Carbon Offsets: Helpful Tool or Greenwashing Trap?

As more companies commit to net-zero targets, the question of carbon offsets almost inevitably arises. Can we use them to meet our goals faster? Are they credible? What's the difference between an offset and a carbon removal, and why does it matter?

You're not alone if you're trying to make sense of this. Here's a practical guide to what carbon offsets are (and aren't), when they can help, and why deep emission cuts should always be your first move.

What Are Carbon Offsets?

Carbon offsets are credits that organisations purchase to compensate for greenhouse gas (GHG) emissions they generate. Each credit typically represents the avoidance or removal of one tonne of CO₂ equivalent (tCO₂e) from the atmosphere.

Offset projects range from:

  • Building renewable energy in developing countries,

  • Preventing deforestation in tropical forests,

  • Capturing methane from waste facilities,

  • Supporting energy-efficient cookstoves in rural areas.

The idea is that while your company emits CO₂, you pay someone else to avoid emitting it or remove it. But this only works if the project is genuinely effective, additional, and permanent.

The Upside: How Offsets Can Help

Used carefully and transparently, carbon offsets can bring real value.

First, they offer an immediate pathway to climate action. For companies just starting or facing technical or financial barriers to eliminating specific emissions, offsets can help take short-term responsibility while long-term reductions are being developed.

Second, offsets can channel much-needed funding to impactful climate solutions. High-quality projects—especially those involving renewable energy or reforestation—can also provide important co-benefits: improving air quality, creating jobs, and supporting biodiversity.

For hard-to-abate sectors (such as heavy industry, logistics, or aviation), offsets may serve as a bridge while cleaner technologies scale up. But they must be used responsibly, and never as a substitute for internal progress.

The Downside: Why Offsets Can't Be Your Main Strategy

Despite their appeal, carbon offsets present limitations and potential reputational risks if used poorly.

Many offsets are based on avoided emissions, like preventing deforestation. However, proving that a forest would have been cut down without offset funding is difficult. This raises questions around "additionality"—whether the emissions savings are real and would not have happened anyway.

Permanence is another concern. A forest preserved today can burn tomorrow. If the stored carbon is later released, the offset's benefit is erased.

Most importantly, offsets don't actually reduce your company's emissions. According to the GHG Protocol—the global standard for carbon accounting—offsets must be reported separately and cannot be subtracted from your Scope 1, 2, or 3 emissions inventory.

In other words, you can't "offset away" your footprint.

European regulation bans green claims based solely on carbon offsetting schemes. Companies can still mention offsetting if they have already reduced their emissions as much as possible and use it for residual emissions only. 

What About Carbon Removals?

Carbon removals are a special type of offset, but with a key difference: They pull carbon dioxide out of the atmosphere and store it, ideally for decades or centuries.

There are both nature-based and technological removal solutions:

  • Reforestation and soil carbon sequestration enhance natural sinks.

  • Biochar locks carbon into soils via carbon-rich charcoal.

  • Direct Air Capture (DAC) technologies suck CO₂ from the air and inject it into geological formations.

These approaches address the root problem—excess CO₂ in the atmosphere—rather than just avoiding new emissions. That's why carbon removals are preferred over avoidance offsets, especially when addressing residual emissions at the end of your decarbonisation journey.

But not all removals are created equal. They must be verifiable, additional, and durable, and many technologies are still developing in terms of scale and cost.

What Makes a Carbon Offset (or Removal) Credible?

If you do choose to use offsets or removals, choose wisely. Look for:

  • Strong certification from reputable standards,

  • Independent verification of emissions impact,

  • Clear additionality and permanence,

  • Transparent reporting.

Before investing, make sure the project aligns with your values, is science-based, and can withstand scrutiny.

Cut Emissions First, Offset What's Left

Carbon offsets can be helpful, but they're not a silver bullet. They don't cancel out your emissions. They don't let you claim "carbon neutrality" without more profound change. And they won't protect your business from increasing regulatory and stakeholder pressure if they're used instead of real reductions.

So what's the right approach?

  • Measure your footprint with a recognised standard.

  • Cut emissions across operations and supply chains.

  • Set science-based targets to stay aligned with global climate goals.

  • Use offsets carefully—preferably carbon removals—for residual emissions only.

  • Communicate transparently and avoid vague or misleading claims.

    At Oakdene Hollins, we help organisations move beyond carbon offsetting and toward credible, science-aligned decarbonisation pathways. From carbon accounting to net zero roadmaps, we work with you to build a resilient, transparent, and built strategy for the future.

Oakdene Hollins