A carbon offset is a reduction in GHG emissions made by one party to compensate for the emissions produced by another party. This is typically achieved by investing in projects that reduce or remove GHGs from the atmosphere, such as renewable energy, energy efficiency, or reforestation projects. The reduction in emissions is then quantified and can be purchased as a carbon offset by companies or individuals looking to offset their own emissions. One of the main criticisms of carbon offsets is that they are sometimes seen as a way for companies to continue emitting GHGs without actually reducing their carbon footprint. In other words, carbon offsets can be seen as a “license to pollute,” allowing companies to offset their emissions rather than make the necessary investments in renewable energy or energy efficiency measures to reduce their emissions.

CDP, formerly known as the Carbon Disclosure Project, is a non-profit organization founded in 2000. The organization’s mission is to encourage companies, cities, states, and regions to disclose their greenhouse gas emissions and climate change-related risks and opportunities. CDP works with institutional investors, major corporations, and government entities worldwide to encourage transparency and accountability in reporting on climate change. The organization also provides a platform for companies and other organizations to disclose their climate change data and strategies, which can then be used to benchmark and compare performance. CDP’s platform is widely recognized as one of the most credible and influential sources of climate change data in the world.

“Net-zero” generally means that the amount of greenhouse gas emissions created and the amount of greenhouse gas emissions removed (for example, via carbon capture and storage) from the atmosphere are equal, resulting in no net increase of atmospheric greenhouse gas. The Science Based Targets initiative’s (SBTi) definition takes the term “net-zero” a step further. Their standards for corporate net-zero targets, in line with keeping global warming to 1.5°C, require rapid and deep emission reductions. Companies must take action to halve their emissions by around 2030. Likewise, long-term deep emission cuts of at least 90% before 2050 are crucial for net-zero targets to align with science. In other words, companies must reduce their emissions by 90%, and only the final 10% can be abated through mechanisms such as some types of offsets. This is why science-based targets are seen as focusing more on the “zero” part of “net-zero” versus the “net” part.

The Paris Climate Accord is an international agreement adopted in 2015 by the United Nations Framework Convention on Climate Change (UNFCCC) that aims to limit global warming to well below 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius (2.7 degrees Fahrenheit). The accord requires countries to regularly report their emissions, progress in implementing climate policies, and aims to increase their ambitions in combating climate change over time. The ultimate goal of the Paris Climate Accord is to achieve a net-zero greenhouse gas emissions balance in the second half of this century.

SBTs are data-driven commitments companies make to reduce GHG emissions. The commitments are validated by the Science Based Targets initiative (SBTi). When SBTi validates a company’s goals, it is ensuring that the company’s goals are in line with the Paris Agreement. Targets are considered “science-based” if they are in line with what the latest climate science deems necessary to meet the goals of the Paris Agreement – limiting global warming to well-below 2°C above pre-industrial levels and pursuing efforts to limit warming to 1.5°C. SBTs are considered the gold standard in corporate climate action because of the level of validation and the kind of climate action required.

• Scope 1 emissions: “Scope 1” refers to the direct emission of greenhouse gases (GHGs) from sources that are owned or controlled by a company or organization. This includes emissions from sources such as combustion of fossil fuels in boilers, furnaces, and vehicles owned or operated by the organization, as well as emissions from chemical reactions that occur during the manufacturing process.
• Scope 2 emissions: “Scope 2” refers to indirect GHG emissions that are associated with the consumption of purchased electricity, heat, or steam. These emissions are produced by a third party, such as a utility company, but are a result of a company’s own activities. For example, if a company purchases electricity from a power plant that emits GHGs during the production of that electricity, the emissions associated with that electricity consumption would be considered Scope 2 emissions for the purchasing company. Scope 2 emissions are one of three categories of greenhouse gas emissions defined by the Greenhouse Gas Protocol, which is a widely used accounting tool for measuring and reporting greenhouse gas emissions.
• Scope 3 emissions: Scope 3 emissions refer to all indirect greenhouse gas emissions that occur in a company’s value chain but are not included in Scope 2 emissions. These emissions are a result of the company’s activities but are produced by sources that are not owned or controlled by the company, such as suppliers, customers, and transportation and distribution networks. Examples of Scope 3 emissions include emissions from the production of purchased materials and products, transportation and distribution of products, waste disposal, and the use of sold products. Scope 3 emissions are often the largest source of emissions for companies, and measuring and reducing these emissions can be challenging due to the complex nature of the value chain. However, many companies are increasingly recognizing the importance of addressing Scope 3 emissions to achieve their sustainability goals and reduce their overall carbon footprint.
• For an overview of emissions scopes, check out Atlantic’s video.