When discussing strategies to reduce climate impact, many companies face a common question: is it better to reduce their own emissions or offset them?
For those at the early stages of their ESG journey, terms like reduction and offsetting may seem similar or interchangeable. In reality, they refer to different yet complementary approaches: reducing means acting directly on company activities to decrease greenhouse gas emissions at the source, while offsetting involves balancing emissions by supporting external projects that remove or avoid an equivalent amount of CO₂.
In this article, we explain the meaning of each approach, their respective advantages and limitations, and how to combine them effectively within a corporate climate strategy.
What emission reduction means
Reducing emissions means tackling the issue at the source by decreasing the amount of greenhouse gases generated by human activities.
For a company, this means making processes more efficient, adopting lower-impact technologies, and implementing operational practices that reduce energy waste and reliance on fossil fuels.
An effective reduction path always begins with calculating the carbon footprint, which makes it possible to quantify an organisation’s greenhouse gas emissions and identify the most impactful activities.
A complete assessment considers the following "scopes", the categories used by the GHG Protocol to classify emissions:
- Scope 1: direct emissions generated by sources owned or controlled by the company (e.g., boilers, plants, company vehicles).
- Scope 2: indirect emissions related to the production of the energy purchased and consumed by the company (e.g., electricity, heat).
- Scope 3: all other indirect emissions along the value chain, both upstream and downstream (e.g., purchased goods and services, waste generated by operations, use and end-of-life of products sold).
Once the baseline is established, the collected data becomes the basis for developing a targeted decarbonisation plan. Actions may include switching to renewable energy, electrifying company transportation, choosing lower-impact raw materials, or collaborating with suppliers to reduce indirect emissions.
What carbon offsetting means
Carbon offsetting consists of actions aimed at neutralising the emissions a company cannot eliminate at the source.
In practice, it involves supporting external projects capable of reducing or absorbing an equivalent amount of greenhouse gases through the purchase of carbon credits.
Each credit represents one tonne of CO₂ equivalent avoided or removed from the atmosphere and can come from a variety of natural or technological projects—for example, reforestation and forest conservation, renewable energy production, or sustainable waste management.
For offsetting to be truly effective and transparent, it is essential to select credits derived from projects verified by independent bodies according to internationally recognised standards.
Carbon reduction vs offsetting: which is better?
Many companies—especially those in the early stages of their sustainability journey—ask themselves whether it is more convenient to focus on internal reduction or rely on offsetting. In reality, the two tools serve different yet complementary purposes.
Emission reduction is always the priority. It addresses the root causes of emissions, effectively lowering the company’s climate impact. At the same time, it generates operational and economic savings and strengthens corporate reputation.
Offsetting comes later, to neutralise the portion of emissions that cannot be eliminated internally. It is a useful tool but must be used responsibly. Relying solely on offsetting may create the impression that the company is “purchasing” its sustainability without addressing the causes of its emissions.
A credible strategy demonstrates that the company has first worked to reduce its emissions, and only then offset the residual share.
Driven by more ambitious climate goals, many companies are now setting net-zero targets. This involves drastically reducing emissions along the entire value chain until nearly all are eliminated. According to the standard developed by the Science Based Targets initiative (SBTi), a credible net-zero strategy requires at least a 90% internal reduction, leaving only the unavoidable residual emissions to be offset. This approach ensures that climate neutrality is not achieved by simply “buying credits” but through real transformation of company processes.
The most effective path for your company
In summary:
- reducing emissions is always beneficial, as it brings economic, operational, and reputational advantages and is the most concrete way to limit a company’s climate impact;
- offsetting is worthwhile when residual emissions have already been minimised, completing the decarbonisation journey responsibly.
However, turning these principles into concrete actions is not always simple. Reliable data, realistic targets, and an action plan aligned with available resources and intervention opportunities are essential.
This is where Kyklos Carbon can make the difference. We support you at every stage of the process: from calculating your carbon footprint to setting decarbonisation targets to choosing the most cost-effective interventions.
Contact us to build a tailored decarbonisation pathway for your company.
Carbon reduction vs offsetting: what’s the difference?