Why Are So Many Companies Embracing Carbon Offsetting?

Business Carbon Offsets | Carbon Emissions

Written by TerraPass

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Did you know you can be exposed to as many as 10,000 advertisements every single day? And amongst all of the feel-good imagery, slogans, and carefully-positioned branding, you’re probably starting to see the terms “carbon-neutral,” “net-zero,” and “climate-friendly” just about everywhere you look.

In the last few years, many of America’s best-known corporations have announced they will achieve carbon-neutrality by 2050 or earlier. Companies such as Amazon, Microsoft, Google, Starbucks, Lyft, and FedEx have each unveiled ambitious CO2-reduction plans – while Unilever’s carbon-neutral goal of 2039 also includes listing carbon footprints on every one of its products.

Almost all CO2-reduction strategies involve purchasing carbon offsets, in which companies invest in projects that capture or eliminate greenhouse gases to offset their own emissions. And in addition to reducing global CO2 levels, offsets also help to create and fund environmental projects that wouldn’t otherwise exist. For example, the new “Carbon Offsetting and Reduction Scheme for International Aviation” (CORSIA) – which is in a trial stage but will become mandatory in 2027 – is expected to inject $40 billion into climate projects and offset 2.6 billion tons of CO2 between now and 2035. To date, all major US airlines have voluntarily committed to the agreement, which will involve purchasing carbon offsets, creating new efficiency measures, and developing cleaner technologies and fuels.

And while it’s terrific to see so much environmental action, you might be wondering why so many companies seem to be going all-in on carbon offsetting. Is it in response to consumer demand? Is it to look good in the media? Or is it indicative of a much-needed change in corporate awareness? Well, let’s take a closer look and find out.

What Is a “Carbon-Neutral” Business?

In simple terms, a carbon-neutral business removes the same amount of carbon dioxide from the atmosphere as it creates, which is commonly achieved by purchasing carbon offsets. Each offset represents one metric ton of CO2 (or equivalent) that is either sequestered from the atmosphere or prevented from being released in the first place.

In a recent project, terrapass partnered with Washington-based beverage company Talking Rain to offset 100% of its scope 1 and 2 greenhouse gas emissions in 2021. The partnership supports eight sustainability projects around the country and reduces the same amount of CO2 annually as taking 6,000 cars off the road for an entire year or planting 460,000 new trees. As well as investing in offsets, Talking Rain also purchases Renewable Energy Certificates (RECs) to support clean energy production and runs a recycling program that diverts 1.5 million pounds of plastic from landfills every year.

“As a beverage company, we are committed to taking meaningful action to reduce the carbon footprint associated with our operations, while also advancing innovation and change when it comes to caring for the environment.” Chris Hall, Talking Rain CEO

And taking carbon-neutrality a step further, some companies are even setting “carbon-negative” goals, meaning they’ll actually remove more CO2 from the atmosphere than they generate. You may have heard about Microsoft’s billion-dollar plan to become carbon-negative by 2030 – which also includes a plan to remove all of its historical emissions (i.e., all of the carbon dioxide it’s ever created) by 2050. The company claims to have been carbon-neutral since 2012, which it says has been primarily due to investing in verified carbon offsets and sourcing renewable energy.

Why Are So Many Companies Targeting Carbon-Neutrality?

On the surface, carbon-neutral businesses represent the growing awareness that we need to significantly reduce CO2 emissions to avoid the worst impacts of climate change. There are, however, many other benefits that are driving corporate action:

Every Industry Relies on a Healthy Planet

With global warming now impacting every part of the globe, many companies and investors have realized that if they don’t reduce CO2 emissions and embrace sustainability, their entire industries are at risk. Back in 2004, Coca-Cola discovered climate change was already impacting its fresh water supply, prompting new measures to reduce its consumption. More recently, the company has announced initiatives to offset its carbon emissions, invest in renewable energy, and work towards a 2040 net-zero target.

“To reach Net Zero by 2040, we will focus first on reducing emissions as far as possible and will offset where essential, and then will invest in projects which remove carbon from the atmosphere or verified carbon offset projects.” Coca-Cola European Partners

But regardless of the industry, every company is impacted by a warming planet – from droughts affecting coffee production to rising oceans and changing weather patterns disrupting tourism. In many ways, lowering emissions and purchasing carbon offsets are long-term investments in our planet’s health – and the precious natural ecosystems that sustain the global economy.

Consumers Are Driving Companies To Take Action

With global warming posing such a profound and ongoing threat, more and more Americans are choosing to spend their money with companies and brands that share their environmental values. In previous years, consumer polls indicated that while people liked the idea of sustainable and climate-friendly products – they didn’t always go out of their way to buy them. Fast-forward to today, and sustainably-branded consumer products are growing faster than 90% of their competition, highlighting a dramatic shift in attitudes and purchasing behavior.

An extensive survey covering the US, UK, and Europe by the Carbon Trust found two-thirds of people also support carbon labeling and would like to know the climate impact of each new purchase. With consumer demand being such a strong driver of corporate behavior, it seems we’ll only continue to see companies taking meaningful action – and being much more transparent about their environmental footprint.

Carbon-Neutrality Is Proving To Be Great for Business

In most cases, carbon offset programs also drive companies to address and reduce their existing emissions. After all, when you’re trying to offset every metric ton of CO2 that you create, there’s a powerful incentive to reduce the size of the target. But many companies have also discovered that helping to cool the climate is also great for the bottom line:

  • Lower operating costs: Measures that reduce carbon emissions – like improving energy efficiency, recycling, conserving water, and investing in renewables and electric vehicles – can also lead to incredible savings. For example, Kimberly Clark upgraded one of its facilities with highly-efficient LED lights in 2015 and now saves $160,000 in electricity a year.
  • Higher revenue: With more consumers looking to support climate-friendly brands and companies, many that have achieved or are aiming for carbon-neutrality are seeing increased sales and market share. Climate action is also proving to be an effective way of attracting new investors, as more individuals and groups seek to back companies with firm environmental goals.
  • Happier and more loyal employees: Climate action is also a powerful way to align corporate and employee values. In a 2019 study, 70% of American respondents said a company’s sustainability plan would impact their decision to stay long-term, while 30% said they had already left a company due to its lack of an environmental vision.

It seems that as more companies discover the benefits of addressing climate change, their competitors will be forced to follow in their green footsteps – or risk being left behind. And with advantages such as lower costs, higher revenue, and happier employees, it’s no wonder we’re seeing so many businesses investing in a low-carbon future.

Is Corporate Carbon Offsetting Here To Stay?

With a worldwide focus on CO2 emissions, changing consumer attitudes, and President Biden and Canadian Prime Minister Trudeau announcing new American and Canadian 2050 net-zero targets, it seems as though we’re on the cusp of a new industrial revolution. Research shows that around 30% of Fortune 500 companies have either defined or achieved a significant environmental goal, while many others are starting to put the necessary framework in place:

“if the growth continues in a similar way, by 2030 79% of Fortune Global 500 companies could be carbon neutral, be using 100% renewable power or have met an SBT” (Science-Based reduction Target) Natural Capital Partners 2019 Report

And while we shouldn’t think of carbon offsets as a magical cure for climate change, they will continue to play a critical role in enabling companies to define and work towards CO2 goals – while developing, supporting, and expanding sustainability projects all over the world.

We should also acknowledge that while many businesses are taking genuine environmental action, the marketing world can still be prone to exaggeration. If you’re ever unsure about the claims made by a specific brand or company, be sure to check their official website for more information. In our experience, companies involved in verified carbon offsetting and sustainability projects are only too happy to provide specific details.

Large or Small, Every Company Can Balance Its CO2 Emissions

No matter what type of business you’re involved in, you can now take direct action to offset your carbon footprint and realize many valuable benefits. At terrapass, we offer a selection of verified carbon offsets and renewable energy certificates (RECs) that can help your company to reduce or even eliminate its carbon dioxide emissions – and set new standards that your competitors will seek to follow.

Using our carbon footprint calculator, you can measure the CO2 emissions of your business activities such as electricity, heating, transport, and air travel, and then select from a range of solutions to restore the natural balance.

It’s clear that global warming and climate change are the most significant issues facing our planet today, and only with all of us working together can we achieve a net-zero future. We’re excited by the number of companies working to offset or eliminate their emissions, and we believe that before long, carbon-neutrality will no longer be the exception – but the new standard.

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