Offsetting is mitigating your impact on the climate by paying for someone else to reduce emissions elsewhere.

There’s a debate about whether paying for carbon offsets is ‘cheating’. This argument states that offsetting is just continuing to pollute while at the same time absolving yourself of the moral responsibility to change your behaviour.

On the other hand, many companies feel that it’s a valid part of an environmental or CSR strategy – as long as it only forms part of the package. To make a serious and lasting impact it is imperative to focus inwards and look at reducing your carbon emissions before turning to offsetting.

The majority of offsets work by investing in projects in developing countries, such as tree planting or renewable energy. The projects reduce emissions there, which ‘offsets’ the emissions you can’t avoid here.

But experts are concerned about the lack of certainty that the promised reductions really do happen. Even the World Bank, which usually trips over itself to support investment in the developing world, says, “Rarely does ‘a ton is a ton is a ton’ hold less true than in this segment”. It’s also hard to know whether the project would have gone ahead even without the offset payment, and therefore whether it’s your cash making the difference.

One way of tackling these problems is to go for offsets that have been accredited. Difficulties then arise when you realise there is an array of standards and you’re choosing between standards rather than offset providers.

A good place to start is the recently released Department for Energy and Climate Change quality assurance scheme for carbon offsetting. This scheme accredits project-based offsets that have been approved by the UN’s Clean Development Mechanism, and those that are based on retiring cap-and-trade credits.

Which brings us onto a new type of carbon offsetting that is creating a stir in the markets. Instead of investing in projects, this form of offsetting intervenes in the EU Emissions Trading Scheme.

This method works by buying and cancelling (or ‘retiring’) allowances from the EU Emissions Trading Scheme. Each allowance is a permit for a polluting company to release one tonne of carbon dioxide. Retiring an allowance depletes the already stretched supply, reducing the total volume of emissions and forcing investment in low carbon technology in Europe.

What is your organisation's approach to carbon offsetting? How far should companies go to reduce their emissions before looking at offsetting as an option? What are you looking for when you buy a carbon offset?