What Does Carbon Offset Mean and Why Does It Matter? Carbon offsetting is a way of compensating for emissions of carbon dioxide or other greenhouse gases by balancing emissions, either through sequestration (storing) or through emissions reduction projects elsewhere. It is often used by companies to meet their legal obligations for carbon mitigation, or to appease customers who want to reduce their carbon footprint. How Does Carbon Offsetting Work? Carbon offsetting looks to reduce the total amount of emissions caused by any activity by taking action to reduce emissions or to capture, store or use carbon dioxide. Offsetting works by calculating how much carbon emission is caused from any activity and then purchasing a “carbon offset” that compensates for that amount. The offset is purchased from a third-party organization that specializes in their own emissions reduction or carbon sequestration projects. A higher price tag on an offset signals a more effective project with better environmental results. Why Is Carbon Offsetting Important? Carbon offsetting is an important tool in managing carbon emissions, providing companies and individuals with a way to manage their carbon footprint by taking action to reduce emissions from activities that cannot currently be avoided. The ability to purchase carbon offsets provides businesses with flexibility in their carbon emission strategy, allowing them to comply with legal requirements, reduce emissions where possible, and easily offset emissions that cannot be avoided. In addition, carbon offsetting is an important tool in communicating environmental awareness to customers, showing that the organization is taking the necessary steps to reduce their carbon emissions. Companies that use carbon offsets can proudly display their commitment to sustainability and demonstrate a leadership role in climate change mitigation.