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What are carbon offsets?

Purchasing carbon offsets is a way to compensate for your emissions by supporting projects that are drawing down emissions in one of two ways:

Avoidance projects - Carbon offset projects avoid emissions by replacing fossil fuel energy or preventing natural carbon sinks (like forests) from being destroyed.

Absorption projects - Other projects absorb emissions by preserving or expanding natural carbon sinks, or by using technology to remove emissions directly from the atmosphere.

How Purchasing Offsets Works

Climate projects (like reforestation, soil restoration, or direct air capture) generate credits - one for every metric ton of CO2e avoided or absorbed. These carbon credits become offsets when a person or organization purchases them to compensate for their emissions. Offsets should only be purchased once, then retired.

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Chart performance data from S&P Global Dow Jones Indices. All energy companies in the S&P 500 are fossil fuel companies and were excluded from the comparison.