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English environmentalist George Monbiot has compared carbon offsets to religious indulgences, which, in the Middle Ages, could be bought from clergymen to make amends for one's sins. At the time, Protestants complained that these pardons excused the sinners' actions and encouraged them to carry on acting in an impious fashion. In a similar way, says Monbiot, offsetting is an excuse for business as usual when it comes to polluting.

Carbon offsetting - which allows businesses or individuals to mitigate the carbon emissions they produce by making contributions to projects that reduce greenhouse gas production - has also received flak due to the largely unregulated nature of the industry. Investigations by journalists and NGOs have exposed a number of projects as fraudulent or even damaging to the environment.

With these PR pitfalls to think about, companies could be excused for staying clear of offsets, yet the popularity of the industry continues to grow at a phenomenal rate: it is estimated the carbon-offsetting market will be worth over £35 bn within two years.

This growth has prompted the government to step in. Last month, the Department for Environment, Food and Rural Affairs (DEFRA) set up a voluntary code for carbon credit producers - companies that sell credits worth a certain amount of carbon to those that wish to offset. The move is part of a wider market shift to improve the credibility of the offsetting industry.

Quick off the mark

Recent examples suggest offsetting has an important role to play in successful environmental campaigns, as long as the right procedures are followed. Three years ago, Radio Taxis Group, one of London's leading black cab companies, took the decision to become carbon-neutral. It set up a long-term strategy to reduce the carbon given off by its fleet of more than 3,000 taxis and 80 executive cars; this included trialling electric cabs.

Last autumn the cab company gave its drivers the option to fill up with a diesel blend, dubbed E3, containing 30 percent bio-fuels. Tests revealed E3 improved fuel economy by more than 9 percent and reduced CO2 emissions by 7 percent, which could reduce the taxi fleet's CO2 output by almost 3,000 tonnes a year.

Along with these measures, Radio Taxis paid for carbon offsets to bring its net production of carbon down to zero. Importantly, the cab firm made its own carbon output a priority, a tactic that benefits its green brand and the bottom line, according to Oliver Williams, account director at Four Communications, a consultancy that works with Radio Taxis. 'By reducing its carbon output, Radio Taxis helps the environment and also reduces the amount of money it spends on offsets,' Williams adds.

Television company BSkyB has also taken the decision to go carbonneutral. It has reduced emissions through a number of measures, including switching to renewable energy at some sites and encouraging staff to buy hybrid cars sold at a discount. Unavoidable emissions have been dealt with by two offset projects: a wind power project in New Zealand and a hydro-electric plant in Bulgaria.

Alternative arrangements

Radio Taxis and BSkyB safeguarded their green credentials by tackling their own emissions first, and using offsets as a supplement, a tactic encouraged by the CarbonNeutral Company, an environmental consultancy that advised both firms. 'CarbonNeutral is very clear that you don't just offset, you also work to reduce emissions,' explains Williams.

The government also recommends a dual approach: DEFRA's website says offsets are the 'next best solution' once 'all practical steps have been taken' to reduce emissions at source.

Another way for businesses to use carbon offsets is to offer them to customers - for example, when people go to the supermarket they can choose to pay more for environmentally friendly products. In a similar way, customers paying for airline tickets can be offered the chance to offset the carbon produced by their journey.

This area has been tightened up in recent months. Last July a report from the Environmental Audit Committee (EAC) criticised the airline industry for not doing enough to combat climate change. It said the industry should make it easier for customers to purchase offsets when booking a flight. British Airways was singled out for particular criticism as, according to the committee, an environmental programme put in place by the airline had offset only the equivalent of four return flights between London and New York per year, an amount the EAC described as 'risible'.

In January British Airways overhauled its offsetting programme. Wall Street bank Morgan Stanley now maintains a portfolio of carbon emissions on behalf of the airline, while the money from offsetting contributions goes toward supporting projects in developing countries and typically focuses on providing new sources of renewable energy and promoting energy-efficiency schemes.

The new scheme is more 'upfront' and 'user-friendly' than its predecessors, says BA spokesperson Sophie Greenyer. 'We have had a carbon-offsetting scheme in place for some time, but we wanted to make it easier for passengers to use,' she explains.

Put off by offsetting

Some remain sceptical despite the tightening of standards in the offsetting industry. Environmental charity Friends of the Earth (FoE) believes stricter rules are needed. 'The language the government is using is right,' says Mike Childs, director of campaigns at FoE. 'But companies after a quick green image without going through the difficulty of reducing their own emissions won't stop just because the government tells them to.'

Childs explains that if business did constrain offsetting to unavoidable emissions, environmentalists would not criticise the practice. 'Offsetting remains one of the first things business does, which is why it has a bad name,' he says, the perception being that companies never do anything unless there is something in it for them. 'Our main objection is the lack of mandatory standards for offsetting.'

Such standards do not appear to be forthcoming, which business will not mind. But if it does not pay attention to best practices when taking part in carbon offsetting, the result to company brands could be damaging.

Overall, the offsetting industry is moving in the direction of greater clarity and accountability, providing benefits for the environment as well as communications departments. Offsets are not going the way of religious pardons - at least not yet.

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