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Carbon Offsets: the ‘go-to’ industry for big business greenwashing needs

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Written by: Audrey Gaughran
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Earlier this month, Kenya hosted Africa Climate Week 2023. President William Ruto advertised Africa’s carbon sinks as an “unparalleled economic goldmine(opens in new window) ”. He was echoing the public relations of the carbon offsetting industry, which is being ramped up massively as different regions host climate weeks in preparation for the annual UN climate summit in November. This week, the PR parade is targeting UN Climate Week in New York(opens in new window) .

The simple idea being sold is that forests, peatlands, and other areas that store carbon can help us address climate change. This is not wrong. But the idea that carbon sinks can be used to wash away big polluters’ sins is. The main pitch of the offsetting industry to big business is: “Hey, big oil multinational! Hey, major airline! Want to claim you’re moving towards net zero and still extract oil or push low-cost flights? Buy this product, and you can do it!” What these companies are buying are carbon credits or offsets. And it is big, big business.

False carbon claims

Carbon offsets are increasingly discredited as a means for companies to address climate change. A new study by the University of California, Berkeley’s Cabon Trading Project(opens in new window)  published on 15 September 2023 found that:

[C]urrent … methodologies generate credits that represent a small fraction of their claimed climate benefit. Estimates of emissions reductions were exaggerated across all quantification factors we reviewed when compared to the published literature and our independent quantitative assessment.”

The Berkley findings echo long-standing criticism(opens in new window)  of the industry and its self-set standards, ‘verified’ by social auditors whose business model depends on keeping their clients happy. But the problems with carbon offsetting schemes are not limited to the false carbon claims; there are serious human rights issues as well. Civil society groups and academics have repeatedly shown(opens in new window)  how marginalised forest communities are pushed off their traditional lands to enable big offsetting industries to move in. They are promised financial compensation in exchange for their land and often end up with next to nothing. This has led to a loss of livelihoods and an increase in abuses by private guards working for the industry. SOMO research to be published shortly will powerfully underscore the breadth of human rights abuses that flow from offsetting projects.

Exploitation and human rights abuses

Our work also shows that the exploitation goes deeper. In many cases, in addition to selling carbon credits, commercial schemes also sell a narrative about ‘local development’ benefits, which customers, usually multinational companies, purchase as part of the package and use for their own PR purposes. Additionally, some carbon offset companies promote women’s empowerment benefits, making local development and women’s rights a commodity that others can purchase to polish up their public image.

When people’s lives and livelihoods become part of a commercial business narrative, there is always the risk that maintaining the positive story that is key to the commercial product’s appeal will mean disregarding evidence of human rights risks and actual abuses.

Perhaps more insidiously, many carbon offset projects seek to frame climate change as caused by the actions of marginalised communities in the Global South who do harmful things like using wood and grazing livestock. By paying to prevent the ‘culprits’ from doing so, sometimes framing these community livelihood strategies as criminal, the carbon offset industry allows massive multinationals to claim they are doing their bit for the climate.

It is quite an achievement to create an industry that makes poor people in countries that did not cause climate change the ones who must change their livelihoods so that wealthy CEOs and shareholders in the countries that did create the problem don’t have to change theirs.

Carbon offset, another foreign investment scam

Carbon offsetting is a $2 billion industry, which is forecast to grow massively in the coming years.

President Ruto’s claim that Africa’s carbon sinks are economic goldmines is probably true – but for Global Northern investors, not for local people. And if the history of foreign investment in Africa’s natural resources, including actual goldmines, is any indicator, not for the countries these investors enter. Having extracted Africa’s oil, gas, diamonds, and, yes, actual gold, foreign investors are commodifying the continent’s forests and peatland and the people who live there, making the same false promises of ‘development’ while banking profits and dodging taxes. 

The market cannot solve climate change. A growing offsets industry that needs forests to create carbon credits to sell to wealthy companies goes only in one direction: more exploitation, abuse, and deepening inequality. 

So why is the offsetting business still on the table at all? Because many governments fear, heavily encouraged by corporate lobbying, that any effort to make the radical shifts needed to address climate change will hurt that deity, ‘The Economy’. Carbon offsets feed their dangerous but powerful addiction to ‘market solutions’. The deeply ingrained belief that we must serve and preserve The Economy at all costs. Even at the cost of our own destruction and that of a habitable planet. 

Governments North, South, East, and West are so bought into this fable that they will blindly embrace the false promise of easy solutions, especially if those solutions offer a profit for someone.

Time for radical steps

Let’s hope that, with the growing weight of evidence that carbon offsetting is a problem, there will be more attention to this at UN Climate Week. Currently, the UN is incoherent on the subject. The UN Secretary-General appears to understand the problem(opens in new window) , but various UN agencies have swallowed the mythology hook, line, and sinker, giving this dubious industry the imprimatur of respectability. 

Carbon offsetting, as a foreign-investor-led commodification of people and their environments, has no place in addressing climate change. Countries and communities with significant natural resources beneficial to addressing global warming should be able to access financial support to preserve their natural wealth – on their terms. This support must come from the Global North countries and companies that caused climate change and should be seen as a part of a programme of reparations.

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Written by: Audrey Gaughran
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