Climate stripes by Professor Ed Hawkins (University of Reading)

The Mitigation Hierarchy:
How Businesses Can Reduce Their Carbon Footprint Step by Step

“The pace and scale of what has been done so far (…) are insufficient to tackle climate change. We are walking when we should be sprinting.”
- Hoesung Lee, Chairman of the IPCC -

Researchers at Imperial College give us only until 2029 until the Earth's temperature has risen to 1.5 degrees above pre-industrial levels. This means that we can emit significantly less CO2 in the future than long assumed. And yet we are only making slow progress on global climate protection, while time is running out.

In 2022, global CO2 emissions reached a new, alarming record of 36.6 gigatonnes, with 70 percent of these emissions attributable to just 100 corporations. These figures highlight the significant impact that businesses have on climate change. Consequently, they possess the greatest leverage to reduce CO2 emissions worldwide.

Companies aiming to address this issue strategically and effectively should be familiar with the Mitigation Hierarchy. This framework is a crucial tool for companies to take responsibility for their carbon footprint.

In this blog article, we introduce the Mitigation Hierarchy and its objectives, outlining the steps your company should take to reduce its emissions.


What is the Mitigation Hierarchy?

The Mitigation Hierarchy is a structured approach to help businesses systematically reduce their carbon footprint. It prioritizes actions for emission reduction in four steps: avoidance, reduction, restoration, and compensation.

Objectives of the Mitigation Hierarchy

The primary goal of the Mitigation Hierarchy is to provide a structured and efficient method for businesses to systematically reduce their environmental impact. By prioritizing the avoidance and reduction of emissions, it incentivizes innovation and efficiency, aiming to minimize greenhouse gas emissions and thereby reduce companies' ecological footprints. The Intergovernmental Panel on Climate Change (IPCC) states that global emissions need to be reduced by 45% from 2010 levels by 2030 to limit global warming to 1.5 degrees Celsius, as per the Paris Agreement goals. However, recent studies suggest that even with such reductions, we are on track for almost three degrees of warming. Thus, businesses need to focus not only on their direct emissions but also on their supply chains and the indirect emissions associated with their products and services.

Another objective is to make companies' climate protection measures and progress publicly accessible and verifiable, enhancing credibility and trust and enabling investors and customers to make informed decisions.

Furthermore, the Mitigation Hierarchy aims to help companies better prepare for climate risks and make their business models sustainable. Early adaptation to a low-carbon economy can save costs, uncover new business opportunities, and achieve competitive advantages.

The four steps of the Mitigation Hierarchy: avoid, reduce, restore, compensate

There are various models of the Mitigation Hierarchy, some with three or even five steps, but all follow the same logic. The following is an effective four-step model, describing how to avoid and reduce emissions, restore nature, and finally compensate for emissions.

A graphic showing the Mitigation Hierarachy

Before initiating actions, measure your company's carbon footprint. Consider this step 0, if you will. Numerous CO2 footprint calculators are available online. Some of these are free, though they may not be as accurate as their paid counterparts. The outcome will provide insights into where you can avoid emissions, reduce them, restore natural resources, and finally, offset emissions.

Step 1: Avoid emissions

Start with the first and most crucial step: Avoid emissions! This action addresses the problem at its root by preventing the release of greenhouse gases before they even occur. This means designing activities, processes, or technologies—or redesigning existing ones—so that they do not produce greenhouse gases. The emissions here are effectively zero.

Step 2: Reduce emissions

After implementing measures to avoid emissions in the first step, a second essential step follows: Reduce emissions! This involves minimizing emissions that cannot be completely avoided. Existing processes and technologies must be adjusted so that they produce fewer greenhouse gases. This is a continuous process of optimization and innovation.
For companies, these two steps—not only avoiding but also reducing emissions—represent not just a contribution to environmental protection. They also offer an opportunity to increase operational efficiency and save costs in the long run.

Step 3: Restore natural resources

The third step focuses on the restoration of natural resources within one's own value chain. By funding appropriate climate protection projects, negative environmental impacts from one's own operations, products, or services are to be addressed. This is also referred to as insetting (as opposed to offsetting, where companies finance emission reductions outside their own activities). The goal is to restore ecosystems, such as forests and oceans, that suffer under a company's business model. An example is the furniture industry, which relies on wood for its products. By financing insetting projects—for instance, for improved forest management—they make a significant contribution to the restoration of forests and thus to climate protection.

Step 4: Compensate for emissions

After you have already taken steps to avoid and reduce emissions, as well as restored resources within your supply chain, it's now important to offset unavoidable emissions. This involves balancing the remaining greenhouse gas emissions by investing in climate protection projects. The aim is to ensure that greenhouse gases are reduced or sequestered elsewhere. Examples of such projects include investments in renewable energy or forest projects that store more carbon.
In this step of the Mitigation Hierarchy, it's not just about achieving a net-zero balance by removing as much greenhouse gas from the atmosphere as your company emits. The compensation measures also provide an opportunity to take responsibility for your own environmental impacts and make a significant contribution to global climate protection. Thus, compensation is also an essential step in your sustainability strategy. However, it must only be understood as a complement to the other steps. Compensation should never replace the avoidance and reduction of emissions.

How can OCELL support companies in the forestry and wood supply chain?

Companies within the forestry and wood supply chain (e.g., manufacturers of wood or paper products) need comprehensive forest data for calculating their greenhouse gas emissions, which OCELL can provide (Step 0).

OCELL can also assist in minimizing the duration, intensity, and extent of negative impacts on the forest that cannot be completely avoided (Step 2).

Steps 3 and 4 involve companies engaging with OCELL's climate protection projects, which transform local forests into climate-resilient, CO2-optimized mixed forests.

Learn more about OCELL's climate protection projects here.

Actions to decrease your carbon footprint

Once you have calculated your company's carbon footprint, carefully examine where you can first avoid and then reduce emissions. Here are some key areas to consider:

Woman cycles to work as part of a mobility scheme.

Subsidized bike leasing offers make employees and the environment happy. (Photo: LeoPatrizi)

Employee Mobility

Employee mobility is one of the main drivers of CO2 emissions. Carefully evaluate which business trips are truly necessary and which could be replaced, for example, by video calls. Also, develop travel policies that might include, for instance, that domestic travel, when unavoidable, must be conducted by train. When acquiring new company vehicles, opting for electric cars is advisable. Encourage employees to travel to the office by public transport by subsidizing monthly travel passes and job bikes, and allow your employees to work from home. All these measures not only contribute to climate protection but also promote a modern, employee-friendly work environment.

Energy Efficiency

Significant savings potential also exists in the energy supply of your office building. Electricity for heating, lighting, or air conditioning significantly contributes to your company's CO2 footprint. Therefore, switch to green electricity based on renewable energy sources such as wind, solar, or hydropower.
Furthermore, review your current operational processes and identify areas where energy efficiency can be improved. This could involve using energy-saving devices, optimizing heating and cooling systems, or implementing smart building control systems.

Waste Management

The way waste is handled directly impacts your CO2 footprint. By producing less waste across the entire value chain and increasing recycling and composting, your company can relieve the environment and save costs in the long run.
Company cafeterias often generate large amounts of waste. But what does this have to do with your CO2 footprint? From cultivation and breeding to production, marketing, and transport, food takes a long journey before it reaches your employees' tables, releasing greenhouse gases at every step. Therefore, avoid food waste. Opt for vegetarian or vegan options in the cafeteria and at events, as this can also save large amounts of greenhouse gases. And finally, if not already done, eliminate single-use bottles, dishes, and cutlery from your company and offer reusable containers instead.


In 2023, the EU reported a record decline in CO2 emissions from the energy sector by 19 percent. At the same time, global CO2 emissions reached a new peak. A total of 36.8 billion tonnes of CO2 were emitted in 2023, which is 1.1 percent more than the previous year. To achieve net-zero, an equivalent amount of CO2 would need to be removed from the atmosphere. In reality, only about 2 billion tons are being removed through forest projects, new technologies, and other measures.

There is still much to do – and companies, because of the volume of their CO2 emissions and financial resources, hold significant leverage. However, if businesses do not accelerate their efforts and act voluntarily beyond political mandates, the targets set by experts are, according to current knowledge, unattainable.

“We’re not doing nearly enough to keep warming below 1.5°C.”
- Dr Robin Lamboll, Imperial College London - 

The Mitigation Hierarchy is a tool designed to encourage companies to contribute proactively and with clearly defined steps towards global climate protection. Only if companies drastically reduce their carbon footprint in the future and offset remaining emissions through climate protection projects, will we have a chance to achieve global climate goals.

Learn here how your company can contribute to improved forest management for CO2-optimized, climate-resilient forests through voluntary investments in climate protection projects.