E - Environmental (Carbon, Energy, Resources, Climate) 5 min read

What is Carbon Offsets? Definition and Context

Credibility Check & Framework Comparison

To ensure absolute regulatory accuracy and reliability, we verify definitions across leading international frameworks before presenting our synthesized SME context.

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IPCC

"A reduction in emissions of greenhouse gases, or an increase in carbon storage, used to compensate for emissions occurring elsewhere."
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SBTi

"Carbon credits generated by projects outside a company's value chain, which are not counted towards a company's absolute reduction targets but can fund extra mitigation."
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GHG Protocol

"Credits representing verified emission reductions or removals, which must be tracked and reported separately from Scope 1, 2, and 3 inventories."

ExecutESG Consolidated Definition

Carbon Offsets

Carbon offsets (or carbon credits) are certificates representing the reduction, avoidance, or removal of one metric tonne of carbon dioxide equivalent (tCO2e) from the atmosphere, achieved by an external project (e.g., reforestation, methane capture, solar installations).

Key Rules under ESG Frameworks:

  • Offsets must not replace internal reduction actions (companies must reduce emissions first).
  • Under CSRD/ESRS, offsets must be reported separately and cannot be subtracted from absolute Scope 1-3 inventories.
  • Credits must be verified by recognized standards (Gold Standard, Verra VCS).

SME Relevance & B2B Inbound Action:

SMEs can utilize offsets to achieve voluntary carbon neutrality goals. However, to satisfy supply chain compliance, you must focus on physical footprint reductions. Log your reduction activities and offset certificates securely inside Aura Act.

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