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29 Feb

What Are Carbon Offsets? A Distraction From Fashion’s Runaway Emissions

Fashion’s climate impacts are off the charts with rampant overproduction. That puts carbon offsets in the spotlight. But in this deep-dive report, newly revealed data from Good On You suggests offsets could be a distraction from meaningful action—and some experts say a continued reliance on offsets could even make the industry’s impacts worse.  


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In 2019, Gucci announced that it had become “entirely carbon neutral”. It seemed an impressive feat for a luxury brand whose supply chain and consumer base stretches across the globe, but fast forward to 2023, and the luxury brand dropped the claim—not because it had abandoned its sustainability commitments, but because what constitutes carbon neutral was in contention.

Like Gucci, many fashion brands—including Saint Laurent, Balenciaga, Reformation, and Allbirds, to name a few—have used carbon offsets to claim carbon neutrality, or “net zero” status. In fact, nearly half of the world’s public companies plan to use offsets to reach net zero.

But now, regulatory scrutiny around sustainability language in marketing is tightening, requiring brands to be more precise about the claims they make—and be able to back them up.

And a slew of investigations in the past two years has called the integrity of offsets into question, not only criticising their efficacy but also positing that they could, in fact, be causing harm. In the UK, the Advertising Standards Authority is set to ban the use of carbon neutrality claims unless brands can prove them—but as it turns out, proving a claim based on offsets might not even be possible.

Many experts are now concerned not only that carbon offsets are flawed, but that they’re distracting brands from the harder work of decarbonisation. And newly revealed data from Good On You’s ratings of the largest fashion brands paints a concerning picture: overall, brands purchasing offsets aren’t making much progress on actual emissions reduction activities.

What are carbon offsets? They sound good in theory

The focus on carbon neutrality and offsetting is due to a looming deadline set by the 2015 Paris Agreement, which was designed to stop global temperatures rising. The legally-binding agreement stated that emissions must be reduced by 45% by 2030 and then reach net zero by 2050. In other words, the world needs to remove the same amount of greenhouse gases (GHG) from the atmosphere as it emits so the overall balance is zero.

Carbon offsets seem like a convenient way to do that, at least in theory: if a tonne of carbon is emitted into the atmosphere somewhere in the world, purchasing offsets for a tonne of carbon would mean that it’s being absorbed, in equal measure, somewhere else. In effect, offsets promise to help polluters cancel out emissions.

The most commonly sold offsets are nature-based—because trees, plants, soil, and even the ocean naturally absorb carbon from the atmosphere. In this case, a fashion brand might calculate how much carbon it is going to emit per product or per year, for instance, and then it may choose to “offset” those emissions by buying carbon credits. The money from those carbon credits funds projects that plant trees, restore coastal habitats like mangroves and saltmarshes, conserve rainforests, and so on, to support nature’s ability to absorb and store carbon. Generally, you might see forestry offsets promoted by fashion brands such as popular “you buy X, we plant trees” programs.

There is little to no scientific evidence that any sort of carbon offset can reduce emissions at scale. I compare it to a mass delusion

Roshan Krishnan – policy associate at the Michigan Environmental Justice Coalition

There’s only one problem: there’s a growing consensus among both academics studying carbon markets and environmental justice activists that all too often, this system doesn’t result in real emissions reductions. “There’s been a lot of work to launder the image of the carbon market to make it [seen as] a reputable tool. There is [little to no] scientific evidence that any sort of carbon offset can reduce emissions at scale. I compare it to a mass delusion,” argues Roshan Krishnan, policy associate at the Michigan Environmental Justice Coalition.

The “delusion” stems from the fact that investigations find many of these nature-based offsets sold have been worthless, with independent reporting ultimately concluding they’re often a cash-grab “hustle,” as noted in a recent New Yorker magazine feature about how a leading offset firm, South Pole, sold millions of offset credits for “reductions that weren’t real”.

Beyond nature-based offsets, other kinds of carbon offsets fund actions to reduce carbon emissions in different ways, such as backing renewable energy projects or providing energy-efficient cookstoves to communities that traditionally burn wood for fuel. Again, they vary in rigour and reputation. But as a result of carbon offsets becoming “one of the bigger grifts” in the “bubble-hype market,” offsets have overall lost a lot of public trust, as an editorial in the Financial Times recently concluded.

Mangrove forest seen from above

Mangrove forests like this one are frequently used in carbon offsetting schemes

Newly revealed data on large brands that buy offsets

The Paris Agreement was intended for the world to reduce emissions as much as possible as the first priority. And that’s similarly what we should expect to see from fashion brands. But the problem is, some fashion brands seem to have skipped over the reductions part and ploughed head first into offsetting.

In other words, if brands that purchased offsets were really taking their carbon impacts seriously, then we’d expect them to disclose a lot more information about the actions they’re taking to reduce emissions. But according to newly revealed data from Good On You, large brands purchasing offsets don’t appear to be doing much more than large brands overall, explains Luis Rodriguez de Cespedes, manager of Good On You’s data systems. (We categorise brands as “large” based on annual turnover, following the widely adopted definition set out by the European Commission.)

Overall few large brands are adopting good practice when it comes to reducing their GHG emissions—and brands that purchase offsets are only somewhat more likely to be doing so than those that don’t.

Luis Rodriguez de Cespedes – manager of Good On You's data systems

We started by looking into the carbon reduction activities of a group of 30 brands that disclose they purchase offsets. We selected the sample of 30 offset brands based on their prominent disclosures of purchasing offsets—the overall number of fashion brands purchasing offsets is likely to be significantly higher, but we focused our data set on this sample that had clear disclosures to gain general insights into what actions these brands take beyond purchasing offsets.

We then compared that with a larger sample of brands that don’t disclose anything about purchasing offsets (for this sample, we selected 915 brands that do not disclose to CDP).

In comparing these two samples, we’re generally looking at the performance of brands known to purchase offsets with those that don’t. “The expectation is that brands should take meaningful reduction action before purchasing offsets,” says Gordon Renouf, co-founder of Good On You. “So our expectation would be that all brands purchasing offsets would be taking at least a few concrete actions [listed below] that would actually reduce their emissions. But the brands that have disclosed offsets are only somewhat more likely than their peers to be taking meaningful reduction activities.”

Our key finding is that most of the large brands that purchase offsets have not adopted best practice GHG reduction initiatives. Only 10% of brands that purchase offsets are taking action to reduce process emissions from manufacturing and only 5% report that they have initiatives to reduce emissions in raw material reduction, a high impact area.

As you can see in the chart below, when it comes to emissions reduction initiatives, most brands simply aren’t doing enough. And unfortunately, large brands that purchase offsets aren’t doing dramatically better as a group:

If large brands that bought offsets were taking carbon reduction seriously, you’d also expect to see them more publicly setting science-based GHG reduction targets and disclosing their progress against them. But yet again, brands that purchase offsets aren’t doing much more than large brands overall: 5% of large brands we assessed had set an approved Science Based Target—the current best standard for greenhouse gas emissions targets. For brands that purchase carbon offsets, the percentage was somewhat higher at 17%, but not as high as we might hope to see. And overall, as our latest data report on climate inaction underscores, the overwhelming majority of large brands overall aren’t disclosing their progress toward these targets even when they do set them.

If large brands that bought offsets were taking carbon reduction seriously, you’d similarly suspect they’d show more leadership on renewable energy throughout their supply chains, not only in direct operations. But our analysis found that no large brands that purchased offsets had also installed and purchased renewables in a medium or large portion of their supply chain.

Ultimately, Rodriguez de Cespedes concludes that “overall few large brands are adopting good practice to reduce their own emissions—and brands that purchase offsets are only somewhat more likely to be doing so than those that don’t.”

Fashion’s emissions are certain, but nature-based offsets aren’t

But aren’t offsets doing some good, you might rightly wonder? Of course, growing forests and preserving vegetation does remove carbon dioxide from the atmosphere because that’s what plants naturally do, explains Phillip Williamson, honorary associate professor at the University of East Anglia’s School of Environmental Sciences. But it’s not as simple as what carbon offsets promise: “The problem is that biology is dynamic,” says Williamson. Such offsets are temporary due to the natural carbon cycle: plants die and break down, and the carbon they’ve stored is released again. “You’re just sort of putting off the problem for a bit longer.”

Alongside the natural carbon cycle, many other forces outside the control of carbon markets can impact whether offsets result in meaningful reductions. A planted tree can be felled, a restored habitat can be cleared for agriculture years or decades later, and extreme weather like wildfires can quickly destroy “preserved” forests. For example, recent devastating wildfires in Canada have resulted in millions of tonnes of carbon dioxide being released into the atmosphere, and some of it has come directly from vegetation burned at a carbon offset project site. Beyond this, as European NGO ECOS has noted: “There is simply not enough space or time on the planet to grow trees and offset our way out of the climate crisis.”

There is simply no way to accurately declare that the carbon credits a company buys will result in the removal of a specific amount of carbon.

These kinds of concerns don’t only pertain to forests. Other forms of nature-based offsets come with problems, too. For example, Williamson specialises in coastal blue carbon—ie carbon captured by coastal and marine organisms like seagrass. He’s studied how widely the estimates of the rate at which blue carbon habitats can remove carbon vary. And he’s found that the highest and lowest estimates for how much carbon can be stored in coastal habitats can differ by up to a factor of 600. That leaves a lot of leeway for overestimation of the impact of nature-based offsets.

There is simply no way to accurately declare that the carbon credits a company buys will result in the removal of a specific amount of carbon. But as a 2021 Friends of the Earth paper states: “offsets are sold regardless of whether they will work over the long term”. And that’s where the problems start.

Investigations find popular offsets are “junk” and “largely a sham”

There’s a growing consensus among the experts we spoke to for this report: many of the most popular offsets sold are not delivering the reductions they promise. And this is reflected in numerous recent independent investigations, which have stirred controversy.

In January 2023, a nine-month investigation by The Guardian, Die Zeit, and SourceMaterial into the world’s leading certifier Verra concluded that more than 90% of its rainforest offset credits were “phantom credits” and therefore “did not represent genuine carbon reductions.” An independent analysis stated that, of 94.9m tonnes of CO2E credits claimed by Verra, there have been just 5.5m tonnes of real emissions reductions. The investigation found that reports of threats to forests were vastly overstated, meaning that “preserving” them had no real benefit, and only a handful of forests studied showed deforestation reduction.

Verra has publicly disputed the results. However, the findings of the investigation are in line with a broader, growing scientific consensus about the fundamental problems with the carbon market, and chime with other investigations and expert statements that date back over a decade.

Many of the most popular offsets sold are not delivering the reductions they promise. And this is reflected in numerous recent independent investigations, which have stirred controversy.

Another independent investigation, which was published just a few months later, said oil giant Chevron’s carbon offsets are “mostly junk”, and in 2022, an industry whistleblower revealed that Australia’s carbon credit scheme was “largely a sham”. “What is occurring is a fraud on the environment, a fraud on taxpayers, and a fraud on unwitting consumers,” professor Andrew Macintosh said at the time. Even Verra has had to dig into potentially dodgy offsets—in 2023, it initiated a quality review of its rice farming offsets used by Shell, later banning them.

The ways in which offsets can be considered a “sham” or “junk” varies. Alongside the overestimates and impermanence covered earlier, a lack of so-called additionality is an underlying issue. For instance, carbon credits that go to fund hydropower projects are based on the claim that without that funding, the renewable energy project would not have gone ahead. But experts argue that in the case of hydropower credits, many of these projects would go ahead regardless. They are not additional. If a forest was not really going to be cleared but its “preservation” is funded by carbon credits, that’s not additional. If one patch of forest is saved, but another is cleared in its place, that’s not additional.

In an investigation into what some experts have framed as Alaska’s “climate fraud” plan to produce carbon offsets from its forests without actually decreasing timber harvests, writer and researcher Stephen Lezak succinctly summed up the “additional” issue with a metaphor: “A [hypothetical] carbon offset that paid vegetarians to reduce their meat consumption is not additional because the vegetarians wouldn’t have consumed meat anyway.”

Tongass National Forest in Alaska, USA

The Alaskan government’s plan to lease areas of its Tongass Nation Forest, seen here, for carbon credits without reducing its timber harvests exemplifies a lack of additionality.

“CO2lonialism”: how carbon offsets impact people, too

Among the creative carbon accounting and the threats to brand reputation, carbon offsets have also come under fire for human rights violations. Indigenous communities’ traditional knowledge and land management are vital to the future of our climate. And yet many have been subject to forced evictions, had their homes torn down, had their long-standing ecosystems disrupted, been swindled with low-value deals, and cut out of the conversation entirely.

But because the carbon market is so prevalent and other investment is near non-existent, many Indigenous peoples have become beholden to offset-based funding.

“When I was working at Amazon Watch basically every community that we worked with, across the Amazon, was involved in a carbon market programme of some shape or form,” says Krishnan. “There were a few holdouts and generally they were able to be holdouts because they were receiving funding from some other revenue stream. [But] the pressure is just immense. You are trying to get a floor put in your schoolhouse or trying to just have resources in the community. And a lot of these populations are totally neglected by the state. They’re playing the hand they’re dealt, and it’s been a very intentional political process.”

There is no doubt that Indigenous peoples must receive funding to further their vital work, but it should not be dictated by Western powers and it should not be used as permission to continue to pollute.

The Indigenous Environmental Network coined the term “CO2lonialism” to describe the colonial nature of offsetting and other such business-first “green” ventures. Indigenous groups have, for decades, opposed the implementation of various carbon offsetting schemes. They have been classified as both a “false solution” and a “death sentence”.

There is no doubt that Indigenous peoples must receive funding to further their vital work, but it should not be dictated by Western powers and it should not be used as permission to continue to pollute, Krishnan says. He highlights the Shandia Fund and Kawsak Sacha as examples of direct funding paths that could be an alternative to the currently flawed markets.

Offsets do nothing to decarbonise fashion’s value chain

Ultimately, our data suggests that offsets are serving as a distraction from the many actions brands can take to reduce emissions and decarbonise their own supply chains.

Depending on their size and control of their supply chain, the meaningful emissions reduction activities brands should consider include:

  • using renewable energy in their production facilities, not only in the head office;
  • undertaking production in close proximity to key consumer markets to reduce transport;
  • using lower-impact materials;
  • using more energy-efficient machinery;
  • educating consumers on lower-impact garment care;
  • and moving toward more circular, less carbon-intensive models.

It’s these kinds of specific actions brands can take in their own supply chains that Good On You recognises in rating fashion brands. “Our entire methodology is looking at the direct action a brand is doing to reduce its own impact,” explains Kristian Hardiman, head of ratings at Good On You. In this way, “it doesn’t make sense” to award brands for the vast majority of offsetting schemes that are promoted as they don’t directly lead to true emissions reductions in the value chain. That’s why brands that only choose offsets do not score highly for greenhouse gas reductions in the Good On You methodology.

“Of course, some emissions are unavoidable,” he continues. “But brands need to be taking action to address their reductions as the first priority, and right now, our data suggests that’s simply not happening at the scale and pace needed.”

Brands need to be taking action to address their reductions as the first priority, and right now, our ratings suggest that’s simply not happening at the scale and pace needed.

Kristian Hardiman – head of ratings at Good On You

While the experts continue to discuss the deeper problems, nature-based offsets remain in high demand. Unfortunately, the carbon offsetting market isn’t only confusing to consumers—many small and independent brands are targeted by predatory consultancies, which sell well-meaning brands on dubious offsets. As small brands often have less control and influence over their supply chains compared with larger brands, offsets can seem like a way to take action with the limited resources the brand may have access to.

“There’s a lot of people making money out of it. I’m not blaming all consultancies, but I do think there’s an issue with offering offsets as a first solution,” says Hardiman. “You get people thinking that they’re really, genuinely making a difference.”

Meanwhile, there’s one big number that continues to climb: the fashion industry’s estimated share of carbon emissions. Those emissions are only getting worse with fast fashion’s runaway overproduction.

Offsets will not save us from the climate crisis. It may sound obvious, but if fashion brands want to reduce their emissions, they need to actually reduce their emissions.

Editor's note

Feature and inset images via Canva. Good On You publishes the world’s most comprehensive ratings of fashion brands’ impact on people, the planet, and animals. Use our directory to search thousands of rated brands.

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