Most companies that ask us about carbon offsets have already been told two opposite things: that offsetting is the responsible thing to do, and that it is greenwashing. Both are true of some offsets. The difference sits in a few checks you can run yourself.
A carbon offset is a reduction or removal of one tonne of CO2 equivalent (tCO2e) by a project outside your company, used to compensate for one tonne of your own emissions. The offset only exists once a verified carbon credit is retired in a public registry in your name. It does not lower your own footprint, which is why reduction always comes first.
This article explains how offsetting works in practice, what separates a credible offset from a weak one, and what a European company can still say about it after the EU’s ban on offset-based “carbon neutral” claims.
Carbon offset vs carbon credit: the same tonne, two words
A carbon credit is the instrument: a certificate, issued by a standard such as Verra or Gold Standard, representing one tonne of CO2e that a project avoided or removed. A carbon offset is the use of that instrument: you retire the credit to compensate for a tonne you emitted.
In practice the words are used interchangeably, and “carbon offset credit” is common in search. The distinction matters in one place: a credit you hold but have not retired offsets nothing. It can still be sold, and someone else could claim it.
Practitioners increasingly avoid “offset” in external communication, because it implies your emissions are cancelled out. Since September 2026 that implication carries legal risk in the EU, as explained below. Our guide to what carbon credits are covers the instrument itself in more detail.
How carbon offsetting works in practice
For a company, offsetting is the last step of a fixed sequence:
Measure your scope 1, 2 and 3 emissions, so you know what you are compensating for. Our free CO2 calculator gives a first estimate.
Reduce what you can: energy, travel, purchased goods, logistics.
Decide the volume you want to address with credits, for example last year’s residual emissions or a share of them. Our article on how many carbon credits you need explains the calculation.
Buy credits from projects that pass a quality screen.
Retire them in the registry of the standard, in your company’s name, with a retirement statement and serial numbers.
Report and communicate them separately from your emissions inventory.
Step 5 is where offsetting becomes real. The registry entry is your evidence: project name, vintage, volume, serial numbers and the beneficiary. If a supplier cannot give you a retirement link, treat the purchase as unfinished. The full chain from project to retirement is explained in how carbon credits work.
Avoidance and removal: two kinds of offset
Every offset comes from one of two project categories:
Avoidance or reduction projects prevent emissions that would otherwise happen: protecting a forest that was going to be cleared, replacing wood fires with efficient cookstoves, capturing landfill methane.
Removal projects take CO2 out of the atmosphere and store it: reforestation, agroforestry, soil carbon, biochar, enhanced rock weathering, direct air capture.
Removals are generally more expensive and are the only type that can neutralise residual emissions under SBTi’s net-zero standard. Avoidance credits remain the cheaper way to finance climate action now. As of October 2026, prices range from about €2-15 per tonne for forest protection (REDD+) and €8-45 for reforestation to €110-240 for biochar and €435-1,000 for direct air capture (carbon credit prices in 2026).
Most companies we work with combine both. How to weigh them is covered in avoidance vs removal.
What makes a carbon offset credible
An offset is a claim that a tonne was avoided or removed because of your money. Five questions test that claim, and the weakest offsets fail at least one of them.
Is it additional? The project would not have happened without carbon finance. A wind farm that was profitable on electricity sales alone does not need your credit. Additionality is the most disputed criterion in the market and the hardest to prove after the fact.
Is the baseline conservative? Avoidance credits are calculated against a counterfactual: what would have happened without the project. Several forest conservation and cookstove methodologies have been shown to overstate that baseline, which produces more credits than real tonnes. This is over-crediting, and it is the main reason some credits trade at a fraction of the price of others.
Is it permanent? Carbon stored in trees and soils can be released again by fire, drought or land-use change. Credible standards hold back a share of credits in a buffer pool to cover reversals. Biochar and mineralisation store carbon for far longer than forests.
Is leakage accounted for? Protecting one forest can push logging to the next valley. Methodologies should deduct for that displacement.
Is it independently verified and registered once? A third-party validation and verification body (VVB) checks the project, and the credits are issued in a public registry with unique serial numbers, so the same tonne cannot be sold twice.
The ICVCM Core Carbon Principles turn these questions into a market-wide benchmark: credits from approved methodologies can carry the CCP label. Ratings from agencies such as BeZero, Sylvera and Calyx add a project-level view. At Regreener we screen every project against our quality framework, which covers more than 100 data points across five domains, before it reaches a client.
The quickest quality test is to ask for the registry link before you sign. A good supplier sends the project page, the methodology and the retirement statement within a day. If you get a brochure instead, expect gaps in the project as well.
Bernard de Wit
Founder, Regreener
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What you can still claim about offsets in the EU
This is the part most explanations of carbon offsetting skip, and the part that now carries legal risk.
Since 27 September 2026, the EU’s Empowering Consumers Directive (Directive (EU) 2024/825) bans claims towards consumers that a product or service has a neutral, reduced or positive greenhouse gas impact because of offsetting (Annex I, point 4c). “Carbon neutral delivery”, “CO2-compensated event” and “climate positive coffee” are all caught, with or without a label or footnote. Company-wide claims such as “we are a climate neutral company” are caught by the separate ban on generic environmental claims, because credits do not show your own environmental performance. Our article on the EmpCo carbon neutral claim ban covers the details, including B2B communication.
What remains allowed is the contribution claim: stating specifically which verified projects you financed, how many tonnes and under which standard, without suggesting your own emissions are cancelled out. Recital 12 of the directive explicitly keeps room for companies to advertise their investments in carbon credit projects. Examples of wording that works are in our guide to contribution claims.
Science-based targets point the same way. Under SBTi’s Corporate Net-Zero Standard V2.0, published in June 2026, carbon credits do not count towards your scope 1, 2 or 3 reduction targets. They are recognised as action beyond your value chain, and larger (Category A) companies have to support eligible carbon removals from 2035, starting at 1% of ongoing emissions and rising to 100% at their net-zero year (SBTi carbon removal requirements).
So the role of an offset has changed. Its use today is to take financial responsibility for emissions you have not yet cut, and to report that you did, while neutrality claims towards consumers rest on your own reductions.
Is carbon offsetting greenwashing?
It becomes greenwashing in three situations: when credits replace reduction, when the credits themselves are weak, and when the claim overstates what they do. Each one is avoidable.
The research behind the criticism is real. A 2026 synthesis of independent evaluations of 44 REDD+ forest projects found that, taken together, they issued almost eleven times more credits than the avoided deforestation justified, while about four in five did protect forest (Swinfield et al., Nature Communications, 2026). A 2024 study of cookstove methodologies estimated over-crediting of 9.2 times across its sample, with the metered Gold Standard method closest to reality at 1.5 times (Gill-Wiehl et al., Nature Sustainability, 2024); Gold Standard disputes the findings. The lesson for a buyer is to buy fewer, better-checked credits and to say plainly what they do. We set out both sides in carbon offsetting: greenwashing or real impact?
The Oxford Offsetting Principles give a widely used reference: cut emissions first, use high-integrity credits, shift your portfolio towards durable removals over time, and disclose what you buy.
When offsetting makes sense for a company
Offsetting fits a company that has measured its footprint, has a reduction plan it is executing, and wants to take responsibility for the emissions that remain in the meantime.
Shift4Good, an impact venture capital fund, is a typical example. Its own emissions come mainly from business travel. It treats offsetting as the minimum for emissions it cannot yet avoid, and split its portfolio between a large tropical peatland conservation project, Katingan Mentaya in Indonesia (Verra VCS 1477), and a regenerative farming removal project in Germany. Both were selected on additionality, permanence and co-benefits, and Shift4Good communicates them as a contribution.
Offsetting does not fit a company that wants a label instead of a reduction plan, or that is buying on price alone. In those cases the money is better spent on reduction first.
Companies often expect offsetting to end the conversation about their emissions. In our experience it starts a better one: once you have to explain which projects you chose and why, your reduction plan gets more scrutiny, not less. That is a good outcome.
Bernard de Wit
Founder, Regreener
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A five-point check before you buy offsets
Footprint and reduction plan in place. You know what you are compensating for, and credits are not the plan.
Project named, with registry ID and methodology. No anonymous “portfolio” without project-level detail.
Quality evidence. CCP label, an independent rating, or a documented due diligence covering additionality, baseline, permanence and leakage.
Retirement in your name. Serial numbers and a public retirement link for every tonne you claim.
Claim wording checked. Contribution wording, no “neutral” or “compensated” towards consumers. Test it with the free EmpCo Claim Checker.
Know your footprint before you offset
Offsetting starts with knowing what you emit. Get a first estimate of your company’s carbon footprint in minutes with our free calculator, then talk to us about the share you want to address with credits.
