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‘Carbon Neutral’ Claims That Rely on Offsets Face UK Ban

Advertising watchdog to begin stricter enforcement on use of terms such as ‘carbon neutral’ amid concerns over offsets.
Emissions from a factory.
Advertising watchdog to begin stricter enforcement on use of terms such as ‘carbon neutral’ amid concerns over offsets. (Shutterstock)

Key insights

  • The UK's advertising watchdog is set to crackdown on terms like "carbon neutral" and "net zero" amid concerns over the integrity of carbon offsetting programmes.
  • Companies including Gucci have been caught in a controversy over whether leading offsetting schemes are having the impact they claim.
  • Under its plans, the UK's Advertising Standards Agency will ban environmental claims based on offsetting unless companies can prove they really work.

Adverts that claim products are carbon neutral using offsets are to be banned by the UK’s advertising watchdog unless companies can prove they really work, the Guardian can reveal, as Gucci becomes the latest company to struggle with a high-profile environmental commitment based on offsetting.

Amid growing concern that firms are misleading consumers about the environmental impact of their products, the Advertising Standards Authority’s (ASA) is to begin stricter enforcement around the use of terms such as “carbon neutral”, “net zero” and “nature positive” as part of a greenwashing crackdown later this year after a six-month review.

Under the plans, the ASA will take action against firms that tell consumers they can buy their products without making global heating or nature loss worse by virtue of purchasing offsets – unless they can demonstrate they really are effective. The move follows recent enforcement by the ASA against Lufthansa and Etihad about green claims. Companies will still be allowed to talk about their sustainability efforts, the Guardian understands.

In January, a joint Guardian investigation found that many rainforest offsets certified by Verra, which operates the world’s leading carbon standard, had little impact despite being widely used by major companies for environmental claims, also finding evidence of forced evictions at a flagship project in Peru used by Disney and Apple. The findings were strongly disputed by Verra.

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While halting deforestation and protecting ecosystems is urgently required to limit global heating and biodiversity loss, analysis of scientific research into the rainforest projects found that most either stopped no forest loss or had dramatically overstated their impact approved by Verra’s system. Last month, a report by the carbon credit rating agency Calyx Global echoed the concerns about the environmental integrity of the credits, although other organisations have a more positive view.

Scientists have called for the unregulated system to be urgently reformed to finance climate mitigation and forest conservation, and Verra is in the process of launching a new methodology for certifying rainforest carbon credits. Amid concerns about credibility, companies are increasingly being encouraged to say they are making climate contributions when purchasing carbon credits instead of claiming they have offset their emissions.

The carbon market data firm AlliedOffsets monitors offset purchasing data for the $2bn (£1.6bn) market, recording several major purchases by leading companies.

Gucci, Italy’s most valuable luxury brand, with revenues of €10.5bn in 2022, which announced it had become “entirely carbon neutral” in 2019 in part using Verra’s rainforest offsets, has deleted the claim from its website and said it was no longer working with South Pole, the Swiss carbon credit consultancy it partnered with on the commitment.

“At Gucci, we are regularly reviewing our environmental claims in order to uphold the best science-based standards, as well as align with the global regulatory framework,” a spokesperson said. “Since setting our carbon neutral goal in 2018, our strategy has evolved progressively and now encompasses a nature-positive approach, including protecting and restoring biodiversity, investing in regenerative agriculture and supporting local communities,” it added.

South Pole said climate neutrality claims had sometimes been misunderstood or misappropriated by companies, and said it stood against greenwashing, and had developed a stakeholder consolation about climate claims. It is consulting its clients on what should constitute a Paris-aligned corporate claim.

In September, the airline easyJet announced it would stop offsetting carbon emissions from its planes, having previously used Verra’s rainforest offsets to claim its flights were “carbon neutral”, while the US airline JetBlue has also moved away from offsetting.

Apple, which became the first company in the reach a $3tn market value last year and bought Verra rainforest offsets for its corporate carbon neutrality claim in 2022, said offsetting was just one part of its efforts alongside aggressive emission reductions and expanding renewable energy usage. It said nature-based offsets remained a part of its plans to make Apple products carbon neutral by the end of this decade.

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Major oil companies are some of the biggest buyers of carbon offsets to help meet their climate pledges while continuing to invest in fossil fuels. The Guardian revealed earlier this year that Shell, which is a major buyer of Verra carbon credits, has set aside more than $450m (£367m) to invest in “nature-based solutions”, which include carbon offsetting projects.

A spokesperson for the oil company told the Guardian that although the carbon market “may not be perfectly functioning everywhere yet” it is still “an important enabler of emissions reduction”. It added that the market’s “imperfections” should not be “an excuse to disregard this viable and additional decarbonisation lever.”

Shell said it disagreed with the analysis into Verra’s standards and was clear that all carbon offsetting should offer a “robust carbon benefit” by using “credible and independent standards”.

Italy’s state-owned oil company, Eni, another major buyer of Verra-certified credits, told the Guardian that all its carbon offset credits were subject to due diligence based on “the highest control standards.” The company expects to continue using carbon offsets to meet 5 percent of the emissions reductions it plans to make in order to be net zero by 2050.

BP has a business division dedicated to sourcing and trading carbon offset permits, including Verra-certified credits, some of which it has sold alongside cargos of liquified natural gas.

The oil company has said that the “bundled carbon offset” product could help customers to meet their sustainability targets, but it does not refer to the offering as carbon neutral. BP has also said that it will not use carbon offsets to meet its own net zero targets.

A BP spokesperson said the company was “actively participating in various initiatives focused on strengthening the quality of the voluntary carbon market.”

“While we support the ability of companies to use carbon credits, especially to help address hard-to-abate emissions, BP has not purchased carbon credits for the purpose of meeting our net zero aims,” the spokesperson added.

By Ellen Ormesher, Patrick Greenfield and Jillian Ambrose

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