Business, finance & everyday decisions
Carbon Credits and Greenwashing: How to Read Climate Claims
A company can buy a carbon credit without reducing the emissions from its own operations. Understanding that distinction makes climate labels much easier to assess.
By Farvenzo Explained · Published · Sources checked 23 October 2026 · 2 min read
Smokestacks at a wartime production plant, photographed in 1942 by Alfred T. Palmer. Historical context for industrial emissions, not a current facility.
Photo: Alfred T. Palmer / U.S. Office of War Information · Alfred Palmer Smokestacks.jpg / source · Public domain.
Source-hosted photographic rendition; no filters, overlays or content edits by Farvenzo.
The illusion: one green label explains the whole footprint
An emissions inventory measures greenhouse gases associated with an organization and its activities. An offset credit represents a claimed reduction or removal elsewhere. Buying the second does not make the first physically disappear.
A credible explanation should identify what was measured, what period it covers, and how the organization treats credits. The words carbon neutral or net zero need a defined boundary and supporting evidence.
Trap one: the counterfactual is hard to observe
For an avoided-emissions project, the difficult question is what would have happened without the project. If the claimed benefit would have happened anyway, the credit may not deliver an additional climate benefit. Permanence, leakage and double counting also matter.
These risks do not prove every project is worthless. They explain why project design, monitoring and independent review are more useful than a low price or an attractive forest photograph.
Trap two: net figures can hide the underlying change
The GHG Protocol separates direct emissions under Scope 1, purchased-energy emissions under Scope 2 and wider value-chain emissions under Scope 3. Its standards call for reporting emissions and offsets separately.
A company might report lower emissions intensity while its total emissions increase as sales grow. Both figures can be relevant, but they answer different questions. An intensity improvement is not automatically an absolute reduction. Double-entry carbon accounting is an accounting approach under discussion; it should not be described as one universal new law covering all companies.
The actionable rule: ask for the inventory before the slogan
Find the company’s reporting boundary, baseline year, absolute emissions and progress against targets. Check whether major value-chain categories are included and whether a comparison changed its method. Then examine any offsets separately, including their project type and verification.
For a consumer, this can be as simple as following the evidence link behind a climate label. For a business, it means maintaining records that explain both the footprint and the claims made about it.
Educational content, not financial advice.
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