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A business guide to find the best carbon offset program to invest in

May 10, 2022
Carbon offsetting

If done properly, carbon offsetting can be an effective component of decarbonisation strategies to help fashion brands reach their net zero targets. With more companies turning to offsets to stick with their net zero goals, the voluntary carbon market (VCM) keeps booming. In 2021, VCM value grew by 190% and is expected to increase by up to 80% this year.

However, just like any other recent trend growing fast, the sector still lacks well-established benchmarks and global standards. For this reason, it’s easy to get lost in the carbon offset jungle and bump into low-value credits.

But Green Story is here to help. We’ve put together a carbon offset guide to help you maximise your investments while avoiding greenwashing. Before revealing which markers you should look for when finding high-return carbon offset options, let’s briefly see what they are and how they work.

How does carbon offset work?

While carbon reduction should be on top of your climate-friendly to-do list, chances are you’ll still be left with some unavoidable residual emissions to get rid of. That’s where carbon offsetting comes handy. By funding sustainable projects that avoid (e.g., the construction of a wind farm) or capture (e.g., a tree plantation) greenhouse gas (GHG) emissions, you can compensate for your business leftover carbon footprint.

When financing an offset scheme, you purchase some carbon credits. For each carbon credit you buy, you receive a certificate confirming that 1 ton of CO2e was avoided or removed from the atmosphere. On the other hand, the price of a carbon credit is affected by market dynamics and project-related factors (e.g., benefits, quality, location, etc.).

So, where can you buy carbon offsets from?

There are plenty of carbon credits marketplaces out there. However, unlike these websites, our Simplizero Ecommerce will recommend carbon offset projects that are aligned with UN Sustainable Development Goals (SDGs) and that best match your supply chain locations or brand values. To add to that, by leveraging our carbon offset services, you won’t have to worry about transparency due diligence. That’s because we’ve already vetted the most reliable carbon offset programs that will grant you a credible and verifiable positive impact.

If you still have any residual doubts about carbon credits, this post will offset them. It’s now time to find out what makes carbon offset programs suitable for companies, whether they’re at the beginning of their sustainability journey or are far into it.

3 key boxes that carbon offset programs for sustainable businesses should tick

While offsetting your carbon emissions may sound like a no-brainer, you should check they meet 3 key requirements as these make carbon credits a good investment.

1. Additionality

Additionality is possibly the most important criteria to keep in mind when buying high-quality carbon credits. An offset project is additional when it’s responsible for an extra emissions avoidance or removal on top of the current baseline (i.e. no project implementation). Also, an offset scheme complies with additionality when the purchase of its carbon credits makes it financially viable. In other words, you don’t want to squander money on a solar farm that will be built even without your funding.

The issue is that additionality is tricky to guarantee. As reported by a European Commission’s study, 85% of carbon credits in Europe developed under the Clean Development Mechanism (CDM) were not additional.

2. Permanence

Your carbon credits should stand the test of time. When it comes to carbon offsetting your emissions by planting trees somewhere, some experts say that a forest should stay there for at least 100 years to store carbon effectively. So, you should sow the seeds of healthy growth right from the start to optimise trees’ carbon capture potential.

But sometimes trees don’t even have the chance to grow. A recent paper found that most of the carbon offset forestry projects developed over the last 50 years had a low return-on-investment (ROI). These tree planting projects didn’t take root for a few reasons. First, many projects went on for less than 3 years, which was not enough for some seedlings to become fully developed trees. And that’s a big problem as short-lived trees won’t work their magic at absorbing carbon. According to a study, it would take 4 years for a tree to capture 0.1 ton of CO2. Finally, longer-lasting projects often didn’t include any after-planting management. Instead, the project developer should take care of saplings and protect the area against any potential deforestation or wildfire. Ultimately, the outcome of these initiatives was flawed because plantations managers referred to inadequate performance metrics (i.e., number of trees planted rather than grown). That’s when a genuine carbon offset project turns into greenwashing.

3. A rigorous accounting

The lack of an international accounting standard increases the susceptibility to carbon credits fraud. Obviously, you’re more exposed to carbon credit scams when investing in projects that are developed far away from where your business is as it’s difficult to hold providers accountable for impact accounting.

To add to that, you run the risk of overestimating your climate impact. First, your carbon credits may be counted twice. Say you fund a biogas plant in Kenya. Absurd as it sounds, the Kenyan government could also claim your offset emission avoidance against its Nationally Determined Contributions (NDCs). Obviously, this nullifies the value of your carbon credits. Secondly, you should account for collateral emission generation. Take a forest conservation scheme, for example. Your efforts in preventing deforestation in a certain area may indirectly cause logging in a nearby unprotected land. That’s what is usually referred to as carbon leakage as you just shift emissions from one place to another. As a result, your carbon avoidance or removal would be less than what you initially paid for.

While carbon credits could be a powerful tool to uplift your triple bottom line, figuring out the best carbon offset schemes to invest in can be challenging. That’s mostly because providers often fail to deliver transparency, thus making it hard to find offset programs that tick all of the 3 above mentioned boxes.

But there’s some good news. Thanks to Simplizero Ecommerce, you’ll access carbon offset projects verified by the most reputable and independent carbon credits certification programs such as Voluntary Carbon Standard (VCS) and the Gold Standard (GS). In addition, our technology tracks each offset purchase through a unique identification number. Doing so, you can easily trace back the on-the-ground decarbonisation potential of your carbon credits in real time.

Book a demo today to find the carbon projects aligned with your brand values while offsetting your products’ carbon footprint.