Carbon offsets: A necessary tool, but only under close scrutiny and precise conditions

  • 14 September 2021 (10 min read)

Key highlights

  • To meet the Paris Agreement net zero goals, both emissions reductions and carbon offsetting will play a critical role in delivering a manageable transition.
  • Reaching net zero will require a vast amount of innovation, policy measures, technological deployment, infrastructure and international co-operation, all of which will take time. An IEA report has set out more than 400 milestones, spanning all sectors and technologies, to mark the path to net zero
  • If strategies tackling emissions reduction need to be implemented right now, in the short term, and until new technologies are massively deployed, carbon offsetting will prove unavoidable, especially in the hard-to-abate sectors.
  • Carbon offsetting has faced accusations that it amounts to ‘greenwashing’ by allowing, even incentivising, companies to avoid actually reducing their emissions. It has been rightly criticised when used by highly polluting companies with no clear strategy or plan to reduce their emissions or cut production of profitable polluting product lines
  • This paper gives an overview of the main areas where scrutiny should apply, to ensure that carbon reduction by offsetting is verified, enforced, permanent and additional.
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    Due to its simplification, this publication is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this publication is provided based on our state of knowledge at the time of creation of this publication. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

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    Disclaimer

    This website is published by AXA Investment Managers Asia (Singapore) Ltd. (Registration No. 199001714W) for general circulation and informational purposes only. It does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities. It has been prepared without taking into account the specific personal circumstances, investment objectives, financial situation or particular needs of any particular person and may be subject to change without notice. Please consult your financial or other professional advisers before making any investment decision.

    Due to its simplification, this publication is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this publication is provided based on our state of knowledge at the time of creation of this publication. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

    All investment involves risk, including the loss of capital. The value of investments and the income from them can fluctuate and investors may not get back the amount originally invested.

    Some of the Services and/or products may not be available for offer to retail investors.

    This publication has not been reviewed by the Monetary Authority of Singapore.