As pressure mounts for real climate action, more and more companies are announcing they’ve gone climate neutral or reached net zero. A popular way to support these claims is through carbon credits. But do carbon offsetting projects truly contribute to global climate goals – or are they simply a convenient way to appear green without making actual change?
Regulators and environmental NGOs are increasingly skeptical. The Dutch Financial Markets Authority (AFM) has warned against misleading sustainability claims, and organizations like Milieudefensie argue that carbon offsetting does little to challenge business-as-usual practices.
Still, it’s important to keep the nuance: carbon credits are not inherently bad. In fact, when used responsibly – as part of a broader reduction strategy – they can help fund climate solutions and support global equity.
So what are carbon credits exactly? Why are they controversial? And how can companies use them in a way that is credible, impactful, and future-proof?
What Are Carbon Credits?
A carbon credit represents the avoidance or removal of one metric ton of CO₂ from the atmosphere. Companies can purchase credits to offset emissions they cannot eliminate internally – for example, in logistics, manufacturing, or air travel.
These credits are issued by climate projects that reduce or remove emissions, such as:
Reforestation and forest protection
Methane capture from landfills or livestock
Renewable energy installations (solar, wind)
Clean cookstove initiatives in developing regions
Carbon credits can be traded on the voluntary carbon market (via standards like Gold Standard or Verra) or through compliance markets like the EU Emissions Trading System (EU ETS).
Why Carbon Offsetting Faces Criticism
Despite their potential, carbon credits have become a focal point for greenwashing concerns. According to the AFM, companies often label themselves as “climate neutral” without clearly explaining how they arrived at that conclusion. The result? Confused customers, unrealistic expectations, and in some cases: outright misinformation.
NGOs like Milieudefensie highlight several key concerns about the way carbon offsetting is often used. Many companies rely on offsets without first making meaningful efforts to reduce their own emissions. In addition, a significant number of carbon credits are linked to low-quality projects whose climate benefits are uncertain or difficult to verify. Climate claims based on these offsets are frequently oversimplified, creating the impression of greater progress than is actually being made. These issues have fueled growing calls for stricter regulation, greater transparency, and the adoption of science-based climate targets.
The Nuance: Offsetting Can Be Legitimate – If Done Right
Let’s be clear: carbon offsetting isn’t inherently greenwashing - the issue lies in how it’s applied. When used responsibly, carbon credits can play a valuable role by financing climate projects in low-income regions, supporting biodiversity, improving public health, and contributing to social development. They can also help compensate for residual emissions that are difficult to eliminate. However, offsetting should always be the final step in a climate strategy -only after an organization has thoroughly measured and significantly reduced its own emissions.
What Makes a Carbon Credit High-Quality?
Not all carbon credits are created equal. Credibility depends on several criteria:
Aditionality: the project must generate climate benefits that wouldn’t have happened otherwise.
Permanence: the emission reduction must be long-lasting. For example, a forest preservation project that could be undone by wildfires is high-risk.
Verification: projects must be independently audited and certified by credible standards, such as Gold Standard or Verra.
No double-counting: credits should only be claimed by one entity and not be included in another country’s nationally determined contributions (NDCs).
What Does a Credible Net Zero Strategy Look Like?
The best companies don’t just talk about climate neutrality – they demonstrate a science-based roadmap toward it. This typically includes:
Measuring emissions across all scopes (1, 2, and 3)
Reducing emissions in line with 1.5°C targets
Offsetting only what remains after deep reductions
Reporting progress transparently and consistently
Organizations like the Science-Based Targets initiative (SBTi) help companies set verified goals aligned with the Paris Agreement.
Additionally, regulators like the AFM are cracking down on vague or unverifiable claims. The key is simple: be specific, substantiated, and honest.
Checklist: Responsible Use of Carbon Credits
Thinking about offsetting your business emissions? Use this checklist to make sure you’re doing it credibly:
📊 Have we first measured and reduced our emissions internally?
🌍 Do our offsets come from high-impact, certified projects?
🔍 Are we using third-party verification and public reporting?
🏷️ Are our climate claims fair, nuanced, and easy to verify?
🧩 Is offsetting part of a broader, long-term climate strategy?
If you can answer “yes” to all of the above – your approach is likely credible. If not, there’s a risk you’re unintentionally engaging in greenwashing.
Conclusion: Climate Impact Requires More Than Just Offsetting
Let’s be real: carbon credits are not a silver bullet. They won’t stop climate change on their own. But when used responsibly, they can support high-impact projects and accelerate global climate action.
Ultimately, the credibility of any climate claim rests on one simple truth: you cannot offset your way to sustainability. True leadership means reducing emissions first – and then compensating what cannot (yet) be eliminated.
So, are carbon credits greenwashing? They don’t have to be. But that depends entirely on how they’re used, and what they’re hiding.
