We were speaking with a friend recently who is a sustainability manager in a mid-sized financial services company. Her company, under her guidance and the support of a dedicated CEO, has been working to reduce its carbon footprint as far as they possibly can. But now they are stuck.

Through robust conservation measures and efficiency upgrades, they’ve made great strides. But they’ve reached a standstill, and are unable to make any further reductions. For example, they’ve been unable to make much of a dent in their “Scope 3” emissions – especially those associated with employee travel (commuting and business travel). These are notoriously difficult to reduce. So they’ve been examining how best to compensate for those emissions.

For many companies, this is usually accomplished by purchasing carbon offsets. Offsetting involves buying credits from a carbon reduction project located somewhere else on the planet. The offset certificate represents carbon that is taken out of the atmosphere (for example, by creating a new carbon sink) or avoided (for example, by creating alternative sources of energy with no or lower emissions). So for our friend, this means balancing those difficult Scope 3 travel emissions by purchasing a corresponding quantity of carbon offsets.

Offsetting is economically efficient. It is certainly easier, and usually cheaper, than working out ways to reduce emissions. Offsetting projects can abate the same quantity of emissions at less cost. 

But offsetting has its share of critics and issues.  Charges of “greenwashing” or “buying your way to carbon neutrality” are often heard. Consider, for example, planting trees in rainforests or other areas impacted by deforestation activities. These planting projects are certainly a worthy undertaking, and they are popular sources of offsets. But as our friend investigated further, she found that it posed real challenges. Those challenges include:

  • The projects are large, far away and invisible to the purchaser.
  • Invisibility leads to an overall lack of transparency and trust.
  • Lack of transparency and trust means that the company must rely on a third party to verify that the project is actually being done.
  • The costs of that verification, along with other overhead costs, reduce the actual amount of money actually funding the project (often to as little as 30%).
  • How can her company be sure that the project would not have happened but for the funding provided through the offsets? If the project would have happened without offset funding, it is not really “offsetting” anything. 

Some forward-looking companies have been exploring some new approaches. These retain the idea behind offsetting (compensating for what can’t be eliminated by finding reduction opportunities outside the boundary of the company itself). Instead of purchasing anonymous offsets, they are finding project opportunities that are relevant to (and benefit) the company’s stakeholders. This practice started in Europe about a decade ago, where it’s been known as “insetting.” In the U.S., a new social venture, Earth Deeds, has developed a similar approach, calling it “onsetting.”

Onsetting involves a collaborative project among stakeholders to reduce emissions. With onsetting, a company sets up local partnerships (for example, the company, with its employees, local community, local NGO, suppliers and/or customers). This partnership provides financing, employee volunteer time, or other critical support for a project with broad benefits for all participants. Examples of emission-reducing onsetting projects include:

  • A company partners with a local energy management firm and construction company to provide expertise and financial support for community–based home insulation and weatherizing project.
  • Another company collaborates with its energy supplier to support installation of solar panels in the local low-income neighborhood.
  • An urban retailer provides free, reusable shopping bags to all of its customers.
  • A hotel chain helps local women-owned olive oil producer plant thousands of olive trees. The women produce the olive oil, and sell it back to the hotel chain.
  • An outdoor clothing retailer supports a local nature reclamation project involving stream restoration and tree planting.

Each of these projects produces carbon reductions that can be accounted for in roughly the same way as carbon offsets. But onsetting provides additional benefits for the company that offsets simply cannot. Benefits like increased employee satisfaction, customer loyalty, and community relationship-building opportunities.

Onsetting can, however, pose some challenges. For one thing, it requires more effort, at least in the initial stages, than simply buying offsets. Planning, creating and implementing projects in collaboration with stakeholders is harder than writing a check. But the ultimate payoff in terms of greater stakeholder and value chain engagement is far greater than the carbon reduction credits.

Our friend’s company, whose office is located in a sprawling suburb, decided to invest in an alternative-fueled shuttle van system that ferries employees (as well as local community members) at no charge to and from local train stations. The project provides a great complement to the company’s existing transit subsidy program. Employees use it to reduce their driving by taking the shuttle from home to the train station. Not only does this allow the company to realize further reductions in its Scope 3 emissions; the employees save time and money. And they get to chat with co-workers they might not otherwise have any contact with. Everybody wins!

The Project Selector tool on Sustrana’s platform contains dozens of project ideas, many of which are good candidates for an onsetting project. Just one more way the platform can benefit your company (and your stakeholders)!

Related blogs: