carbon offsetting: does it work or not?

News – 08 June 2023

During the FairClimateFund Relation Day, together with our clients and partners, we dove deep into the world of CO₂ compensation.

The voluntary carbon market is complex, and a lot is happening at the same time. You may have noticed that there has been recent criticism regarding the claimed climate impact of CO₂ compensation projects and the way companies use CO₂ compensation to reduce their carbon footprint. FairClimateFund has long advocated for greater transparency in the voluntary carbon market and a fair distribution of carbon funds.

We strive for a CO₂ market that benefits people and communities in the most vulnerable regions of the world, which is much needed. The effects of climate change have been evident for many years and the impact in vulnerable areas is significant. As far as FairClimateFund is concerned, quitting CO₂ compensation all at once is therefore not an option. Right now, we need all measures to mitigate the effects of climate change. And yes, in the meantime, there is still much room for improvement in CO₂ compensation.

Our projects create an impact
FairClimateFund’s compensation projects not only reduce CO₂ emissions, but also improve the living conditions of the most vulnerable. Cooking on an open fire, for example, is very harmful to the health of women and children. Clean cooking solutions bring numerous additional benefits, such as time savings and reduced deforestation. In addition, our projects focus on adaptation measures, such as the planting of shade trees for vulnerable crops like coffee bushes.

Meanwhile, climate finance is much needed for vulnerable communities. The voluntary CO₂ market can make a significant contribution if the carbon revenues actually reach local households. The value of the voluntary CO₂ market is expected to rise to no less than 10-40 billion euros by 2030, according to the Boston Consulting Group.

FairClimateFund is the leading global provider of CO₂ credits certified by the Gold Standard and the Fairtrade Climate Standard. This means that local communities own the CO₂ credits themselves and receive a fair price for them, including a Fairtrade premium. This bonus is managed by local cooperatives and invested in climate adaptation activities.

Companies’ climate impact
It is not only our carbon offset projects that make an impact. Recent research from Trove Research indicates that companies using carbon credits reduce CO₂ twice as fast as companies that do not. This is excellent news for the climate, of course.

For many companies, however, achieving zero CO₂ emissions is not yet possible, so CO₂ compensation serves as a good solution. We advise companies to follow an active climate policy and prioritize CO₂ reduction. The remaining CO₂ emissions can be priced internally. You can use the resulting climate finance for further reduction, innovation, and investment in high-impact projects in the field of climate adaptation, climate mitigation, and biodiversity.

As a company, it is crucial to communicate your climate policy transparently and honestly. We recommend avoiding hard claims such as ‘CO₂ neutral’ and ‘climate neutral’ as much as possible, since these are often not 100% correct. This may be due, among others, to the robustness of your carbon footprint analysis or the climate project with which you compensate. Consider, for example, trees that have yet to be planted or have not fully grown, or that are disappearing due to a natural disaster. Rather, tell your entire climate story in a clear manner, including setbacks and highlights. The form and presentation of your climate story are key to success.

More transparency
Finally, FairClimateFund strongly supports the review of CO₂ compensation projects and companies’ ‘climate neutral’ claims by independent organizations. Fortunately, international initiatives are being developed to address this, such as the Voluntary Carbon Markets Integrity Initiative - VCMI, the Integrity Council for the Voluntary Carbon Market - ICVCM, and the Carbon Credit Quality Initiative - CCQI.

Do you also want to reduce your CO₂ emissions or are you already working on this and have any questions, please feel free to contact one of our colleagues. We will be happy to help you.

Together, we work toward a better and fairer climate for all of us!

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