Why do companies prefer local carbon offsets, even though there are better climate projects?

Research published in Nature led by Professor Jiehong Lou from the Center for Global Sustainability at the University of Maryland reveals an interesting paradox in corporate decision‑making about carbon offsets.

When purchasing carbon credits, companies often choose local projects with side benefits for the community — even though more efficient climate projects exist elsewhere.

Why this is the case:

- local projects strengthen the company's reputation and are more “visible” to customers and stakeholders

- companies are motivated by competitiveness and corporate value — side benefits (employment, communities) are more attractive than pure emission reductions

- on the contrary, for cheaper projects (renewables) the motivation is rather an operational commitment to reducing emissions

The context is alarming: according to other analyses, more than 43 % of offset projects overstate their actual climate impact and over 70 % negatively affect local communities and indigenous peoples.

Carbon offsets make sense as a supplement — not as a replacement for real emission reductions. Before buying credits, calculate your own carbon footprint and find out where you can actually cut emissions. Only then offset what cannot be reduced.

Source: Lou, J. et al., npj Climate Action (Nature), 2024 | Devdiscourse, 03/2026