Definition 1
Offsetting Strategy means a plan specifying all of the following [and which complies with the latest Oxford Principles for Net Zero Aligned Carbon Offsetting]:
(a) the verified credits from a recognised Offset Provider that may be used by [the Company] to offset its Residual Emissions, including:
(i) the type of credits used and where they are held
(ii) the GHG emissions, areas and scopes to be covered by the credits
(iii) a requirement to ensure credits are comparable in durability to the GHG emission being counterbalanced
(b) how to ensure the environmental integrity of credits used to achieve net zero
(c) how [the Company] will as a priority transition:
(i) from using credits from offsetting projects that avoid or reduce emissions of GHGs to projects that remove emissions of GHGs
(ii) to GHG removals that involve long-term storage methods with a low risk of reversal
(d) how [the Company] will reduce its use of credits by reducing its Residual Emissions [by [●] percent] by [2050, the net zero target date];
(e) how [the Company] will regularly revise its offsetting strategy as best practice evolves
(f) the impact of the relevant offsetting projects on a just transition and wider social and environmental goals
[Drafting note: contract writers may choose to define this item (f) referring to a just transition and wider social and ecological goals. If it is not defined, it may be difficult to enforce because, depending on the agreement, it may be unclear what this looks like.]
(g) provides that offsets:
(i) are managed in an adaptive way, using flexible decision-making to adjust to uncertainties as natural outcomes change
(ii) are from activities that provide social safeguards, promote equity and benefit both ecosystems and local communities
(iii) protect and manage a wide range of ecosystems (for example, avoiding single-species tree farms or other kinds of plantations that have negative impacts on biodiversity).
Drafting notes and guidance
We recommend companies with offsetting strategies refer to the latest Oxford Principles for Net Zero Aligned Carbon Offsetting, which outlines key principles for offsetting. The 2024 principles are:
1. cut emissions, ensure the environmental integrity of credits used to achieve net zero, and regularly revise your offsetting strategy as best practice evolves
2. transition to carbon removal offsetting for any residual emissions by the global net zero target date
3. shift to removals with durable storage (low risk of reversal) to compensate any residual emissions by the net zero target date
4. support the development of innovative and integrated approaches to achieving net zero.
Please see our definition of Offsetting for additional information.