Business emissions: a guide to carbon offsetting for SMEs

You may have heard numerous terms thrown around by businesses, including carbon neutral and carbon offsetting. There are now schemes and projects you can pay or invest into in order to balance out your own emissions. It’s increasingly popular amongst businesses seeking to become more sustainable.

But what does your business need to know, and is offsetting your only choice? We take a detailed look at offsetting, including what options are available and what they mean for the carbon footprint of your business.

What is carbon offsetting?

Carbon offsetting is a way to reduce carbon emissions. For example, let’s say your business produced one tonne of carbon. You could offset this by buying emissions reductions (also known as carbon credits or carbon finance). This payment is put towards projects that reduce carbon emissions in some way, such as developing existing technologies or creating new ones.

There are two types of carbon offsetting:

Carbon capture, where carbon is captured from the atmosphere. The most common type of carbon capture is planting trees.
Carbon reduction, which focuses on improving energy efficiency and creating alternative ways to produce energy, such as using solar panels or wind turbines.

One good thing about carbon offsetting is that it doesn’t need to be localised, given that climate change is a problem worldwide. Individuals and businesses can use carbon offsetting to reduce emissions anywhere there’s a project. These projects are often based in areas which need the help most, where the greatest impact can be made.

At the moment, carbon offsetting is not regulated by any governing bodies, but some schemes may choose to become certified to show they operate in a sustainable way.

Two validation codes exist in the UK: the Woodland Carbon Code and the Peatland Code.

The Woodland Carbon Code

UK projects validated by the Woodland Carbon Code demonstrate high standards of sustainable forest management, and are able to make a genuine difference in terms of carbon reduction. The code is supported by the government and the ICROA (International Carbon Reduction & Offset Alliance).

The Peatland Code

UK projects validated by the Peatland Code demonstrate that the carbon benefits they sell are ‘real, quantifiable, additional and permanent’, and contribute towards restoration. The code is supported by the IUCN (International Union for Conservation of Nature).

Outside the UK

Further afield, organisations such as Gold Standard and Plan Vivo are standards bodies that outline requirements projects must follow to be certified and issue carbon credits.

Why do businesses use carbon offsetting?

For many businesses, it’s no longer enough to simply focus on profit – they want to make a difference to the world around them and the people in it. Add in the fact that sustainability has become something of a buzzword over the last few years and you’ve got an opportunity for carbon offsetting to grow in popularity.

Here are some more reasons why businesses use carbon offsetting:

We know more about sustainability and climate change than we used to. This additional knowledge can drive people to alter their behaviour in all areas of life, including how they run their business. For example, the brand Patagonia is open about their search for a way to produce their products without fossil fuels. In the meantime, they have a self-imposed Earth tax, 1% for the Planet, which is given to environmental non-profit organisations.
Consumers care about sustainability. People expect more from the businesses they’re a customer of, across a range of industries, and many choose to vote with their wallets. A report by Impact found:
1. 84% of consumers said they would or might stop buying from a brand with a poor sustainability record
2. 66% are willing to pay more for sustainable goods; 70% would pay up to 35% more
3. 33% have stopped buying brands or products because they were concerned about their sustainability
It’s in their best interests. Climate change threatens numerous industries, so if businesses want to survive (and thrive), they need to take environmental concerns into consideration. It’s important for financial reasons, too. Investors are more interested than ever in what companies are doing to tackle sustainability challenges, moving away from ‘carbon-related investments’.
It helps with employee retainment. 2020 research showed that having a social purpose helped businesses to find and keep talented employees, with 93% of employees believing companies should lead with purpose, and 90% of employees who work at companies with a strong sense of purpose describing themselves as being more inspired, motivated, and loyal.
They’re looking to become carbon neutral. According to Lexico¹ a business is considered carbon neutral if it makes or results “in no net release of carbon dioxide into the atmosphere, especially as a result of carbon offsetting.” In simpler terms, the level of carbon emissions a business produces is balanced out. Carbon offsetting is a way to achieve this.

¹ Oxford University Press (2021) carbon neutral. In: Lexico.com, Available at: https://www.lexico.com/definition/carbon-neutral [Accessed 17/02/2022]

Businesses and sustainability

There does seem to be a shift towards sustainability amongst businesses amidst the government’s commitment to achieving net zero carbon emissions by 2050, however gradual. 61% of businesses thought the move towards a greener economy was positive, and 50% had noticed their customers expected them to be more environmentally responsible.

Measuring your business’s carbon footprint

Before you look at carbon offsetting, you need to know what your business’s carbon footprint is. This is the amount of carbon dioxide released into the atmosphere as a result of the activities of your business.

There are two ways you can calculate carbon footprint:

Use an online carbon footprint calculator designed for businesses, such as:
- This calculator provided by Carbon Footprint Ltd
- This one by Carbonfund.org Foundation
- Carbon Trust
Hire someone to create a detailed report on your carbon footprint and where you can reduce carbon emissions.

The option you choose will depend on the time and budget you have available. A free online calculator is ideal for those who have limited time or budget. A full carbon footprint report can be helpful if you’d like advice on areas for improvement.

How to offset your carbon footprint

The easiest way to offset your carbon footprint is to join a scheme. There are multiple schemes out there, but not all of them are created equal, so it can be tricky to choose the best one for your business.

A key question to ask is whether buying into a specific scheme will result in a reduction of carbon emissions that would not have happened if you hadn’t made the purchase. Does your contribution ensure extra trees can be planted, for example?

Carbon offsetting schemes for SMEs

Carbon Footprint Ltd

This UK-based scheme has a number of projects, including tree planting, solar PV installations for schools, and biodiversity and conservation schemes. It allows you to support projects where you or your stakeholders are based, and has additional services for businesses looking to improve their sustainability beyond offsetting.

Forest Carbon

Forest Carbon develops certified carbon projects, including new woodland planting and peatland restoration. They sell carbon credits through the Carbon Club, certified by the Woodland Carbon Code and the Peatland Code, to SMEs and larger businesses who want to mitigate their business footprint. Forest Carbon is also exploring the development of projects in agriculture and marine environments.

My Carbon Plan

My Carbon Plan aims to plant 100,000 trees in the UK every year. They offer carbon offsetting for individuals and businesses.

Native, a Public Benefit Corporation

Native offers offsetting schemes for businesses, and will also support emissions estimates for small businesses that have not yet conducted one. Their offsetting schemes invest in clean water, renewable energy and regenerative agriculture, among others, and are independently verified by third parties.

Are there alternatives to carbon offsetting?

Critics of carbon offsetting argue that it’s an easy way for businesses to take care of their climate responsibility without having to make significant changes to their behaviour. They also point out that not all carbon offsetting projects have the same quality, which is true, and why it’s so important to be selective when choosing one to contribute towards.

If you decide carbon offsetting isn’t the right choice for you, there are still options out there to help you reduce your impact on the environment.

Here are some alternatives to carbon offsetting:

Make changes to your business practices to reduce carbon emissions. If you’ve calculated your carbon footprint, it should be relatively straightforward to identify areas where you can make changes. For example, do you travel for meetings that could be held over video call? Could your company recycle broken equipment instead of sending it to landfill? Could you switch energy providers?
Make it easier for your employees to make more sustainable choices. One of the biggest barriers to eco-friendly behaviour is not knowing where to start. Having some guidelines in place removes some of this stress and could encourage employees to make changes. For example, could you introduce a Cycle to Work scheme, or arrange for employees to share lifts to and from the office?
Becoming a certified B Corporation. This demonstrates that your business meets high standards on a range of factors, including employee benefits, charitable giving, transparency, and environmental performance. Examples of B Corporations in the UK include:
- allplants
- Alpro
- The Beeswax Wrap Company
- The Body Shop
- Danone
- Ella’s Kitchen
- Gousto
- Innocent Drinks
- JoJo Maman Bebe
- KeepCup
- Lily’s Kitchen
- The Myers-Briggs Company
- Pukka Herbs
- Riverside Natural Foods
- Rude Health
- S’well
- TOMS
Reduce funding for the fossil fuel industry. It’s not often publicised, but many banks and pension schemes can contribute towards the use of fossil fuels, which in turn contribute towards global warming. You could give employees the option to alter their pension to a version that makes ethical investments, or switch your bank account to a different provider.
Donate to charities that are tackling environmental issues. There are plenty to choose from across the UK, all looking at different areas, from wildlife and litter prevention to environmental laws and renewable energy.

Taking steps towards better sustainability might feel overwhelming at first. But as you can see, there are plenty of ways to make a difference, whether you choose to join a carbon offsetting scheme or find an alternative way to be environmentally friendly.

Glossary

Term	Definition
Carbon capture	A type of carbon offsetting where carbon is captured from the atmosphere. The most common type of carbon capture is planting trees.
Carbon credits/carbon finance	A payment put towards projects that reduce carbon emissions in some way.
Carbon footprint	The amount of carbon dioxide released into the atmosphere as a result of the activities of an individual, business, or community.
Carbon neutral	Something that makes or results in no net release of carbon dioxide into the atmosphere, especially as a result of carbon offsetting.
Carbon offsetting	A way to balance the carbon emissions you put out into the atmosphere.
Carbon reduction	A type of carbon offsetting which focuses on improving energy efficiency and creating alternative ways to produce energy, such as using solar panels or wind turbines.
SMEs	Small and medium-sized enterprises.
Sustainable	Conserving an ecological balance by avoiding depletion of natural resources.