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More and more companies are marketing their products as climate friendly, carbon neutral or offering carbon offsets. Many airlines now offer their customers the option to “offset” the carbon footprint of their travels. You will soon see carbon neutral ketchup and pineapples in grocery stores. What does this green marketing strategy really mean? To begin with, it is important to understand why carbon is used to sell products and to quantify the greenness of certain products over others.

The term “carbon” refers to the carbon dioxide molecule. When humans exhale, they release carbon dioxide. It is something that is natural for our ecosystems, when it is released naturally. Trees often absorb this carbon dioxide and use it. Also our soils and bodies of water. Trees convert carbon dioxide and release oxygen that we and other animals breathe to live.

Carbon dioxide levels naturally change as a result of the interaction of numerous biological processes on earth. The problem with carbon dioxide is the type. With industrialization came the increased release of carbon dioxide, methane, nitrous oxide, and other man-made (unnatural) gases from industries such as: oil extraction and refining; large agro-industries and chemical fertilizers; construction and landfills containing numerous chemicals; manufacture of plastics; and many others. These man-made industries are not natural and therefore have no natural ways to offset their impact. The worst industries like pulp and paper, agribusiness, and oil extraction wipe out forests, destroy soils and water systems, throwing away the natural balance that nature has created to remove carbon dioxide.

You don’t have to believe global warming theories to conclude that Mother Nature is under stress and needs a happy pink pill or we are headed for a major female meltdown. So let’s put all those discussions aside and look at carbon footprints and offsets as an easy way to measure, for the business world, the negative effect on our planet of doing business.

Imagine a basement in a house. When we add carbon to our world, it is like adding water to our basement. The more and more we add, the bigger and bigger the problem. When we talk about carbon offsets, it’s akin to figuring out ways to remove water from the flooded basement, prevent the basement from flooding, or better yet, build better basements so flooding isn’t even a problem.

When governments start measuring the carbon footprint of man-made industries, they will be able to hold companies accountable for their impact on our planet. Governments around the world are looking to put a cap, that is, limit, how much these companies / industries should (if at all) impact our planet. Once these limits are set, companies will be forced to pay fines, change their impact, and / or buy carbon offsets. Bad companies will be able to offset some (or all) of their impact by buying carbon offsets from companies and organizations that are doing things that reduce carbon emissions around the world. The success of this model depends on a few variables.

Businesses that are reducing their carbon emissions, creating carbon neutral products, or selling carbon offsets to customers may be perceived by the market and consumers as concerned about the planet. It remains to be seen how consumers will respond to this form of corporate responsibility / marketing. Will it increase sales or will it attract and retain new customers? This will largely depend on consumer confidence in the legitimacy of these carbon offsets in caring for the planet. If you’re buying carbon offsets as a business (or consumer), don’t be fooled by the so-called “non-profit” status of an organization. Non-profit and for-profit companies can negotiate carbon offsets. A non-profit organization can simply spend all of its income at the end of its year. It doesn’t mean it’s a charity.

Research the organization or company that sells the compensation. Determine who approved your carbon offsets as legitimate. There are internationally recognized third-party verifiers to audit carbon offset traders. This ensures that the organization selling carbon credits is not selling them doubly or is not manufacturing the source of their beneficial carbon credits. Not all carbon offsets have the same value. One of the most common carbon offsets are those obtained by planting trees. Where are the trees planted? What kind of trees? Why are there no trees in that place? How will these trees be protected for the next 100 years? Am I paying to have trees planted because a logging company failed to honor its commitment to replant what it felled?

Ideally, buying carbon offsets to make your business, product or service carbon neutral should help green projects and businesses that would not otherwise survive in today’s economy. For example, a gas company may choose to purchase carbon offsets from a composting business, which has no government funding or legislation to drive the business. The compost business is taking green business risk. The gas company’s carbon offsets become an additional source of income to help keep them in business as the market adjusts to increase interest in compost sales. The gas company still needs to take steps to reduce its carbon footprint, but in the meantime it buys carbon offsets.

When someone is promoting your product or company as carbon neutral or carbon positive, it should be easy to determine how. Businesses that can educate their consumers and transparently quantify their climate-friendly actions will retain loyal customers. In this day and age, it won’t be long before consumers can tell the difference between companies committed to sustainable environmental change and those interested in driving short-term sales with green marketing claims.