There have been studies in the past that have shown the same thing but that was a number of years ago now. ZeroMission has for many years, and at close range, been able to see the connection between reductions in own greenhouse gas emissions and climate compensation. We offer both the service climate calculations in the digital platform Our Impacts and credits in climate projects, and for us it is clear that there is a connection.

Sylvera is a UK-based company that, among other things, reviews and rates carbon offset projects. Their report was recently released and we share it below in our own summarized translation. Link to the original report is at the bottom.

There is a widespread belief that companies that offset do less to reduce their emissions than companies that do not. We wanted to see if this was true (spoiler: it's not!). Recently, carbon offsetting has been questioned in the media, but we think this discourse is missing an important nuance. Yes, there are bad carbon offset projects that do not deliver on their promises. But the fact is that negative emissions, for example through carbon offsetting, are needed if we are to meet the Paris Agreement's 1.5-degree target.

One argument often raised against carbon offsetting is that the purchase of credits gives organizations a free pass to keep emitting and continue with "business as usual". It is easy to believe this narrative, but according to our analysis, it is not true.

We collected data from over 100 of the largest companies in different industries around the world to see if their investments in offsetting indicated that they were reducing their emissions at a slower rate than companies that did not offset. The results would surprise anyone who is critical of carbon offsetting. Below is what we discovered through the survey.

Methodology of the report

To get an indication of the relationship between reducing emissions and purchasing carbon offset credits, we analyzed 102 companies in the aviation, finance, automotive, retail, energy, technology, telecommunications, manufacturing and healthcare sectors. We collected data over 9 years, from 2013-2021, and of the 102 companies we examined, 51 purchased offsets and 51 did not. The data used in this analysis is information on the companies' Scope 1 and Scope 2 emissions, as well as information on the type of offsets purchased by the companies. All information collected is from public sources.

We have done our best to find the best data possible, but there are some limitations that are important to understand. First, to get a fully representative picture, we would have needed to analyze climate data from all companies. However, as this is not possible, we have used data from 102 organizations from nine sectors as described above. Secondly, this analysis only compares Scope 1 and 2 data as these are the emissions that companies have direct control over. The strategy has been to use Scope 2 location based data. Thirdly, we have relied on publicly available data and although we have done our best to compile as comprehensive a picture as possible, it is not perfect.

Outcome

So what does the data we collected tell us? According to the analysis, these 100+ companies are reducing their emissions by an average of 5% each year. But the interesting thing is that there is a clear difference. Companies that buy offsets reduce their Scope 1 and 2 emissions by 6.2% each year. Meanwhile, companies that do not buy offsets reduce their impact by 3.4% each year. So we see that investments in offsetting coincide with a doubling in the number of emissions reduced.

Different sectors are reducing their emissions to different extents, with the financial sector achieving the largest emission reductions. The aviation industry has also reduced its emissions, although this is largely attributed to the pandemic. Manufacturing and IT companies tend to be the slowest to adapt and reduce emissions, which is likely due to the high costs of implementing more sustainable manufacturing technologies and the high growth of tech companies in recent years.

While reducing emissions is a key indicator to show a climate transition, it is important to put this in context. For example, many companies in the oil and gas industry can show large reductions in emissions, most likely because they had such high emissions to begin with. In contrast, many technology companies show a slow rate of reduction, which is probably because they started at a very low level. So while reductions in emissions matter, we need to look at a company's overall climate performance to get a fair picture.

Is there a relationship between emission reductions and the purchase of high-quality offsets?

The type of credits purchased matters. Without the robust mechanisms for evaluating and certifying offsets that exist in the voluntary market today, many companies that have invested in offsets over the past decade would have very little visibility into the type of offsets they have invested in. As the market for voluntary offsets develops, it will become easier for companies to gain visibility into projects and ensure that they are indeed delivering a high level of climate benefit. But even if we ignore the issue of credit quality, our analysis shows that investing in offsets does not prevent companies from taking important steps towards reducing their emissions.

We always recommend prioritizing reducing emissions first, and buying high-quality offset credits second. Companies that combine these two mechanisms will help scale up and accelerate positive change. As UN Secretary-General António Guterres said in the latest IPCC report: "Our world needs climate action on all fronts - everything, everywhere, all at once". Businesses simply must use all the tools at their disposal to fight the climate crisis and ensure a safe future for this planet and all who live here.

Executive summary

• Some organizations reduce their emissions faster than companies in other sectors, but it is important to put emissions reductions in context. Companies that reduced their emissions a lot may have had very high levels to begin with.

• The theory that companies that buy carbon offsets buy their way out of the problem and continue to emit climate-damaging gases at the same rate is not correct according to our analysis. In fact, the purchase of offsets is more common among companies that take greater responsibility for reducing their climate impact. High-quality offsets are an important part of progressive climate action and companies should continue to invest in these projects to take responsibility for the emissions they are not reducing today. Using negative emissions is key to meeting climate targets.

• The world needs companies to have mandatory and standardized methods to report their climate impact. Insufficient climate data is a huge problem, not least for investors and consumers. Standardized climate impact reporting is a critical step towards a net-zero emissions world, and would allow anyone to easily track companies' climate performance. It would also make it easier to hold companies accountable if they are not doing enough to reduce their climate impact.

• If companies reduce their emissions and invest in high-quality offsets, it would accelerate effective climate action. Rather than being an excuse to keep emitting and continue with business as usual, investing in offsets is an important indicator of real change. The message is that all companies, large and small, should invest in offsetting as part of an effective climate strategy.

Sylvera's original article provides specific analysis on individual companies and their climate impact. It covers companies such as Visa, Audi and Bank of America. Link to the report

 Sylvera website