What is compensation?

Compensation, also known as (carbon) offsetting, is the voluntary or mandatory purchase of carbon credits to balance the emissions caused by an entity. The price for a carbon credit used for compensation is the benchmark when comparing an investment for direct internal reductions.

Some greenhouse gas emissions are impossible to avoid, and compensation through carbon credits helps to achieve climate neutrality and net-zero objectives. Compensation includes investments in renewables, energy efficiency, reforestation, carbon capture, and other highly quantifiable carbon mitigation activities.