Carbon Reduction vs Offsetting: Our Guide

Carbon Reduction vs Offsetting: A Quick Overview

Sustainability is full of buzzwords, technical language, and confusing trade-offs - and nowhere is that truer than in the debate between carbon reduction and carbon offsetting. Many businesses want to do the right thing but find themselves overwhelmed or misled by conflicting advice. Should you cut emissions internally? Buy offsets? Do both?

The truth is: doing both is great - but you should do them in the right order, and with a clear strategy.

Here’s a simple way to think about it:

Carbon Reduction = Reducing the emissions your business is directly or indirectly responsible for.
Carbon Offsetting = Paying for emissions to be reduced or removed elsewhere, to compensate for your own.

Let’s unpack what each of these involves - and how to use both in a smart, credible way to tackle your climate impact.

Carbon Reduction: Cutting Your Own Emissions

Carbon reduction means taking action to lower the amount of greenhouse gases your business produces. That includes direct emissions from things like company vehicles and buildings (known as Scope 1), as well as indirect emissions like purchased electricity (Scope 2), and finally emissions from your supply chain and products (Scope 3) - read more about these sources here.

In essence, carbon reduction is about owning your footprint and reducing it at the source.

Why Does Carbon Reduction Matter?

This is the most impactful, long-term way to drive change. Reducing your own emissions directly leads to less pollution in the atmosphere.

More importantly, reduction is the foundation of any serious climate strategy. Offsets can play a role - but only after you’ve tackled your own house first.

How Do You Go About Reducing Your Emissions?

1. Measure Your Carbon Footprint

You can’t reduce what you don’t know. Start by calculating your current emissions using a recognised framework like the GHG Protocol. This gives you visibility into hotspots—areas of your business that produce the most carbon.

2. Identify and Implement Reduction Initiatives

Once you know where your emissions come from, you can begin making changes. This could involve:

Switching to renewable electricity
Upgrading to energy-efficient equipment
Reducing business travel or switching to electric vehicles
Engaging suppliers to reduce emissions in your value chain
Cutting waste, especially food or packaging

3. Track Progress Over Time

Measurement shouldn’t be a one-off. Regularly reviewing your emissions helps you track the impact of your initiatives, set new goals, and keep improving.

How Do You Know If You’re Being Ambitious Enough?

Set reduction targets in line with the Science Based Targets initiative (SBTi). This framework helps businesses ensure their targets are aligned with what climate science says is needed to limit global warming to 1.5°C.

Once targets are set, report progress transparently. This helps build credibility and makes it easier to communicate your efforts to stakeholders, customers, and employees.

What Is Carbon Offsetting?

Carbon offsetting means compensating for your emissions by funding projects that reduce or remove carbon elsewhere.

For example, you might support:

Renewable energy projects in developing countries
Reforestation or forest protection initiatives
Methane capture from landfill
Clean cookstoves that reduce wood-burning

The idea is to “balance out” your unavoidable emissions by making an equivalent positive impact elsewhere.

How Does It Work?

1. Measure Your Emissions

Just like with reduction, you should know your baseline before you decide on any figure to "offset". Your footprint often defines how many tonnes of CO₂ you may want to offset.

2. Offset Emissions

Once you know your emissions - say, 500 tonnes per year - you can purchase high-quality carbon credits that represent 500 tonnes of carbon reduced or removed elsewhere.

Do You Need to Offset Everything?

Technically, no. There’s no rule that says you must offset 100% of your emissions. Some businesses choose to offset more to become “carbon negative,” while others offset only a portion.

However, using your emissions as a benchmark helps ensure your contribution is proportionate to your impact. It also makes your claims (e.g., “carbon neutral”) easier to verify.

How Do You Offset Credibly?

Not all offsets are created equal. To ensure your money is making a real difference, use accreditation schemes. Reputable standards like Gold Standard verify projects and ensure integrity.

What are they looking for when the verify projects? Here are the key principles for what makes a robust offsetting project:

Additionality: The project wouldn’t have happened without your funding.
Permanence: The carbon stays out of the atmosphere for the long term.
No double counting: Only one organisation can claim each offset.
Measurable and verified: Projects are audited to confirm real impact.

These principles ensure that your investment delivers genuine, lasting carbon benefits.

Carbon Reduction vs Offsetting: What’s Better?

If you’re choosing between reduction and offsetting, reduction always comes first.

Why? Because reducing emissions at the source has a direct and lasting impact. It also helps shift systems - like energy, transport, and materials - toward a low-carbon future.

Offsetting is still useful, especially for emissions you can’t avoid yet. But increasingly, regulations and standards require both. For example:

‍ISO 14068 (Carbon Neutrality Standard) requires internal reductions as a precondition for credible offsetting.
The SBTi Net Zero Standard mandates deep reductions of at least 90% before offsetting residual emissions.

So it’s not a case of “offset or reduce” -the best approach is “reduce first, then offset responsibly.”