Companies tend to buy the crappiest carbon offsets when the projects are located right near their own headquarters.
SSRN · March 17, 2026 · 6297878
The Takeaway
While we usually assume local proximity allows for better oversight, companies actually prioritize the 'goodwill' and visibility of local projects over their actual environmental impact. This creates a market where local offsets are more expensive but less effective at actually reducing carbon than projects located further away.
From the abstract
Although the climate impact of carbon abatement is geographically invariant, this paper documents limited geographic fungibility in voluntary carbon markets. Firms disproportionately retire offsets in countries where they operate. We contrast an Information Channel, whereby local presence improves project screening, with a Goodwill Channel, whereby supporting local projects enhances reputational visibility. The evidence supports the latter. Offsets retired within firms' operational footprints ex