Carbon offsets

Carbon offsets are a way for companies to compensate for their GHG emissions by investing in projects that reduce or capture GHG gases elsewhere. They can be bought by companies to decrease their carbon footprint, and can be especially helpful in balancing emissions that are difficult to eliminate. 

Carbon credits

“A carbon credit is a tradable instrument (typically a virtual certificate) that conveys a claim to avoid GHG emissions or to the enhanced removal of GHG from the atmosphere.” (GHG Management Institute, SEI)

In simpler terms, it represents one metric ton of CO2 that a company is allowed to emit or has reduced. It is a way of quantifying the carbon emissions that a company offsets. 

Carbon credits also allow for the establishment of a “cap-and-trade system.” In this system, the government sets an emissions cap, and companies buy and sell carbon credits to meet that cap. 

How do they help?

Carbon offsets and carbon credits allow for adaptability, oversight and cost savings. They may even be essential when it comes to hard-to-abate emissions, such as those from shipping and steel production, due to the technical and economic complexities involved. Alongside this, they can be used as both short-term and long-term solutions to complement reducing emissions through asset turnover and evolution of company business models. 

Summary

For companies, understanding how to effectively utilize carbon trading mechanisms is no longer just about compliance– it’s about making use of a strategic opportunity to align with global climate goals, manage costs efficiently, and ensure resilience in an increasingly eco-conscious market. But why stop there?

How can we help – Whether it comes to strategically enhancing business models to uphold long-term enterprise resilience or using innovative solutions to meet sustainability goals, CeroED’s #ARRO does it all. Our SaaS platform will help you measure, manage, and improve your ESG performance, so that you can remain compliant, competitive, and ultimately, better align with global climate commitments. Read more about this at www.ceroed.com

Written by: Bhoomika Makwana, CeroED