Major Corporations Scrap Carbon Offsets To Focus On Reductions

Major Corporations Scrap Carbon Offsets To Focus On Reductions - Carbon Herald
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Voluntary carbon offsets have been a pathway for global corporations to compensate for their emissions and contribute to the world’s efforts of reducing greenhouse gases. However, 2023 has been a year where investigations have piled up showing many of those offsets, claiming they result in emission reductions actually don’t do that. 

A new investigation from the Guardian published at the beginning of 2023 analyzed months of research on data regarding forest carbon offsets – one of the most common types of offsets used by companies to claim carbon neutrality. The investigation called more than 90% of the forest carbon offsets issued by Verra – the world’s leading verifier of offsets, “largely worthless and could make global heating worse”.

Relevant: The Guardian Investigation Of Verra Carbon Offsets Claims More Than 90% Are “Worthless”

Even though some critics pointed out that the findings have been exaggerated, the investigation draw the world’s attention to the burning problems of voluntary carbon markets and opened a market of new opportunities for industries to address them.

One of the side effects on the voluntary carbon market from the investigation was companies rethinking carbon offsets. Corporations, previously engaged for years with buying carbon offsets as part of their climate strategy, have started changing their claims and shifting the priority towards more robust climate actions. 

One such corporation is Nestlé. The world’s largest food maker has a net zero greenhouse gas emissions target by 2050. It wants to cut its scope 1, 2 and 3 emissions by 20% by 2025 against a 2018 baseline and by 50% by 2030. Nespresso, one of its brands, has also been claimed as carbon neutral across its business operations since 2017, achieved through offsetting projects and some reduction interventions. 

Just last week, however, the company announced a big shift in its carbon neutral strategy – instead of investing in carbon offsets, it will redirect resources to cutting its greenhouse gas emissions.

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“We are moving away from investing in carbon offsets for our brands to invest in programs and practices that help reduce GHG emissions in our own supply-chain and operations, where it makes the most difference to reach our net zero ambition… Our net zero roadmap does not rely on offsets. We focus on GHG emissions reductions and removals within our value chain to reach our net zero ambition,” said a Nestlé spokesperson.

The luxury fashion house Gucci – one of the corporations most linked to buying carbon offsets verified by Verra, has reportedly deleted its claim of becoming “entirely carbon neutral” from its website back in May 2023. It is also no longer working with South Pole, a leading carbon offsets project developer that has received criticism for selling unreliable offsets. 

Gucci announced back in 2019 it had become “entirely carbon neutral” in part using rainforest offsets certified by the Verra carbon offsetting standard.

The ASA (Advertising Standards Authority) – the UK’s advertising watchdog told the Guardian in May 2023 that it will ban advertising making misleading or exaggerated climate-positive claims like ‘carbon neutral’, ‘net zero’ and ‘recyclable’ unless they can demonstrate they really are effective. Proving the validity of carbon offsets has been a major hurdle for buyers. 

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EasyJet (EZJ.L) is another major carbon offset purchaser. The airline has been offsetting carbon emissions from the fuel used by its flights since November 2019 and showed in its 2020 annual report it has offset 75% of the carbon emissions from the fuel used in all its flights.

The company also announced a shift in its strategy in September last year. It scrapped its carbon offsetting scheme at the end of 2022 and instead will target a 78% drop in emissions by 2050 via investments in efficient aircraft, sustainable aviation fuel and operating improvements.

Relevant: EasyJet Will Focus On Sustainable Aviation Fuel To Slash Emissions

It announced it had contracted all its sustainable aviation fuel needs for the next five years from its supplier Q8Aviation, while investing in technology to optimize the descent of its aircraft.

Companies have faced an increasing amount of criticism for using greenwashing tactics. Buying carbon offsets that cannot be proven they have actually cut emissions and still claiming carbon neutrality is considered a misleading practice. 

Even though some reforestation, afforestation and nature restoration projects have actually benefited from the payments made by corporates to buy offsets, a critically large number of those payments never go where they should – to restore nature and expand carbon sinks. Such a toxic practice causes a lack of trust in the efficiency of the voluntary carbon market, discourages investments into otherwise vital nature-based projects and has a serious counter-effect on the global efforts to address climate change.

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