Taking Off: The Role of Carbon Offsets in Corporate Climate Strategy

Below is an excerpt from ISS Corporate Solution’s recently released paper “Taking Off: The Role of Carbon Offsets in Corporate Climate Strategy” The full paper is available for download from the ISS Corporate Solutions (ICS) online library.

Summary:

As companies and countries increasingly build out climate strategies to align with Net-Zero goals, there is growing interest in the role of carbon offsets as a mechanism to achieve these goals. Offsetting strategies involve a variety of methods, from planting trees and preserving existing ecosystems to building renewable energy infrastructure and utilizing carbon capture technologies. Offsetting emissions can be a viable component of a company’s Net-Zero and climate strategy, but should not take priority over other emission reducing activities, due to limited clarity on the impact of offsets and technological limitations.

In this paper, ISS Corporate Solutions examines the history of carbon offsets, the properties of an effective implementation of a carbon offset program, and role of carbon offsets in achieving Net-Zero ambitions.

Key Takeaways:

• The two primary forms of carbon offset are Carbon Removal and Carbon Avoidance
• Regulatory and voluntary carbon offsets behave differently
• Additionality, Exclusivity and Permanence are key elements to an effective carbon offset strategy
• Key risks include overestimation and collateral social and environmental damage
• The value of the carbon offset market reportedly jumped to more than $2 billion in 2021