How does carbon offsetting work for companies?

In view of the advancing global climate crisis, more and more companies are committed to effective climate protection. This also applies to mobility. To this end, measures are being taken to avoid or reduce emissions in business operations. But what if emissions are unavoidable? CO2 offsetting can be used to compensate for these unavoidable emissions. We explain how this works.

Content

1. CO2 emissions in the mobility sector
2. What does CO2 offsetting mean?
3. Better to avoid and reduce than to compensate
4. How can you offset CO2?
5. CO2 compensation in companies as part of the sustainability strategy
6. How can companies directly promote CO2 savings?
7. The EU's Corporate Sustainability Reporting Directive (CSRD)
8. How CO2 compensation works with the NAVIT mobility budget

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CO2 emissions in the mobility sector

Transport is responsible for almost a quarter of total CO2 emissions in the European Union. Around 740 million tonnes of CO2 were emitted from road transport in the EU in 2021. Almost two thirds (64%) of this came from cars and motorbikes, about a quarter (27%) from trucks and buses and 10% from light commercial vehicles. 

Transport is the only sector in which greenhouse gas emissions have increased over the last three decades. Between 1990 and 2020, emissions rose by 33.5%. Savings through better engines and exhaust technology as well as through the use of alternative fuels (E10) were more than offset by an increasing volume of traffic and a rising share of highly motorised vehicles. 

However, in order to achieve the EU climate targets and climate neutrality by 2050 in accordance with the European Green Deal, transport-related greenhouse gas emissions would have to be reduced by a good 90% by 2050 compared to 1990.

This means that people's mobility is facing a fundamental change if the climate goals are to be achieved. Many cities and countries are already shaping the mobility transition and working on measures and infrastructure to encourage people to switch to sustainable forms of mobility.

However, it will not be easy to significantly reduce CO2 emissions in the transport sector, as the pace of emissions reduction has slowed. Current projections show that transport-related emissions will only fall by 22% by 2050, far short of current targets. Moreover, there will also be CO2 emissions from mobility that are unavoidable. This is where CO2 offsetting can provide support.

What does CO2 offsetting mean?

For the climate, it is not crucial where in the world emissions are emitted and where they are saved, as long as the bottom line is that CO2 emissions are reduced or avoided and the CO2 concentration in the atmosphere does not increase further.

In practice, however, this also means that in many cases not all emissions are always completely avoided. Even if all available climate protection measures are implemented to reduce the carbon footprint, unavoidable emissions often remain.

With the help of CO2 offsetting, companies can compensate for these unavoidable residual emissions by supporting climate protection projects elsewhere in the world.

Especially in areas where a substantial reduction of greenhouse gas emissions cannot be achieved in the short term with other measures, carbon offsetting can be an important instrument for corporate climate protection. Until new low-CO2 technologies or energy sources are developed, offsetting can be a pragmatic interim solution and make a quickly effective and efficient contribution to climate protection.

Better to avoid and reduce than to compensate

Basically, it is better if CO2 emissions are not created in the first place and if ways are found to reduce CO2 sources. If both possibilities are exhausted, it is helpful to compensate for the remaining emissions. The order of climate protection with regard to CO2 emissions is as follows:

1. Avoid
2. Reduce
3. Compensate

The most effective measure for climate protection is to avoid CO2 emissions. In the context of mobility, this can be realised above all by switching to climate-friendly means of transport such as walking and cycling as well as innovative technologies such as electrically powered vehicles.

The second most effective climate protection measure is to reduce CO2 emissions that cannot be avoided. This can be achieved through more efficient vehicles or by reducing fuel consumption. 

As a third and final measure, CO2 compensation can be resorted to should it no longer be possible to achieve the CO2 targets with the other two measures.

How can you offset CO2?

Companies first have the task of identifying and analysing their own climate impact on the basis of their carbon footprint and making it transparent as part of their ESG reporting. For the standardised recording of emissions, the Greenhouse Gas Protocol Corporate Standard (GHG Protocol) has established itself as an industry standard.

If the CO2 emissions have been successfully recorded, companies can offset this carbon footprint by purchasing CO2 certificates from climate protection projects.

These projects promote, for example, the reforestation of forests for the sequestration of CO2, the expansion of solar power or hydropower or climate-friendly and low-emission fuels.

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CO2 compensation in companies as part of the sustainability strategy

For the (still) unavoidable CO2 emissions in business operations, CO2 offsetting can be an effective instrument for corporate climate protection. However, CO2 offsetting should always be only one aspect of the company's holistic sustainability and climate protection strategy, which focuses on avoiding and reducing CO2 emissions.

How can companies directly promote CO2 savings?

It doesn't have to be CO2 compensation. Companies that want to make their company mobility more climate-friendly have various options for doing so. Here are a few examples:

• Promote sustainable employee mobility
• Offer hybrid work models and remote work
• Carpooling
• Avoid air travel for appointments
• Keeping external appointments by train
• Hold meetings online whenever possible

With our CO2 calculator you can easily and quickly calculate the CO2 emissions of your company's employee mobility and compare them with other parameters.

The EU's Corporate Sustainability Reporting Directive (CSRD)

With the new Corporate Sustainability Reporting Directive (CSRD), the EU will in future oblige many more companies than before to report on sustainability in their management reports.

It replaces the previously applicable Non-Financial Reporting Directive (NFRD) from 2014. The directive regulates the sustainability reporting of European companies. This means that not only the possible impacts that climate change is likely to have on the company must now be documented (outside-in perspective). 

Rather, the actual impacts that the company's business activities have on the environment and the climate must also be disclosed (inside-out perspective). This also applies to the area of operational mobility and employee mobility. Employee mobility is part of Scope 3 of corporate emissions, as it comes indirectly from a company's value chain. Other Scope 3 emissions can be business travel, leased equipment or waste disposal. However, Scope 3 emissions are the most difficult to reduce as they are the most difficult to collect data for.

The aim of the new directive is to increase transparency in the area of sustainability and climate protection. 

Find out how a mobility budget can help with the CO2 reporting obligation.

How CO2 compensation works with the NAVIT mobility budget

NAVIT supports companies of all sizes on their way to sustainable mobility management. A flexible mobility budget is the right incentive for employees to use climate-friendly means of transport in order to save CO2.

CO2 emissions that cannot be avoided are automatically compensated by NAVIT through the support of highly effective, certified projects for the reduction and avoidance of CO2.

1. With the NAVIT mobility budget, the CO2 emissions of all journeys can be compensated automatically
2. Via the apps of the mobility providers, the NAVIT mobility budget is used
3. The CO2 emissions of all journeys are accurately calculated and displayed using a TÜV-certified methodology (via our partner Squake)
4. Every gram of CO2 is automatically converted into a contribution to the chosen offset project
5. You can choose the right offset project for your company from a wide range of options and choose between avoiding or reducing CO2 emissions.
6. Each offset project supports specific UN Sustainable Development Goals (SDGs)
7. In this way, your company makes an active contribution to achieving the climate goals.

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