What is carbon credit offset for Net Zero strategy ?

August 25, 2022



Carbon footprint
Grégoire Guirauden

Grégoire Guirauden

Chief Operations Officer

The role of carbon offset role in net zero strategy

Carbon offsetting in Net Zero Initiative by Carbone4

If recent trends continue,  predictions of global temperatures increasing by as much as 2.7°C (4.86°F) by 2100. Even with this tiny rise in global temperatures we are feeling the effects of climate change, with erratic weather patterns, including heatwaves, floods and severe storms, loss of polar ice, and rising sea levels.

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 Offset Strategy Pillars

Why carbon 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
  • Companies do not have control over the largest share of their greenhouse gas emissions 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

  • Carbon offset 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 carbon dioxide emissions reduction
  • Communication about this carbon offset 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 approaches, or how to virtuously finance impactful climate-positive projects:

  • Necessity to have measured one's carbon footprint, defined a a greenhouse gas emissions reduction trajectory, and to have implemented relevant carbon emissions 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 net zero emissions 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