What are carbon offsets and does your business need them?

Over the years, there’s been mounting emphasis on environmental sustainability , and many businesses are taking note. But, despite the continued conversations, smaller businesses are often slower to implement sustainability practices.

In fact, only 38% of small businesses have invested in environmental adaptation, even though they account for 90% of businesses worldwide and make up more than 50% of global emissions.

Small businesses don’t have access to the same capital and resources that large organizations do when it comes to making environmentally friendly changes. However, there’s still good news: Businesses don’t necessarily need a huge budget, a dedicated sustainability team, or a ton of know-how to make a positive impact.

What is one way that you can reduce your emissions and contribute to a healthier future for the planet? Carbon offsets.

What are carbon offsets?

Even if you’re mindful and environmentally conscious, doing business requires a certain amount of carbon emissions—from manufacturing products to transporting them to their final destinations.

Think of carbon offsets as a form of trade. A carbon offset is a way of balancing or “canceling out” the emissions of your business by investing in projects, activities, and initiatives that work to reduce carbon.

Basically, it’s the more formalized version of planting a tree for every truck of products you ship, as just one example.

So…what does it mean to be carbon neutral?

You may have heard the term “carbon neutral” used in various sustainability conversations.

If it’s caused head scratching and confusion in the past, here’s the gist: When a company is carbon neutral, they’ve achieved a perfect balance between how much carbon they’re eliminating and how much carbon they’re emitting. They’ve counteracted the bad with the good.

It’s a status that’s gaining more and more steam and prestige, especially among larger businesses.

A reported 23% of Fortune 500 companies have made a public commitment that they’ll be carbon neutral, using 100% renewable power, or meeting a Science-Based Target (or a combination of those three initiatives) by the year 2030. Even Amazon CEO Jeff Bezos has pledged that the company will be carbon neutral by 2040.

How do carbon offsets work?

Even if complete carbon neutrality feels like a reach for your small business, carbon offsets can still help you even out your carbon emissions. But, how exactly do these offsets work?

In most cases, this isn’t going to be a grassroots movement (like the tree planting example we used earlier). Instead, your business will actually purchase carbon offsets, which you’ll likely hear referred to as carbon credits, through an established carbon offset program. Some popular and reputable programs for businesses include:

• 3Degrees
• Carbon Checkout
• Native Energy
• Terrapass

That’s not an exhaustive list. As you explore your options, The New York Times advises looking for certifications by standards groups like The Gold Standard or Green-e to make sure that your money actually goes to worthwhile climate projects.

How much does a carbon offset cost? Or how much do you need to invest to truly counteract your business’s emissions?

That answer varies from business to business and project to project. If your goal is carbon neutrality, then you’ll need to start by calculating your business’s total carbon emissions. It doesn’t need to be complicated, especially if you use an online calculator (which most programs offer as part of the purchase process).

When you know your emissions, you’re better equipped to understand how much you need to offset. Again, if you want to be carbon neutral, emitting 25 metric tons of CO2 per year means you’d want to offset 25 metric tons per year.

The established initiatives will walk you through how to invest in their carbon offset programs and counteract your emissions. Regardless of which one you go with, the basic premise remains the same: You’re committing money to a program that benefits the environment to balance out your business’s carbon footprint.

Does your small business need carbon offsets?

The short answer is no—you don’t need them. They aren’t mandated or required for businesses. However, offsetting your business’s carbon emissions offers several benefits:

• You’ll help the planet: Let’s get the obvious one out of the way. Carbon offsets help your business address climate change which, first and foremost, is good for the planet.
• You’ll boost your business’s reputation: More than ever, people are looking for eco-friendly products and businesses. In fact, 64% of Americans say they’re willing to pay more for sustainable products, and 78% say they’re more likely to purchase a product labeled as environmentally friendly. Offsetting your carbon emissions shows people that you’re invested in the health of the planet.
• You might get a tax deduction: Your business might be able to write off your purchase of carbon offsets as a tax-deductible business expense. As always, it’s a smart idea to check this over with your accountant first.

Even if you don’t manage to be carbon neutral (or even carbon negative), investing in carbon offsets can still be a smart move.

Small steps lead to big changes

Carbon offsets are an effective and impactful way that small businesses can contribute to a more sustainable future. And best of all? They don’t require a ton of time and resources.

That said, they certainly aren’t the only way to lead a more environmentally friendly business. From minimizing your waste to switching to LED lightbulbs, there are tons of sustainability practices that will take your business (and the environment) in the right direction.

Remember, committing to seemingly small changes can make a big difference in the future of your business—and that holds true for the environment too.