Emissions are being cut abroad, but pollution stays at home. Experts in energy management stress that companies need to prove that they cut emissions on their own sites instead of offsetting them elsewhere in the world.
Corporate Accountability’s report, released this summer, warned of rising risks for companies that depend solely on carbon offsets to support their sustainability claims, including the risk of court challenges over misleading claims, and growing financial and reputational damage tied to climate-related litigation.
In the report, analysts examined 43 of the largest offset projects in the voluntary carbon market, and most were ‘unlikely to deliver the climate benefits promised.’ Last year alone, researchers claimed that 47.7 million credits were ‘problematic,’ meaning that they won’t deliver real emission cuts, and were taken out of circulation.
Each carbon credit equals one ton of CO₂ reduced or removed, becoming an offset once purchased and retired.
According to Exergio, an energy optimisation company that develops AI-based tools for commercial buildings, it represents a growing climate-washing rate, where companies ‘pretend that their assets are green, yet continue to pollute local communities’.
Donatas Karčiauskas, CEO of Exergio said: “Buying questionable credits for projects halfway around the world doesn’t make your building in London, Paris, or Vilnius any cleaner. Offsets don’t lower your local emissions or improve air quality. And they won’t protect you from legal scrutiny. Real reductions need to happen where your pollution happens.”
A similar image is portrayed in a recent report by the London School of Economics and Political Sciences. It shows that the disparity between climate claims and actual results causes many companies to land in court, with over 226 new climate-washing cases filed in 2024. The report also shows a positive trend – claimants indeed win a high share of those climate-washing cases.
In 2024, 20 per cent of cases targeted companies or their executives, with defendants ranging from financial institutions to consumer brands. It is a change in the past trend, where oil companies once dominated such litigation.
Additionally, 80 per cent were strategic cases that tried to change government policy or company practices. Many sought to force stronger climate rules or hold companies accountable for misleading environmental claims.
“For asset owners, the message is clear – cut emissions on-site or be ready to justify every tonne you claim to reduce,” added Karčiauskas. “A little isn’t enough anymore in sustainability, and if businesses claim that their assets are green, they’ll have to be ready to provide concrete steps, such as installing efficient heating and cooling systems or redesigning production processes.”
This focus on tangible, local impact is especially relevant for the buildings sector, one that is responsible for the highest percentage of emissions, Karčiauskas notes.
He adds that offsets have never addressed the constant problems in commercial properties, such as outdated HVAC systems, wasted energy from static controls, or the comfort and health of occupants.
“If you decide to offset your carbon credits, these issues remain untouched, no matter how many credits you buy. Court decisions and raising awareness on climate-washing showcase that major companies won’t be able to run away from the issue or hide it elsewhere,” Karčiauskas concluded. “With the help of AI, we can already cut a building’s energy use, and its emissions, by 20 to 30 per cent in months, without expensive retrofits. That’s the kind of result you can verify and defend, and it represents the impact on-site.”
