What is carbon credit offset for Net Zero strategy ?

September 26, 2022
Carbon footprint

Carbon offsetting role in net zero strategy

Carbon offsetting in Net Zero Initiative by Carbone4

For society to reach carbon neutrality and limit global warming to 1.5°C, companies committed to environmental transition must simultaneously and from now on:

A) reduce their own greenhouse gases emissions as much as possible,

B) foster the reduction of other stakeholders’ emissions, and

C) enable global carbon capture through the increase of carbon sinks.

Levers (B) and (C) are what we call contribution: companies financing carbon reduction and capture projects to accelerate their deployment,  in- or outside of their value chain.

Carbon credit offsets are part of a strong Net Zero strategy.

Why carbon credit offsets are essential to accelerate the ecologicial transition

Carbon contribution is essential to reach the objective of carbon neutrality at society level for three main reasons:

  • Solutions to shift our production and consumption system to a low-carbon model need financing to deploy at scale
  • In France only, an incremental investment of 15 to >40bn€ per year is estimated to be required to reach our neutrality objective
  • [1]
  • Companies do not have control over the largest share of their emissions within scope 3, and should hence pull the lever of contribution to have a fair and comprehensive climate action, from now on for the environmental transition to happen early enough

Carbon credits offsets but not greenwashing

While carbon contribution is essential for the environmental transition, its perception has been degraded by several offsetting scams. We strongly believe carbon contribution’s image should be restored, and not be associated with greenwashing.

Main greenwashing signals in carbon credit offsets

  • Offsetting takes place instead of reduction actions which could have been implemented at the company
  • Financed projects have no link with the company’s activity
  • Carbon credit prices are far too low to reflect the real climate price of environmental pollution, and does not encourage the company to accelerate its emissions reduction
  • Communication about these offsetting projects can mislead customers or employees on their understanding of the company's real impact on the environment

Carbon contribution, the best way to approach carbon credits offsets

The contribution approach, or how to virtuously finance impactful climate-positive projects:

  • Necessity to have measured one’s carbon footprint, defined a reduction trajectory, and to have implemented relevant carbon reduction actions during the year
  • Financed projects are mirroring emissions which cannot be reduced at this time at the company, e.g. scope 3 emissions
  • Carbon contribution credit prices reflect the real cost of environmental deterioration, and create de facto an internal carbon tax for the company to accelerate its transition
  • Honestly engaging its whole ecosystem - clients, employees, investors…- on these contribution actions, without any misleading communication or initiatives

How companies should define their Net Zero Strategy and carbon credit offsets

Prior to making any carbon contribution, the following actions should have been implemented:

  1. Measuring your carbon footprint on scopes 1, 2 and 3
  2. Setting regular objectives on each scope to reduce drastically your own emissions on a mid-term perspective
  3. Conducting every year the relevant reduction actions to stick with the defined trajectory
Science-Based Target Initiative (SBTi) approach of Net Zero strategy and the role of carbon credit offsets.

If these conditions are met, your contribution plan should follow the following steps:

  1. Selecting relevant and impactful projects to finance, which could ideally have a direct or indirect impact on your emissions in a mid-term perspective
  2. Checking if these projects respect the core carbon credit principles
  3. Defining the volume and purchase price of carbon credits
  4. Involving your ecosystem with the right communication support and engagement plan

Grégoire GuiraudenGrégoire Guirauden

Grégoire has worked for more than 6 years in the digitalization of companies and the scaling of customer success teams. He is deeply passionate about climate change and green technologies.

Related Posts

Stay in touch

Thank you! Your submission has been received!

Oops! Something went wrong while submitting the form