Published : August 2022
How they work, strategies for success and the future of the voluntary carbon market
Why should businesses care about carbon offsets? Pressure from market forces—customers, supply chain partners, investors—and the possibility of regulatory changes such as the recent SEC proposal are driving companies to make net-zero carbon commitments they’ll need offsets to fulfill. Simultaneously, the reputational benefits of offset projects and growing investment opportunities encourage early engagement.
The role of carbon offsets in corporate decarbonization strategies is far from settled; among the companies receiving an ‘A’ rating from the CDP, not all purchase carbon offsets.1Overall Overall, 40% of companies in the Forbes 2000 with net-zero targets include offsets in their climate strategy, and among companies with targets for 2030 or earlier, the figure reaches 60%.27 in a world where both the finances and the human capital needed to navigate decarbonization are limited, it is crucial to understand what offsets are, how the voluntary market works, and what businesses stand to gain from getting involved sooner rather than later.
Sustainability decision makers who have just begun to explore carbon offsetting and other business leaders who find themselves tasked with evaluating a carbon offset strategy
- Virtually every company that pursues a net-zero target will need to offset some portion of its emissions in the long run.
- The inevitability of offsetting in the long term means the chance to differentiate a company’s offset strategy is found in the near term.
- The best approach to incorporating offsets depends on the size of a company’s current and projected footprint, and reputational and financial considerations.
- Every successful offsetting strategy depends on broader decarbonization planning and leadership.
- Offset strategy will become a fundamental part of any company’s financial management and investment skillset.