02-23-2026
Corporate commitments to carbon neutrality are now mainstream. From airlines and logistics firms to technology and consumer brands, companies are pledging to shrink their environmental footprint and investing in renewable energy, low-carbon materials and cleaner operations. Yet for most organizations, some emissions remain unavoidable. That’s where carbon offsets enter the picture.
The strategic question is no longer whether to offset, but how. Should companies absorb the cost themselves, or invite customers to help fund climate action at the point of purchase?
New research from the Daniels School’s Gökçe Esenduran and colleagues, “Getting to the Green: Should a Profit-Maximizing Firm Buy Carbon Offsets or Invite Consumers to Buy Them?”, offers a clear, data-driven answer: the optimal strategy depends on offset costs and how much customers actually care about total firm emissions — not just the footprint of the product they buy.
One of the study’s most important findings is that firm-level carbon neutrality only makes financial sense when a meaningful share of customers pays attention to a company’s overall emissions profile. If customers focus solely on the product they purchase and ignore emissions generated by other buyers, then fully offsetting at the firm level becomes a losing proposition. Specifically, when offset costs are moderate, offering offsets as an add-on can be more profitable than offsetting at the firm level. Furthermore, firms may even sell offsets at a price below their cost, effectively subsidizing the offset purchase, because the resulting increase in product demand and pricing power more than compensates for the loss on the offset itself.
This insight helps explain why transparency has become such a central feature of corporate sustainability. Platforms like CDP disclosures, Science Based Targets and third-party verification are not just compliance tools — they shape whether customers perceive emissions as a firm-level responsibility or a personal one. Without credible and visible information, even well-intentioned sustainability investments may fail to influence demand.
The research also shows why optional carbon offsets have become so widespread, particularly in sectors like aviation, logistics and transportation. When offset costs are moderate, offering offsets as an add-on can be more profitable than offsetting at the firm level. This approach allows environmentally engaged customers to self-select into a higher-priced, lower-carbon option, while disengaged customers continue purchasing the standard product. In effect, sustainability becomes a form of market segmentation and price discrimination.
However, this strategy introduces a fundamental tension between profitability and environmental impact. While optional offsets can increase profits, they may lead to lower total emissions reductions than firm-level carbon neutrality. When only green consumers offset their purchases, emissions associated with disengaged consumers remain unaddressed. From a climate perspective, this is clearly inferior to full firm-level offsetting — even if it is financially rational.
The study also highlights how rising quality standards in the voluntary carbon market are reshaping the economics of going green. As firms shift toward higher-quality, higher-cost offsets such as permanent carbon removals rather than cheaper avoidance projects, carbon neutrality becomes harder to justify financially. This makes consumer-funded offset programs more attractive in the short term, but also risks delaying deeper investments in operational decarbonization.
Importantly, these trade-offs extend beyond carbon offsets. The same logic applies when firms ask customers to help fund sustainable aviation fuel, green shipping options or premium low-carbon products. In each case, optional contributions reduce the financial burden on firms, but may slow progress toward full decarbonization.
Together, these findings suggest that carbon strategy is no longer just an environmental decision — it is a core business strategy that shapes pricing, customer segmentation and long-term competitive positioning. Sustainability initiatives interact directly with how customers perceive value, responsibility and fairness. Leaders who treat offsets as a symbolic gesture or marketing tactic risk missing the deeper strategic implications.
In short, getting to the green is not just about choosing the right offsets — it’s about designing a sustainability strategy that aligns customer behavior, financial incentives and long-term climate impact.
