Buyer’s guide to carbon offsetting (January 2010)

Employers and employees can make a contribution to the fight against global warming by donating to schemes that will offset their carbon footprints, says Tom Washington

Carbon-offsetting schemes enable employees to calculate the amount of carbon they produce, be it through car journeys, flights, or the amount of electricity they use at home. This carbon footprint is then offset by the employee, for example, by donating to charity through payroll deduction.

In some schemes, staff can purchase units of carbon which are used to offset the daily damage they inflict on the environment. The money used to buy the units is invested in projects across the world, such as wind farms, that are working towards driving down carbon emissions.

In other schemes, the selected charity will undertake to plant the required number of trees to offset the carbon.

Interactive calculation tools, which allow staff to work out their own carbon footprint, can be employer-branded and sent out in paper or electronic form.

Green credentials

For employers, offering this benefit fits in well with a corporate social responsibility strategy. Not only does it boost their green credentials in an increasingly ethical talent market, but it also appeals to existing staff with an interest in environmental issues.

One such scheme is the Woodland Trust’s Woodland Carbon programme, which enables organisations to reduce their impact on the environment by creating new native woodland. The scheme helps employers and staff mitigate the effect of their carbon emissions by planting trees at sites across the UK, while creating wildlife habitats that protect against flood and wind damage, soil erosion and drought, and provide green spaces for people to enjoy. Nick Atkinson, carbon manager for the Woodland Trust, says: “Woodland Carbon is a great way to engage staff and will also make a real dent in an organisation’s impact on the environment.”

Employers can offer carbon-offsetting schemes as a standalone benefit or as part of a flexible or voluntary benefits plan. It can also be offered via a salary sacrifice arrangement, under which staff can make savings on tax and national insurance contributions by donating to a registered charity directly from their gross salary. Vebnet, for example, can include this as part of its flexible benefits provision.

Educational tool

Richard Morgan, head of flexible benefits at Vebnet, says carbon offsetting enables employers to reinforce their commitment to the environment. “It is as much an educational tool as anything else. Take-up rates tend to be very small, but I envisage they will increase as the economy improves.”

Employees will typically cover most of the cost of a carbon-offsetting scheme, but employers can still expect to pay about £3 a year for every member of staff who takes up the perk.

However, employers can decide to foot the entire bill to offset their employees’ carbon footprint and allow staff to choose which charity the money goes to.

Financial support

Gareth Ashley-Jones, head of flexible benefits at Aon Consulting, has seen an increasing number of organisations in different sectors deciding to support employee contributions to such benefits by providing matching financial support.

“Despite the economic downturn, take-up of environmental flex benefits, provided by the likes of the Woodland Trust, have proved remarkably resilient,” he says. “Environmental concerns are still priorities for both employees and employers.”

Key facts

What is carbon offsetting? A carbon-offsetting scheme enables employers to offer staff the opportunity to counteract their total carbon footprint, calculated by factors such as the number of car journeys, flights and the amount of electricity they use at home.

Where can employers find more information about carbon offsetting? The Department for Environment, Food and Rural Affairs (Defra) provides information on carbon offsetting at: climatechange/uk/carbonoffset/

Who are some of the main providers? Carbon Clear, Carbon Offsets, CO2 Balance, Pure, Woodland Trust, while Grass Roots offers its product Carboncreditz.