Businesses are increasingly pursuing carbon offsetting to achieve what they say is "net zero" emissions, in what appears to be greenwashing, a report by the Climate Change Committee (CCC) has found.
Carbon offsetting is where one business, to compensate for its own emissions, essentially pays for the removal of emissions by another organisation.
Investing in carbon credits is one way companies can appear more environmentally friendly – claiming to be moving towards net zero – without explicitly implementing change to their own business, according to the report from the UK’s independent adviser on tackling climate change.
“Businesses are increasingly turning to voluntary carbon offsetting” to appear greener, the report said.
Voluntary offsets are purchased without laws or regulations in mind, unlike compliance offsets that are designed specifically to allow companies to meet these requirements.
CCC called for the government to clarify the definition of a ‘Net Zero Business,’ highlighting the need for “stronger guidance, regulation and standards to ensure purchase of carbon credits is not used as a substitute for direct business emissions”.
It continued: “If voluntary carbon markets are genuinely to complement the transition to Net Zero, businesses must be supported to directly decarbonise their operations and supply chains.”
A PwC study recently found that the demand for ESG products, including carbon credits, is exceeding supply, with the products increasingly being seen as “fundamental” for the future.
According to CCC: “Many businesses have named ambitious ‘Net Zero’ dates but achieving them through an over-reliance on offsets is undermining the economy-wide transition.”
With COP 27 taking place in Egypt next month, the CCC report puts pressure on the government to address the issue of greenwashing.