How to offset carbon emissions: a step-by-step guide

Climate change is one of the most pressing challenges facing organizations today. With over half of global emissions coming from just 36 companies, the corporate sector has a massive role – and responsibility – in reversing climate damage.

It's no surprise, then, that concern is growing at the leadership level: in 2023, 67% of business leaders expressed deep concern about climate change, according to Deloitte.

For many businesses, learning how to offset carbon emissions is a critical first step toward sustainability. Whether you're just starting or looking to improve your approach, this guide walks you through every stage from calculating your footprint to compensating carbon emissions.

3 steps to compensate your carbon emissions

To take meaningful climate action, companies need to follow a clear path: measure emissions, reduce them wherever possible, and then compensate what remains through credible climate projects.

1. Calculate your carbon emissions

The first step is to measure your emissions. This involves understanding and categorizing your emissions according to the Greenhouse Gas (GHG) Protocol, which classifies emissions into three distinct scopes:

• Scope 1: Direct emissions

Emissions from sources that your organization owns or controls. Examples include emissions from company vehicles, on-site fuel combustion, and industrial processes.

• Scope 2: Indirect energy emissions

Emissions from the generation of electricity, steam, heating, and cooling your organization purchases and consumes. While the energy is produced off-site, its consumption is within your operations.

• Scope 3: Other indirect emissions

All other indirect emissions that occur in your value chain, both upstream and downstream. Examples include emissions from purchased goods and services, business travel, employee commuting, waste disposal, and the use of sold products.  

Accurate accounting across all three scopes is crucial for a comprehensive view of your carbon footprint. Many tools are available for carbon footprinting, ranging from free calculators to more advanced enterprise-level software.

2. Identify opportunities to reduce carbon emissions

Offsetting is important, but reduction always comes first. Establishing clear, science-based targets ensures that your organization aligns with global efforts to mitigate climate change.

Follow the Science-Based Targets Initiative (SBTi):

The SBTi provides a framework for companies to set GHG emission reduction targets backed by the latest climate science. Key components include:

• Near-term targets: Set 5–10 year goals to significantly cut Scope 1, 2, and 3 emissions — aiming to halve them by 2030.

• Long-term targets: Commit to reducing emissions by at least 90% across all scopes by 2050, using permanent carbon removal to neutralise any residual emissions.

Working within the SBTi framework adds rigour and credibility to your emission reduction efforts.

3. Select a climate project or portfolio

After implementing all feasible internal emission reductions, the next step is to compensate carbon emissions through high-quality, verified offset projects.

According to the Voluntary Carbon Markets Integrity Initiative (VCMI), credible use of carbon credits should complement, not replace, direct emission reductions.

The VCMI Claims Code of Practice stipulates that companies must:

• Set and publicly disclose science-based near-term emission reduction targets

• Commit to net-zero by 2050

• Purchase high-quality carbon credits from outside their value chain

To ensure the integrity of carbon credits, the Integrity Council for the Voluntary Carbon Market has established the Core Carbon Principles , which define high-quality carbon credits as those that are:

• Additional: Emissions reductions or removals would not have occurred without the carbon credit revenue

• Permanent: Their impact lasts long-term durability 

• Exclusive: The same emission reduction is not claimed by multiple entities

• Quantifiable: Based on robust, verifiable data

• Co-beneficial: Supporting broader environmental and social goals

For a closer look at how carbon credits can fit into a broader sustainability strategy, check out our blog post on how to incorporate carbon credits effectively.

Start compensating your carbon emissions with Cawa

Sourcing and verifying carbon credits on your own is time-consuming and hard to navigate. You need to find trustworthy projects, ensure they meet strict standards, and track everything for compliance.

Cawa makes it simple. We offer direct access to high-quality carbon removal projects (like afforestation, biochar, and direct air capture) vetted against standards like Verra, Gold Standard, and Puro.earth. You get full traceability, CSRD-ready data, and the option to integrate offsetting into your workflows via API.

Want help getting started? Schedule a call and speak to one of our experts.

Frequently asked questions about carbon offsetting

What is carbon offsetting?

Carbon offsetting is the practice of compensating for your emissions by funding activities that reduce or remove carbon from the atmosphere, such as planting trees or investing in a biochar project.

It’s not a silver bullet, but when combined with internal reduction efforts, it’s a powerful step toward net-zero.

What is the difference between carbon offsets and carbon credits?

Carbon offsets refer to actions or projects that reduce carbon elsewhere.

Carbon credits are the certified units representing these reductions – typically one tonne of CO₂ per credit. Credits can be purchased and retired to balance your own emissions footprint.

What are the benefits of carbon offsetting?

Carbon offsetting helps organizations:

• Meet ESG and climate goals

• Build a trusted brand

• Achieve a competitive differentiation in your industry