written by: Sofia Bozani