Carbon offsets are often used by organisations to compensate for emissions. However, under the main reporting standards, offsets are not included in the calculation of gross emissions. This article explains how offsets are treated in carbon accounting, what the standards require, and how you can disclose them alongside your Sumday reports. See our blog on accounting for carbon offsets here too.
Recording offsets in Sumday
Offsets cannot be recorded directly in Sumday. The platform is designed to align with the Greenhouse Gas (GHG) Protocol, which state that companies must disclose gross emissions separately from offsets.
Sumday helps you measure and report gross emissions. If you would like to disclose offsets, you can do so outside the system using the reports and reporting templates provided.
What are carbon credits and offsets?
Carbon credits: represent one tonne of CO₂ equivalent (tCO₂e). Credits are issued by projects that either avoid or remove emissions.
Carbon offsets: occur when an organisation retires credits to compensate for its own emissions.
Examples of offset projects include:
Avoidance projects: e.g. renewable energy generation, avoided deforestation.
Removal projects: e.g. reforestation, peatland restoration, direct air capture.
Guidance from standards
GHG Protocol
Gross emissions must be disclosed separately.
Offsets are optional to disclose. If disclosed, companies should provide information about the verification or certification of the credits.
IFRS / ISSB (IFRS S2)
Requires disclosure of absolute gross emissions across Scope 1, 2, and 3.
Where companies report net targets, the related gross target must also be disclosed.
In both cases, gross emissions reporting is mandatory. Offsets are supplementary and must be clearly distinguished.
How to disclose offsets alongside Sumday reports
When preparing reports from Sumday:
Use the Sumday platform to calculate and disclose gross emissions.
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In the reporting template, add a separate section for offsets, including:
The number of credits retired
Whether the credits are verified or certified
The type of project (avoidance or removal)
This ensures your report is consistent with international standards and provides transparency to readers.
Practical approach for businesses
Measure emissions first to establish a complete inventory.
Focus on reducing emissions within operations and supply chains.
Disclose any offsets separately, outside of gross emissions figures.
Offsets can be used to address residual emissions but should not replace efforts to reduce emissions directly.
Summary
Offsets cannot be entered into Sumday’s accounting system.
Gross emissions are always reported first.
Offsets may be disclosed separately in the reporting template, with supporting details.
This approach aligns with both the GHG Protocol and IFRS/ISSB guidance.