For years we’ve been told that if companies cannot reduce their pollution directly, they can balance it out by paying for carbon offsets. The idea is simple on the surface. A company emits a certain amount of greenhouse gases, and then buys credits from projects that either remove carbon from the atmosphere or prevent it from being released. Plant a forest here, capture methane there, and the balance sheet looks better.
It sounds neat, but does it actually work? A study published in Nature Communications looked into this question, focusing on some of the world’s largest companies in industries that are particularly difficult to decarbonize, such as airlines, automobile manufacturers, and oil and gas firms. The researchers examined 89 multinational firms and tracked corporate climate data between 2018 and 2023, asking two straightforward questions:
- Do companies that buy offsets cut their emissions faster than those that don’t?
- Do these companies set more ambitious climate targets compared to global benchmarks?
The study found that offsetting had no significant measurable impact on either the speed of emission reductions or the ambition of targets. In other words, a company buying carbon credits did not appear to be any more committed to reducing its own emissions than one that avoided offsets entirely.
Even when companies did spend money on offsets, the amounts were tiny compared to their overall investments. For example, easyJet and Delta Airlines were among the largest offset buyers in the dataset, and even they spent only about 2–3% of their capital expenditures on credits. For most companies, the share was far smaller. For a business pouring billions into planes, airports, factories, or infrastructure, this is a very minor line item.
That raises a question: why use offsets at all? Part of the answer is consumer perception. Offering carbon-neutral flights or “green” fuel options allows firms to present themselves as acting on climate change. But the researchers warn that this can have two side effects.
First is the “investment effect.” If a company has a fixed budget for climate action, money directed toward offsets is money not available for internal changes, like upgrading factories or switching to renewable power. Second is the “target effect.” If climate targets allow the use of credits, companies might lean on the cheaper option of buying offsets instead of making harder and more expensive structural changes.
Both effects mean that offsets can actually compete with, rather than complement, internal decarbonization efforts.
The study’s conclusion is blunt: voluntary carbon offsetting plays a negligible role in driving corporate climate strategies. The authors suggest that stronger regulation, such as carbon pricing, mandatory reporting, and more rigorous emissions trading schemes, is far more likely to push companies toward meaningful reductions.
This doesn’t mean offsets should disappear completely. There will always be emissions that are extremely difficult or impossible to remove, and in those cases high-quality credits can help balance the ledger. But relying on offsets as the main tool for corporate climate action is unlikely to move the needle.
The broader lesson is that climate progress comes less from buying permission slips and more from changing the systems that create emissions in the first place. Planting trees or funding carbon capture can support the transition, but they cannot replace the hard work of rethinking how industries operate.
As deadlines for climate goals get closer, the study adds to a growing body of evidence that voluntary promises are not enough. Without firm rules and accountability, offsetting may continue to give the appearance of action while real emissions keep flowing.
Story Source: The negligible role of carbon offsetting in corporate climate strategies, Nature Communications, published in Nature, licensed under CC BY 4.0.
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