Companies are “sleepwalking into climate catastrophe” by continuing to use carbon offsetting to counter their greenhouse gas emissions, a sustainability platform has warned. Carbon offset schemes allow individuals and companies to invest in environmental projects around the world in a bid to balance out their own carbon footprints.

The price of carbon credits – often £5 a tonne – is a fraction of the £252 real cost of carbon emissions to society, Pinwheel said in a white paper.

The start-up warned “we’re sleepwalking into a climate catastrophe”.

Gavin Sheppard, chief executive of Pinwheel, said: “Carbon offsets lock us into dangerously low climate investment, making it all but impossible to avoid climate catastrophe.

“Organisations are taking a staggering risk with their reputation when they use carbon offsets as a major part of their response to climate change.

“Leaders and boards should get ahead of this risk by getting out of the murky world of offset-based claims and instead putting their money into a portfolio of the most impactful carbon removing and biodiversity projects.”

The firm recommends companies fund high impact climate and biodiversity projects instead.

Experts have voiced concerns that if companies are able to claim they are carbon neutral with carbon credits, it may make them less likely to reduce the carbon emissions within their business.

The forest carbon offsets approved by the world’s leading certifier and used by Disney, Shell, Gucci and other big corporations are largely worthless and could make global heating worse, an investigation last month found.

The offsetting program largely failed to make “genuine” carbon reductions, a nine-month analysis found.

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