If you fly from New York to Miami and release 500 pounds of carbon dioxide into the air, you can purchase a carbon offset that funds a project elsewhere in the world to remove the same amount of carbon dioxide, usually by planting trees.
Carbon offsets are a way to "cancel" emissions and they're widely available. You can buy an offset for your next flight in just a few taps.
Large companies buy offsets to cancel their emissions too. It is the most popular market-based approach to solving climate change.
As far back as 1988, a coal company planted millions of trees to offset the emissions from their coal plant.
There's a lot of debate if carbon offsets actually work.
In theory, carbon offsets make sense for direct activities. You fly, buy offsets, and your share of the plane ride's emissions are neutralized.
But what about your investment portfolio?
If you own shares of ExxonMobil, you didn't personally emit anything by buying the stock. Yet your money is now tied to a carbon-intensive business.
What's your carbon ownership as a shareholder? The emissions from operations you proportionally own? Your slice of emissions when their oil gets used? The carbon embedded in your investment returns?
Carbon offsets weren't built for indirect carbon exposure like holding stock. They were designed for direct activities.
A more direct approach would be using your shareholder voice to push for emissions reductions through voting and engagement at the companies you own and investing in a portfolio with less carbon-intensive companies.