As sustainability becomes a larger force in the economy, companies are turning to carbon offsets as part of the solution for reaching carbon neutrality. The carbon market is young and uneven but maturing and growing rapidly.

Aggressive Moves to Become Carbon Neutral

As noted in our previous post on this subject, companies need to become more aggressive in meeting Paris Accord and UN Sustainable Development Goals (SDG) to achieve carbon neutrality in the desired time frame.

The Sustainable Development Goals (SDGs) or Global Goals are a collection of 17 interlinked global goals designed to be a “blueprint to achieve a better and more sustainable future for all”. The SDGs were set up in 2015 by the United Nations General Assembly (UN-GA) and are intended to be achieved by the year 2030. [1]

Companies are beginning to engage customers in this mission, as they must. A major sticking point when communicating with customers about climate initiatives is the veracity of claims. Customers want to know carbon offsets are additional, verifiable and audited by a trustworthy organization.

Why Brands Should Care About the Quality of Their Offsets

It’s natural for brands to want to proclaim their climate conscientiousness through carbon offsets, given this concern is top of mind for many consumers. If a company claims to be doing good for the climate by way of offsets, they will need to prove it.

As consumers become more engaged, they expect the same of businesses. In fact, a majority (65%) of respondents expect CEOs to do more to make progress on societal issues, including reducing carbon emissions, tackling air pollution, and making business supply chains more sustainable. [2]

These are not idle concerns, so it is essential for an organization’s reputation that offsets are legitimate. “Greenwashing” and false claims can lead to serious backlash and public relations problems, which of course companies want to avoid.

Offset quality matters. “Additionality” is a critical term to understand in terms of offsets. Proof of additionality is what consumers want most, as it ensures organizations are making real impacts and not playing a carbon shell game. Briefly:

… reductions are additional if they would not have occurred in the absence of a market for offset credits. If the reductions would have happened anyway – i.e., without any prospect for project owners to sell carbon offset credits – then they are not additional. Additionality is essential for the quality of carbon offset credits – if their associated GHG reductions are not additional, then purchasing offset credits in lieu of reducing your own emissions will make climate change worse. [3]

All Offsets are Not Equal – Key Criteria

Before laying claim to offsets, organizations need to become informed about the nuances in this marketplace and understand the terminology and what’s in play. All offsets are not the same, and specificity here is critical.

Briefly: “quality carbon offset credits must be associated with GHG reductions or removals that are:

  • Additional
  • Not overestimated
  • Permanent
  • Not claimed by another entity
  • Not associated with significant social or environmental harms” [4]

In short, companies must acquire verified offsets that consumers can trust, or risk the trap of “greenwashing” or, put bluntly, fraudulent claims of carbon reduction through fake or misleading offsets.

Accreditation bureaus verify the authenticity of offsets. These include but aren’t limited to American Carbon Registry (ACR) and Gold Standard. When working to understand offsets, organizations such as these provide excellent resources and solid places to begin. You can also visit Soli’s partner the Climate Remediation Foundation for an overview of offsets.

Brand Loyalty and Carbon Offsets

Customers are looking for reasons to stay loyal to organizations, and environmental and climate concerns are increasingly important.

When Deloitte compared responses across countries, reducing carbon emissions was a near-universal priority. Certain environmental issues, in particular, are growing in importance. For example, 64% of consumers say they care more about extreme weather patterns than they did the prior year. Meanwhile, 74% of consumers say extreme weather will become even more important in the future. [5]

Organizations must speak to these issues and communicate clearly how their initiatives actively address them, in plain language consumers understand. Consumers want to trust brands, and trust naturally inspires loyalty.

With a growing number of consumers showing concern for the environmental impact of their purchases, retailers can increase trust – and sales – by incorporating more sustainable practices into their operations. For the bottom line, sustainability efforts can translate into improved sales and brand loyalty as consumers look for providers that align with their own values. [6]

As such, business leaders have an opportunity here to do two things:

1. Meaningfully move the needle on NetZero through verified carbon offsets

2. Increase brand loyalty through alignment with customer values.

This is the definition of a win win, when executed properly through real carbon offsets and effectively communicated to consumers in plain language.

Brands must now be purpose driven to show their authenticity and commitment to taking climate action. Organizations interested in NetZero should pursue opportunities to be able to clearly say “Our offsets are real, we mean what we’re doing, and we want you to know your business goes to support these initiatives.”

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