Tisha’s Insights

Carbon Offsets: Why I Haven’t Given Up

October 12, 2023 Tisha Schuller & Kelsey Grant

What you’ll learn in this two-part series:

  • The most important recent developments in the carbon offset world
  • Why carbon offsets—done right—will still be an important part of decarbonization strategies

Carbon offsets have only gotten more painfully out of fashion since I wrote “Clearing the Air on Carbon Offsets” in June. Even so, a growing number of companies are evaluating what role carbon offsets should play in their decarbonization strategies. Why? Because decarbonization is messy and hard. And those committed to climate action will have to embrace unfashionable actions and partners in service of progress.

In the first of this two-part series, I explore the latest in the ever-evolving carbon offset landscape and voluntary carbon market. In the second part, I will cover actions you can take to de-risk and layer legitimacy into your carbon offset strategy.

Both of these things are true:

  • Companies pursuing an offset strategy will be targeted for criticism by many stakeholders and pundits, who will caricature these efforts as greenwashing or insincere.
  • For many companies, carbon offsets will be a necessary, authentic component of their effective decarbonization strategy.

Part 1: The situation

The carbon offset landscape is rapidly changing. I advise our clients to understand evolving stakeholder and regulatory expectations. Here are the developments you need to understand:

Critiques of offsets continue to evolve. When carbon offsets make the news, the coverage is usually negative. Most recently, a study by the UC Berkeley Carbon Trading Project claimed that a majority of rainforest carbon credits (REDD+) issued by Verra, the largest voluntary offset program, did not reflect meaningful positive climate impacts. Such critiques generally point toward two issues:

  • Offset quality. Observers and stakeholders expect companies to prove that offsets represent real emission reductions.
  • Offset role. Critics worry that carbon offsets “allow polluters to continue polluting” or otherwise disincentivize companies from reducing their emissions. Further, they want to ensure that offsets do not have negative effects on local communities.

Key initiatives will not allow offsets. There has been meaningful growth in the number of companies establishing targets through the Science-Based Target Initiative (SBTi). Notably, SBTi does not allow companies to use carbon credits to meet their emission reduction targets.

Offset standards are improving. As criticism has grown, robust efforts to improve the reliability and integrity of the voluntary carbon market have evolved as well. The Integrity Council for the Voluntary Carbon Market seeks to establish global standards for defining and determining high-quality carbon offsets. The group’s Core Carbon Principles (CCP) are informed by multi-stakeholder feedback and outline baseline criteria for a high-quality offset, focused on three areas: governance, emissions impact, and sustainable development. The Integrity Council will use its Core Carbon Principles Assessment Framework to decide which carbon-crediting programs are CCP-eligible and may have the associated CCP label on their carbon credits.

Popular carbon programs also regularly update methodologies and standards. Verra, for example, will be issuing an updated methodology for its often-criticized REDD+ credits soon and has noted that “the current scrutiny of the voluntary carbon market is essential and necessary.”

Governments may get in on the action. Most carbon credits exist in the voluntary carbon market (as opposed to compliance-based schemes such as California’s cap-and-trade program). Nonetheless, government actors are increasingly evaluating the role they will play in the voluntary market.

For example, the Commodities Futures Trading Commission (CFTC) has shown interest in regulating the voluntary carbon market. In June, the commission established a new task force to “combat environmental fraud and misconduct in derivatives and relevant spot markets,” including the voluntary carbon credit market. That same month, the CFTC’s whistleblower office issued an alert seeking tips related to misconduct in the carbon market. The CFTC also hosted two convenings on its role in the carbon market.

At the end of last year, the Federal Trade Commission (FTC) announced it was seeking public comments on potential updates to the Green Guides, which outline principles that apply to environmental marketing claims—and which the National Advertising Board, state governments, and other legal and regulatory entities may reference and utilize for decision-making. The FTC specifically asked whether the guides should provide additional guidance on carbon offsets.

The Securities and Exchange Commission’s proposed climate disclosure rule, if implemented, would require any registrant company to disclose the role that carbon offsets play in its climate-related business strategy.

The European Union’s Sustainable Taxonomy, which provides companies, investors, and policymakers with specific definitions for which economic activities can be considered environmentally sustainable, excludes carbon offsets as a permissible means of reducing GHG emissions from an investment or project. The EU has also proposed a ban on environmental claims that aren’t thoroughly substantiated (such as “climate neutral”), which are often backed largely by carbon credits.

CCS and DAC are getting standards. Carbon offsets can provide an opportunity for oil and gas companies to leverage existing company efforts, technology, and investments. Oil-and-gas-adjacent technologies that will be key for a low-carbon world, such as direct air capture (DAC) and carbon capture and storage (CCS), can be used to generate carbon offset credits. The CCS+ Initiative developed a carbon capture methodology for use in Verra’s carbon offset program, which also applies to DAC, and was opened to public feedback over the summer. The American Carbon Registry has also developed a methodology for carbon capture projects.

Companies are retreating from offsets. Over the summer, major food company Nestle announced it would stop using carbon offsets and, instead, focus on investing in other means to reduce emissions. Fortescue, one of the world’s largest iron ore mining companies, announced plans to divert carbon offset funds toward direct emission reductions. And the chief sustainability officer of Delta Airlines recently said at Climate Week that the company is “not buying any carbon offsets right now.”

Seize the day

Making sense of all the developments and mixed signals around offsets can be so confusing that leaders can be tempted to double down on whatever the company’s existing offset strategy is. That would be a mistake.

In Part 2, we are going to translate the good, the bad, and the ugly into prudent risk mitigation options. Developments do provide clues to where future credibility (and credulity) will emerge. We will translate those clues into actionable recommendations for companies like yours, based on our front-row seat in the space.

Thank you to Kelsey Grant for her research and writing on this important topic.

Adamantine can help you devise a strategy around carbon offsets. Hit reply for a consultation. If you like what you’re reading, please share this edition with three of your colleagues.

To quality,



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Both of These Things Are True

By Tisha Schuller