Carbon offsetting is something we read about a lot these days. It is a complex area and it can be difficult to work out the right way forward. With more organisations buying carbon offsets, many managers are faced with navigating the subject and deciding whether they should spend money on an offsetting service.
What is carbon offsetting?
Carbon offsetting is a growing industry. Companies set up projects that either reduce emissions (by building renewable energy plants, for example), or absorb greenhouse gases from the atmosphere (by planting or protecting forests). Legal considerations connected to the Kyoto Protocol mean that projects should always be in developing countries. According to New Carbon Finance, the number of carbon offsets bought doubled between 2007 and 2008. The list of buyers is dominated by private companies, but public sector organisations and charities are cropping up more often.
Why do organisations buy carbon offsets?
Organisations buy carbon offsets to counteract parts of their carbon footprint that they can not avoid. The motivations for doing differ depending on the organisation. Organisations in sectors that have been slow to take up the environmental agenda offset to show customers and staff that they are ahead of the game. Conversely, in sectors such as financial services, where many companies have been offsetting for some time, organisations may offset to avoid losing out to the competition. Customers are increasingly demanding clarity about the environmental policies of organisations they deal with, and one concept that organisations find easy to communicate is that of carbon neutrality.
Whether it is a specific product or the whole organisation that has gone carbon neutral, customers understand that this represents a big commitment from the organisation and are making purchasing decisions accordingly.
Andy Wood, Managing Director of Suffolk brewer Adnams, echoed this at the launch East Green, the UK’s first carbon neutral beer. “Adnams has always passionately believed in ‘doing things right’ and East Green is the latest example of our efforts to reduce our environmental impact in everything we do. Every stage in the development of East Green, from the growing of the hops to the packaging, has been designed to minimise our carbon emissions as far as possible.” Adnams then offset the remaining emissions to make the beer carbon neutral.This is a common theme, but organisations need to be sure to have a carbon management strategy in place before offsetting. Kirsty Clough, a Climate Change Policy Officer with the WWF-UK, recommends that organizations carefully consider if they have done enough themselves before offsetting. "There's no way we can stay below a two-degree [increase in global temperature] if all we're doing is offsetting", Clough said.
Pitfalls
Projects that reduce emissions in the developing world are usually well intended, but there are risks. In particular, there is a risk that a project would have gone ahead without the money provided by offsets—meaning that the offsets have no real impact.A Friends of the Earth report into the industry reveals concern that offset projects do not deliver credible environmental benefits, stating “There are strong concerns over the environmental credibility of many of the credits and the contribution of the projects to sustainable development.”Few organisations have the necessary time to do the required due diligence on projects, meaning that some organisations damage their reputation by inadvertently choosing the wrong project.
A new way of offsetting
Retiring credits from the EU Emissions Trading Scheme is one way of overcoming these pitfalls. This new method of carbon offsetting works by buying and cancelling (‘retiring’) ‘permits to pollute’ from the EU Emissions Trading Scheme. Industrial companies that would have bought the permits instead have to reduce their emissions. It is a simple, effective way to offset and it reduces emissions within Europe, where emissions per person are high.Retirement is gaining support from all areas - even hard-line environmental commentators previous sceptical of offsetting. John Grant, author of The Green Marketing Manifesto, described Carbon Retirement, the first company to offer this service, as “the world’s first truly ethical offsetting scheme.”
Top tips
If you are thinking of offsetting your organisation, a product, or portion of your carbon footprint such as travel, read our three point guide.
Be able to satisfy yourself and your stakeholders that offsetting is not distracting from your internal efforts to reduce emissions. Some organisations have not done this, and have been accused of ‘greenwash’ and taking the easy option.
Question whether the project really needs your financial support. If it can stand alone, you could probably spend your money better elsewhere.
Look for suppliers that can explain which standard was used to verify the credits. There are many standards available but the most stringent are the UK Government Quality Assurance Scheme and WWF’s Gold Standard.
