Glossary entry

Offshoring

Definitions

Offshoring

Offshoring means the relocation of [insert business activities] to another country or the outsourcing of such activities to a third party in another country for the purpose of:

(a) reducing its emissions;

(b) avoiding [Environmental Performance] targets in [original country] due to more lenient environmental regulation in [the country of relocation];

(c) using unreasonably low-cost labour;

(d) exploiting weaker labour laws and practices in [the country of relocation];

(e) carrying out practices in [the country of relocation] which would be illegal in [original country]; or

(f) carrying out practices in [the country of relocation] which could be reasonably considered to adversely affect achieving [a just transition] [and] [the UN Sustainable Development Goals/ wider social and ecological goals].

Read the disclaimer

Drafting notes

Offshoring describes geographically relocating a company’s high greenhouse gas emitting activities to another country. Importing goods and services is a form of emissions offshoring.

Emissions offshoring could be used to make it appear that a company has reduced its greenhouse gas emissions. Where companies are measuring their Scope 3 Emissions, these must cover any offshored emissions.

Studies show that when firms increase their imports, their own emissions fall with a corresponding rise in supplier generated emissions.

This definition is deliberately broad so it can be easily adjusted to fit a variety of contracts and contexts.

Application

Commercial leases, project finance documents, employment contracts, consumer goods and supply chain clauses, government guidance and share purchase agreements.