The sharp increase in net zero commitments from governments, corporates and financial institutions comes with a renewed interest in carbon offsetting mechanisms. As a clear signal of this momentum, the voluntary carbon credits market is on track to double year-on-year in 2021.

Carbon offsetting is not new and has been meant to bring flexibility and efficiency in the fight against carbon emissions, notably by providing institutions with a mechanism to finance emission reduction projects across borders and boundaries.

However, positioning the contribution of this mechanism to the achievement of global 2050 net zero efforts brings new challenges. Voluntary carbon offset mechanisms should be considered as a last resort action. In our opinion, it can play a credible role in the fight against climate change by funding the reduction of residual greenhouse gas emissions (GHG) emissions and strengthen natural and/or technological carbon sinks.

With that in mind, this ESG Thema focuses on addressing the fundamental questions behind carbon offsetting: What is carbon offsetting? How does it work? Why is it important? What are its key challenges? How can carbon offsetting be used by investors to drive real emission reductions? And more.