Bumps on the short-cut to climate neutrality: Comparing offsetting behaviour in the world’s largest corporate buyers of voluntary carbon credits

As large companies face mounting pressures to aim for carbon neutrality by mid-century in support of the Paris Agreement, carbon offsets have emerged as a drop-in solution to fast-track progress towards climate targets. The allure of offsets is simple: not only are they cheap and widely available on carbon markets, but a company purchasing offsets credits can claim to have compensated its GHG emissions while evading the difficult, costly and more disruptive task of eliminating its reliance on fossil fuels. Yet corporate use of offsets has attracted scathing criticism. Terms like “junk offsets” and “carbon con” have appeared in headlines as analysts point to a prevalence of aged credits from forest conservation or renewable-energy projects that fail to remove atmospheric carbon. There is thus an urgent need to objectively assess the volume and quality of carbon offsets being retired from the world’s carbon market, since they are a core means by which many large companies intend to reach carbon neutrality or eliminate residual emissions. But the academic literature, by focusing on carbon markets per se, is yet to examine the offsetting behaviour of major corporations and extract implications for global progress to climate neutrality. This study, therefore, examines the offsetting behaviour of the 20 firms responsible for the bulk of retirements from voluntary carbon markets since 2020. This list includes airlines Delta and EasyJet, oil companies Shell and Chevron, automaker Audi, and fashion giant Gucci. We build a novel dataset marrying data from the carbon-offset registries (Verra, Gold Standard, U.N. Clean Development Mechanism [CDM]) with company documentation to ask: (i) What is the role of carbon offsets in each firm’s strategy for reaching carbon neutrality? (ii) What are the characteristics of offsets retired and do these represent quality contributions to climate mitigation? To operationalise our assessment of “quality”, we quantitatively map out trends since January 2020 regarding emissions reduction type (avoidance or removal), project type (renewable energy, afforestation, etc.) and offset age. This approach thereby operationalises best-practice industry standards stipulating that carbon offsets ought to support both recent and physical carbon removals from the atmosphere. We expect to demonstrate a proliferation of credits issued from emissions-avoidance projects that do not involve the physical removal of atmospheric carbon. Findings will reveal an abundance of renewable energy, REDD+ and CDM projects, which inherently contain questionable assumptions about additionality and GHG-reductions from counterfactual emission baselines. We further anticipate finding widespread use of aged offsets (frequently >5-10 years) that fail to support contemporary carbon-cutting actions. By objectively demonstrating how offsets retired by the world’s largest buyers fall short of best-practice standards, findings will challenge the appropriateness and climate benefits of the corporate sector’s increasing reliance on offsets in pursuit of carbon neutrality. We make two contributions. First, we provide the most comprehensive, transparent and objective analysis of corporate offsetting behaviour to date, publishing our supporting dataset in entirety. Second, we lay empirical foundations for a new academic topic, sowing seeds for cross-fertilisation by researchers of energy transitions, fossil-fuel phase-outs, political science and corporate decarbonisation.