Shell has become the latest major company to step back from offsetting amid concerns about the integrity of carbon credits, with the EU finalising a law to ban offset-based carbon neutral claims.
A crisis of confidence in carbon offsetting started earlier this year following an investigation into the industry by The Guardian. Offsetting bodies disputed the findings, but in September The Guardian returned with new analysis concluding that nearly 80% of the 50 top-selling carbon offset projects were “likely junk”.
Purchasing carbon credits remains hugely popular among businesses, but the ongoing saga has prompted many major companies to rethink their approach. Shell is one of the latest to reveal it is moving away from purchasing offsets, joining other household names like Gucci, Leon and Nestlé.
Shell has said it still supports carbon offsets in principle, but has stepped back from a target to invest up to $100 million per year in carbon credits by 2030.
Carbon credits are designed to help organisations make an immediate difference to the climate while they work on reducing their own emissions directly. They are also a vital source of investment for conservation and restoration projects around the world.
However, regulators are increasingly worried about the potential for greenwashing, particularly around terms such as ‘carbon neutral’ or ‘climate neutral’, which usually just involve purchasing offsets.
The UK’s Carbon Trust recently scrapped its longstanding carbon neutral standard after acknowledging that offset-based green claims could be misleading. Other organisations are swapping carbon neutral with alternative terms like ‘funding climate action’.
In the EU, lawmakers are finalising new rules which could ban claims like ‘carbon neutral’ completely from 2026. A new law which is currently working its way through the final stages of legislation will effectively prohibit green claims that are based on offsets.
“The European Union is taking leadership in combating greenwashing,” said Lindsey Otis, policy expert at NGO Carbon Market Watch. “Carbon neutrality claims have been shown to be unintelligible to consumers, and they must stop. [The agreement] marks the end of outlandish and baseless advertisements that tell European consumers that they can take carbon neutral flights, wear carbon neutral clothes, and eat carbon neutral food.”
To learn more about the basics of offsetting and how to use carbon credits effectively, read our business guide to carbon offsetting.
Access guidance and resources to help you reduce carbon, improve your environmental credentials and save your business money
No matter the size of your operation, there are a range of low and no cost solutions to reducing your energy consumption and save your business money.
Get the latest environmental business news, views, insights and events from Green Economy, straight to your inbox each month.
Before you can start your journey to net zero, it is important to understand where you are starting from. This guide explains all you need to know about carbon footprinting and how to measure this in your business.
What is meant by ‘Scope 3’ greenhouse gas emissions, why they are important and how can businesses begin to measure them as part of their carbon footprint?
What is meant by climate change targets that are ‘science-based’, why are they important and how can businesses follow a science-based pathway in their own carbon reduction plans?
There are a dizzying number of environmental standards and accreditations available to businesses today. In this guide, we take you through the key products to help you identify the most appropriate option for your business.
Net zero - what is it, why should you care and what can your business do about it?
Research shows that the carbon footprint of the average supply chain accounts for 90 per cent of a business's carbon footprint. In this guide we explore the steps businesses can take to be a green supplier of choice.
One of the simplest ways for you to reduce your impact on the climate is to switch your energy supply to renewable electricity, read our step by step guide.
When looking to reduce emissions from your operation, carbon offsetting appears an attractive quick fix. Here we explore how carbon offsetting works, when it can be effective and why it should be the final item on your carbon reduction to-do list.
Understand the principals of ‘corporate greenwash’ and why businesses need to be accurate, clear and transparent when promoting their environmental credentials.
