The current resistance towards voluntary carbon offsets around the world is a very privileged view that needs to change. Carbon markets often provide incentives and financing for the most downtrodden and the first responders to climate change. There are countries in the global south, who desperately need this last mile finance, finance that is not a debt, grant, or equity, a form of capital that derives itself from a business taking responsibility for their emissions voluntarily (not compensation, as this is often touted as, wrongly so in my opinion) as opposed to doing nothing. We do not yet live in a perfect world, which means that the transition to zero-emission choices is going to take time.

I argue that companies in the developed world should not necessarily only reduce first, but have a 50/50 approach of internal reductions and offsets for climate action outside their boundary, so the global south can transition to clean faster and in a more equitable and cost-effective manner. For the Paris purists, this would represent a version of CBDR (common but differentiated responsibilities) and L&D (loss & damage) to be addressed by the private sector.

A sustainability head of a company rises to the microphone at a conference the other day and proclaims to the world that they intend to reach net zero by 2040 without using carbon offsets, with a clear emphasis on ‘without offsets’. The audience breaks into one clap to the other to almost a standing ovation. I am left speechless as I wonder what happens between now and 2040 and how nobody seems to be bothered about that. Expecting this of course, as the crowd comprised of a few many woke people who had been fed the offsets greenwashing story with everybody touting offsets as a license to pollute, while the ones who don’t do anything about the climate are in the clear. Damned if you do, great if you don’t seem to be the way to go and what kind of voluntary offset greenwashing has indeed swayed public opinion, really, ever. BP can go ahead and voluntarily offset its way to Timbuktu and back, public opinion will not change about their oil spills, and rightly so. Again the word ‘voluntary’ people, don’t ‘have to’ offset. It’s the difference between doing something about your emissions (not perfect but good) and not doing anything at all (which seems to be the way to go). Oh, maybe a small donation to a very reputed international NGO, with your CEO going in for a photo op somewhere in Africa would do the job (whoever said that was greenwashing).

And even if all these companies and lets for argument’s sake say all of them manage to reach a complete net-zero state, and heck even historic carbon neutral without offsets, this doesn’t make a dent even in the lives of all those people in the global south, the ones who are first responders to climate change and so desperately need a sustainable growth path. As much as I agree that we need to reduce, we need to reduce and remove in the right places with the priority to the people at the forefront of this. And reduction within one’s boundary does not necessarily happen in one day, it takes years and decades often as technology and underlying costs evolve. Most people severely impacted by the climate do not have that kind of time.

I am not even a big believer on reduce on our own and only residual emissions to be offset anymore, because it ends up delaying climate action where it is most needed. It has to be a combination approach of equal measures.

I think the priority should be to address the responders. A lot of think tanks in the western world who ask us to follow science, often forget about the social sciences of this catastrophic problem. The science is not only about the 1.5 degrees, there is a science on mitigation finance being used as adaption building for the millions in the global south and as well as cost-effectiveness of mitigation spending. God knows we need every dollar we can spare. So a very ambitious 80$ a ton science-based carbon price by a company means absolutely nothing to me or any of the communities we work with. Nothing. Give us a fraction of that price and you will see the magic happening with quadruple the climate impact.

Public climate finance has been a sham. The 100Bn$ fund a year commitment remains a pipe dream. Heck, they even counted loans as climate finance. I do not see John Oliver doing a show on that scam. The adaptation fund, a fraction of what was promised has been realized so far from that one. The green climate fund, well, you need to go through a 2–3 year readiness program just to apply for that fund–just to apply. Let us now see how much is pledged for ‘loss and damage’ and how much is paid. Also, the essential point here is that governments are the only ones who will access this money. There is an urgent need for communities to access benefits directly and that’s the gap the voluntary carbon markets fill.

Please don’t get me wrong. I don’t think the voluntary carbon system is perfect. Many loopholes and scams are going on. But on the other hand, there is so much good work being done by so many innovative players and grassroots-level organizations as well. It is undeniably an evolving space with its shortcomings but the concept itself has a lot of merits. And I have seen this first hand. We work with millions of smallholder farmers in south Asia, farmers whose entire year’s income is less than 300$. We help create value chains for them (warehousing, access to credit, market linkages). We work with gender programs with indigenous communities in the region, where women who are traditionally kept out of the mainstream are forming self-help groups and their micro-credit programs. And we are not the only ones doing this. There are hundreds of organizations in Asia, Africa, and Latin America striving every day to work with these climate first responders. There is access to electricity, access to clean drinking water, clean cooking, sustainable agriculture, indigenous forests, and a whole lot of new tech being worked on, enabled by carbon finance. And this is all audited, science-based with years of research and expertise behind it. How do I explain to a kid in a refugee camp who has seen lights in his shanty for the first time in his life, that the offsetting sale that financed his light and the solar panel, is often touted by educated people in the west as greenwashing. We are often told to downplay our funding sources as being mainly through the sale of offsets, but lately, we wear that as a badge of what outcomes are possible from this otherwise non-existent source of finance for people like us and the hundreds of non-profits and social innovators we support. These same organizations would otherwise be out there with a begging bowl to philanthropy and or governments (with their due fees to intermediary donors or payments to corrupt government institutions).

The equation of the donor and the done in most cases is cringe-worthy. The way most social organizations in the global south are treated by bilateral and foundations from the west is nothing short of condescending, and half of the money anyway goes back to western consultancies and organizations, and another quarter goes into events, high-paid ex-pat staff and business class travel (eyes rolling). And here we could have any local organization with the right intent and project, and one that can hold its own in a business transaction with a counterparty, resulting in completely different power structures and if I may a lot more result based than normal grant funding. While everybody is jumping up and down about public climate finance, it has to be acknowledged that kind of money is an absolute drop in the ocean and takes years to trickle down to those who need it the most. The World Bank gives loans to governments. Large donors give money to large International NGOs. Who gives value directly to people on the ground and makes entrepreneurs out of them, hardly anyone.

And more effective money might I add. The results expected out of a carbon finance project, because it is transactional in one sense with delivery commitments, makes it a much more result-oriented project than any of the above, with legal recourses, again something that is practically non-existent in other forms of development finance. No cost extension anyone? Carbon projects are long-term with sustainability budgets built into programs, much needed for real impact. How many times have we heard of development projects fizzling out after the first couple of years for lack of finance. On the contrary, some land use carbon programs are designed for 30 years or more! this is how you ensure impact.

Carbon finance forms the basis for science-based climate action and not just arbitrary philanthropic action. For example, a company that asked me to help out with their climate strategy, they were very proud of the fact that they were planting half a million trees every year. Question 1 to them, how many of those 500,000 you had planted 4 years back are still alive and growing well, and do you know who has land titles to the land you planted on – they dint know? Question 2, what are these 500,000 trees about your scope 1 and 2 emissions, they didn’t know: turns out these guys need to plant almost 20 million trees in the next 2 years to account for the scope 1 and 2 emissions for the next five years alone! even after they met their internal reduction target of 20%. A budget that now needs to come out of their CFO’s office, not their marketing office. In other words, they need to restore an entire ecosystem and maintain that ecosystem for the next twenty years.

Unheard of initiatives for the sustainability world immersed in perception-based CSR and I acknowledge the issues, offsetting is not the only solution to climate change, it can potentially have negative impacts on ecosystems without due safeguards, can lead to a change of commercial agrarian structures, there is a lack of financial transparency, issues with neo-colonialism, etc., we know of these issues and worry about them too and so do the standards, yes the standards, something that is lost in the mainstream discourse on voluntary offsets. These projects follow rigorous eligibility tests, and methodologies reviewed by standards, are audited by 3rd parties every year and have information open for the public, more transparent and rigorous than most other development projects, and I have seen loads of them in my 20 years in this sector.

Also, someone reducing at 50$ a tonne in the developed world versus that 50$ a tonne being used by someone else in the global south to frog leap the energy mix, the same energy mix you are trying to reduce your footprint from, is more effective. Period. Developed countries will clean up their grid faster, so your energy reduction initiative now in Europe compared to doing it somewhere else whose grid will take 60 years or more to transition, counts for much more climate action.

Let’s not forget, climate change is a global problem. It’s not your problem or mine.

It is quite nauseating to see the global north academia, media, think tanks, and politicians all ganging up on offsets. People are sitting on their high horses in Berlin, Zurich, New York, or London deciding on whether or not indigenous communities in the hinterlands of sub-Saharan Africa should have access to much-deserved finance. Communities who face the brunt of climate change, for no fault of theirs. So much so, that even civil society in the global south has been fed this story of offsets is a ‘no-go’ in some way. These are the same organizations that want governments to pay for loss and damage. But have a problem when the same is asked of private companies in the west. Are loss and damage pay-outs a license to pollute for western governments? Would you still hold them accountable to their NDCs, of course, you will. Then why are offsets different? ‘Polluters pay’ is what I see in a lot of climate banners, then why are we screaming off the rooftops when they are indeed being made to pay. Should we still campaign for higher transparency on emissions, of course, we should. Should companies be held to high standards of internal abatements, of course, they should. But for climate action to be just, this internal abatement should be simultaneous to offsets and not just for the residual part. My take – An equal split between internal abatement and offsets is what is ideal for global climate action climate justice and a just transition.

The internal abatement can be accelerated by the use of jurisdictional ETS systems (compliance carbon markets, your actual license to pollute credits) or a carbon tax, but with high prices/costs which incentivizes immediate abatements. In this instance, I would rather have companies hit their net zero a few years later down the line, as they would have easily tripled or more the mitigation outcomes basis this combination strategy. Add to that all the social co benefits that leads to more ‘just’ climate action.

The resultant decarbonization graph that you would see then would be a much more ‘just’ one, faster in achieving tangible climate impact and more economic if I might add.

There are scams everywhere. The stock markets haven’t shut down because there were and are scams every other day. Yes there’s a lot more carbon markets can do to increase the trust in the markets but it’s so difficult to start making that nuanced discussion mainstream, as offsetting is immediately touted as green washing, and the discussion becomes a nonstarter. Discussions about issues of additionality, carbon estimations, benefit sharing, forest fires and buffer pools are essential – but I like I said, that’s a non-starter.

There are so many instances of new market participants, corporates trying to understand the use of the mechanism but shy away at the end citing reputational risks. It’s better to do nothing than go for offsetting they say. Not the right approach at all, offsetting should be at the forefront of climate finance and mitigation methods, of course not the only way but one of the major ways. This typical western outlook of looking inwards and then asking everyone else to look inwards is not a solution. The Paris agreement was celebrated by everyone, because the west rejoiced in the fact that’s it’s not only them who have to reduce, but everyone else, great! But we are still left with some of that loss and damage and common but differentiated responsibilities out there. And while governments do not care much about these anymore, why not allow well-meaning business to go down that route?

As we all know, with all that’s going on with the climate problem, the planet will be fine. It’s life as we know (and not just human life) who are the losers here. And the first responders need the first ‘reach out’. And I am sorry, that is not going to come only from governments or multilaterals or donors.

I am imploring all organizations, civil, government and private to take the pain of understanding this space a bit more, maybe physically visit a project or two, and then firm up their opinion on offsets. Your opinion matters, it matters to the millions in the global south, our true first responders, who do not have much else to hang on to.

P.S Am not a big fan of individual action with regards to carbon credits. I think that narrative is wrong, it’s for businesses to provide us clean energy and recyclable products and not leave the onus on us. So unless you have the wherewithal to understand the project you are offsetting from (again not treat the carbon credit as a compensation, but as a responsibility), I would suggest you stick to pressuring the businesses to do their bit. Too much is now on the individual. So offsetting your flight travel is not something I would be a big fan until you know where and how your money is being spent. Then its up to you if you want to take that responsibility or not or better still fly less till they have it sorted on Sustainable Aviation Fuel.
Sandeep Roy Choudhury is co-founder of VNV Advisory Services, a social enterprise working with climate-vulnerable communities in Asia & Africa.