FAQ: HOW COMPANIES CAN SUPPORT EXTERNAL CLIMATE ACTION

The document argues that the traditional carbon offsetting model is fundamentally flawed and misleading, urging companies to adopt Beyond Value Chain Mitigation (BVCM). Unlike offsetting, which claims to 'cancel out' emissions, BVCM involves supporting external climate projects as a contribution to global goals without claiming carbon neutrality. The guide outlines the legal and reputational risks of offsetting—including a September 2026 EU ban on product-level offsetting claims—and provides a five-step implementation framework for BVCM. It suggests diversifying contributions beyond carbon credits into durable carbon removals (CDR), 'high-hanging fruit' technology research, and climate impact funds, while emphasizing that external action must not replace internal decarbonization aligned with a 1.5°C trajectory.

• Carbon offsetting is based on the flawed premise that one credit can reliably cancel out one tonne of CO2, a claim unsupported by evidence; one study found that less than 16% of credits from over 2,000 projects represented actual emission reductions.
• The European Union will implement a ban on product-level offsetting claims, such as 'carbon neutral' or 'climate neutral' logos for goods and services, starting in September 2026.
• Beyond Value Chain Mitigation (BVCM) differs from offsetting by supporting external mitigation without claiming to counterbalance the company's own emissions. It can utilize 'money-for-tonne' (internal carbon pricing) or 'money-for-money' (percentage of revenue) approaches rather than 'tonne-for-tonne' logic.
• Consumer surveys in the UK, Germany, and the Netherlands indicate that 'carbon neutral' claims are either misunderstood or viewed with skepticism, often leading consumers to feel misled when the role of offsetting is revealed.
• To implement BVCM, companies should follow a five-step process: calculate and disclose GHG footprints (Scopes 1, 2, and 3), determine a budget for external action, perform due diligence to select a portfolio of impactful initiatives, finance those initiatives, and communicate these steps while keeping them separate from internal decarbonization.
• Companies are encouraged to diversify their BVCM portfolios beyond carbon credits to include durable carbon removals (CDR) for long-cycle emissions, 'high-hanging fruit' initiatives (hard-to-abate technologies), and climate impact funds.
• External climate contributions must not replace internal decarbonization; companies must maintain science-based targets aligned with a 1.5°C trajectory and disclose the financial resources dedicated to in-house mitigation.

APA

Nilles, L. O., Mair, G., & Zawieracz, M. (2026). FAQ: HOW COMPANIES CAN SUPPORT EXTERNAL CLIMATE ACTION. Carbon Market Watch. https://carbonmarketwatch.org/wp-content/uploads/2026/05/2026-05_-FAQ_-HOW-COMPANIES-CAN-SUPPORT-EXTERNAL-CLIMATE-ACTION.pdf

Chicago

Nilles, Lindsay Otis, Gavin Mair, and Magdalena Zawieracz. FAQ: HOW COMPANIES CAN SUPPORT EXTERNAL CLIMATE ACTION. Carbon Market Watch, 2026. https://carbonmarketwatch.org/wp-content/uploads/2026/05/2026-05_-FAQ_-HOW-COMPANIES-CAN-SUPPORT-EXTERNAL-CLIMATE-ACTION.pdf.

Wikipedia

{{cite report |last1=Nilles |first1=Lindsay Otis |last2=Mair |first2=Gavin |last3=Zawieracz |first3=Magdalena |title=FAQ: HOW COMPANIES CAN SUPPORT EXTERNAL CLIMATE ACTION |publisher=Carbon Market Watch |date=May 2026 |url=https://carbonmarketwatch.org/wp-content/uploads/2026/05/2026-05_-FAQ_-HOW-COMPANIES-CAN-SUPPORT-EXTERNAL-CLIMATE-ACTION.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{nilles2026faq, author = {Nilles, Lindsay Otis and Mair, Gavin and Zawieracz, Magdalena}, title = {{FAQ: HOW COMPANIES CAN SUPPORT EXTERNAL CLIMATE ACTION}}, institution = {Carbon Market Watch}, year = {2026}, month = may, url = {https://carbonmarketwatch.org/wp-content/uploads/2026/05/2026-05_-FAQ_-HOW-COMPANIES-CAN-SUPPORT-EXTERNAL-CLIMATE-ACTION.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }