Carbon offsetting: A guide for small businesses (2024)

What is carbon offsetting and is it accessible for small businesses? As more of us start working towards net zero, find out what you need to know about carbon offsetting schemes and how they work.

Once you’ve calculated your carbon footprintandstarted making as many eco-friendly switchesaspossible, you might find that you’re still producing someunavoidableemissions.Sowhat can you do to shrink your carbon footprint further andreach net zero?

You mayhaveseenyour favourite brandpledgingto plant a tree for everyorder orsharingtheir commitment to offsetting schemes on social media.Carbon offsetting, sometimes known as carbon balancing, is being used by many companies to neutralise their emissionsand gaincarbon neutral accreditation.But whatexactlyis carbon offsetting, how does it work and is itan optionfor your small business?

What is carbon offsetting and how does it work?

The United Nations recognised the difficulty of reaching net carbon zero at the Kyoto Protocol in 1992. They created a concept called carbon offsetting. Carbon offsetting is the removal of carbon dioxide from the atmosphere to counter the greenhouse gases that you have put into it. If you think of your carbon footprint as a form of accounting, then your emissions are your expenditure and any carbon offsets you buy is your revenue. You want to break even each year to achieve net carbon zero.

Achieving net carbon zero (or carbon neutrality) is the scenario where your business has a carbon footprint of zero. Ideally, this would be achieved by eliminating your greenhouse gas emissions completely. However, sometimes it is not financially feasible to eliminate them and in other situations it is impossible. For example, if your business involves concrete then carbon dioxide will be emitted during the process of making it.

Carbon offsetting is the process of‘cancelling out’ thecarbon dioxideand other harmful greenhouse gasesyou create by investing in environmental projectsthat reduce emissions. Businesses can pay for these initiatives to be carried out on their behalf tooffsetthe emissions that they produce day-to-day. Restoring forests by planting trees is one of the most popular ways of doing this, as trees naturally absorb and store carbondioxide.Someoffsetting initiativesaim to reducefuture carbon emissions,like solar panels,whilst others removeit from the atmosphere.

For a smaller business,this might include neutralising the emissions from:

• waste producedthroughyour manufacturing process
• energy usage in your premises
• fuel consumptionas a resultcommuting or traveling
  

Whattypes of carbon offset projectsare available?

There are lots of carbon offset options available. They range from planting trees and preserving wildlife to installing insulation and renewable energy. Carbon offsets as an industry is still in its infancy. As demand grows and this industry accelerates, expect many more schemes to form and become eligible carbon credits.

According to theEnvironment Agency, there are currently only two accredited carbon offsetting standards in the UK:the Woodland Carbon Code and the Peatland Code.Verified Woodland Carbon Credits, for example, can be used to support your business’ claims of carbon neutrality.More will join it and we would advise you to use the Environmental Agency’s guidance to find the best carbon credits. More schemes are recognised internationally. If you wish to pursue these then groups like Verra and Gold Standard offer verification.

Some examples of types of carbon offsettingschemes include:

• woodland creationandplanting trees
• installing renewable energy solutionsin communities
• investing in biodiversity and conservation
• energy efficiency projects, such as insulation andelectric cars
• recycling schemes to support waste management

If you reach net carbon zero, then you might want to get this independently verified.

Which scheme is best for my business?

Paying to support sustainability projects to offset any emissions you produceisn’t a replacement foractivelyreducingyour emissions.It’s advised that these schemes are used alongside reduction efforts to reach carbon neutrality, because it’s important to minimise and prevent the emissions you produce in the first place wherever possible.Net zero is when emissions are equal to, or less than, the emissions removed from the atmosphere.As the UK works towards its goal of net zero by 2050,learn how your small business can take steps towards sustainabilityby reducing its carbon footprint.