How to Find the Perfect Carbon Offset

Carbon offsets have emerged as a key tool for businesses looking to transition toward more sustainable ways of operating. Selling them can help a company finance clean energy projects or take other sustainability measures that fit its business operations. For businesses that can't leverage those opportunities on their own, buying carbon offsets can still help raise their green profile in meaningful ways. If your business has already gained some progress, carbon offsets can also help you embrace a broader field of action.

In other words, carbon offsets can provide your business with the flexibility to support more effective action than it could maintain individually. That all seems pretty simple, but in practice, it's not. There are literally hundreds of legitimate carbon offsets available, and more are emerging every day. Not all of them are a particularly effective match for an individual business, especially when it comes to branding.

The good news is: Carbon offsets have been around for a while, which means that there is a vast amount of research and guidance available to assist you with your purchase.

What is a carbon offset, anyway?

Simply put, a carbon offset enables you to buy into -- or take credit for -- an emissions-reducing project that is not directly connected to your property or business operations.

The goal is to neutralize part or all of your emissions. Depending on the project and your business operations, offsets could even result in a negative balance to your credit.

The World Resources Institute (WRI) defines a carbon offset as a:

...unit of carbon dioxide-equivalent (CO2e) that is reduced, avoided, or sequestered to compensate for emissions occurring elsewhere. These offset credits, measured in tons, are an alternative to direct reductions for meeting GHG targets in a cap-and-trade system.

The reference to cap-and-trade refers to a regulated, government-enforced market for carbon offsets. Since there is no such national system in the U.S., for the purposes of this article we'll be discussing voluntary offsets.

The voluntary market is nothing to sneeze at, by the way. A recent study by Imperial College of London revealed that voluntary carbon offsets can yield significant social and economic benefits above and beyond emissions reduction, making them an ideal fit for small businesses looking for opportunities to pitch in locally.

Finding the perfect carbon offset

Offsets can also provide you with a powerful tool for reinforcing your brand, or building up your community service profile. That's where things can start to get complicated.

The complexity becomes evident if you think of offsets in terms of the electric vehicle market. If you do business in an area where your only reliable access to charging is from a grid mix dominated by coal and natural gas, purchasing an EV for your vehicle fleet might impress some of your customers, but it is not the most effective use of your emissions-reducing dollars.

Now let's take another example directly concerning carbon offsets: For restaurant owners, offset projects that help reduce methane emissions from farm operations are an effective and meaningful place to invest offset dollars, especially if the project involves a local farm.

Biogas digesters, which reclaim renewable biogas and fertilizer from raw manure, are becoming common carbon offset investments for farm operations. So, in general, they are a natural fit for the food service business. However, that depends. If you run a vegan food truck and you want to offset your use of diesel fuel, purchasing carbon offsets to help install a biogas digester at a livestock or poultry farm would not be a particularly meaningful choice in terms of your business philosophy. Investing in an urban solar project for low-income housing might be a more appropriate offset.

Similarly, if you run a restaurant that advertises humane sourcing from local meat, dairy or poultry farms, investing in a biogas operation that reclaims manure from a local factory-style farm operation would not necessarily enhance your profile.

If you are having trouble finding a local fit, you may want to range farther afield. The clean cookstove movement, for example, combines economic and public health benefits in emerging economies that still predominantly rely on crude cooking equipment.

Carbon offsets and carbon crutches

Before we get to some resources for finding effective projects, it's also important to keep in mind that the entire commercial sustainability field is maturing rapidly, and consumer awareness is growing along with it. As a result, companies that engage in "greenwashing" are at greater risk of exposure than they might have been just a few years ago.

In terms of carbon offsets, the result is that regardless of how meaningful and effective your offset purchases are. If you haven't also taken meaningful steps to modify your internal operations, you could expose your business to criticisms like this [via the organization Business for Social Responsibility (BSR)]:

"...Critics argue that offsets do little to drive the internal business process innovations and systems-level changes needed. Moreover, some say, offsets may lead to complacency or 'absolve climate guilt,' in turn forestalling the necessary commitments to new behaviors, policies and business practices.  Critics have likened corporate offsets to 'bargaining with the devil' and putting 'lipstick on a pig.'"

In addition to a negative impression on your customers, using carbon offsets exclusively as a crutch could also lead to a backlash in your supply chain, and it could impede your ability to attract a top-quality workforce.

The supply chain itself can also work against your efforts, depending on your type of business. Take Lego Group's foray into wind power, for example. The company helped to spearhead the Windmade label and is a major investor in a new offshore wind farm.

Lego's problem is that it has a long supply chain, so reducing emissions for its flagship facility has a relatively small impact on the overall carbon footprint of LEGO products. That also presents an obstacle in terms of future growth in emerging markets such as Asia. To address the issue, last year Lego launched a major supply chain carbon emissions initiative in partnership with the World Wildlife Fund's Climate Savers program.

As for the consumer side, just last week Lego announced that it would cut its decades-long relationship with Royal Dutch Shell for Shell-themed playsets when the current contract expires in 2016. The decision came after Greenpeace and other environmental stakeholders raised public awareness over the disconnect between Lego's climate action and Shell's business operations.

The bottom line is that the perfect carbon offset for your business will complement your goals and operations; it will complement other steps that you are taking internally to reduce the carbon footprint of your business, and where applicable it will also be supported by efforts along your supply chain.

Reinventing the carbon offset wheel (not)

Determining the type of offset that matches your business principles is actually the easier part of the equation. More daunting is the process of finding an offset that really delivers what it promises.

Both WRI and BSR offer up a concrete list of guidelines for purchasing carbon offsets. Among other things, you want to ensure that: the reduction would not have occurred in the normal course of business operations without the help of your investment; the amount of reduction is measurable and verifiable by accepted methodologies; the savings is permanent and not likely to be reversed; and there is a legal platform for providing you with recourse if the offset provider fails to see the project through to completion or otherwise falls down on the job.

You will also need to be on the alert for scams, including unscrupulous offset providers who oversell offsets to multiple purchasers for the same project.

This all can involve considerable time and expense, both of which are not as available to smaller businesses as they are to larger ones.

That's where carbon offset brokers like TerraPass come in. The burden of vetting providers and projects is taken off your shoulders, so you can focus on choosing the right fit for you and your business.

Image credit: Emilian Robert Vicol, Flickr cc