Corporate carbon offsetting: cure or placebo for the climate?
Faced with the challenges posed by climate change, companies are keen to reduce their carbon footprint and contribute to a more sustainable future. One of the most widely discussed and implemented approaches is carbon offsetting, a strategy aimed at balancing greenhouse gas (GHG) emissions by financing emission reduction projects elsewhere. However, this practice raises crucial questions about its real effectiveness for the climate.
Many critics believe that carbon offsetting can serve as a "placebo" to ease consciences, rather than actually reducing global GHG emissions. It is imperative to examine the complex aspects of this practice to understand its true impact.
1. Understanding carbon offsetting
1.1 What is carbon offsetting?
1.2. Perceived benefits of compensation
2. Criticism and concerns about corporate carbon offsetting
3. Optimize your company's carbon offset strategy
3.2. Recommendations for companies wishing to engage in responsible carbon offsetting.
Understanding carbon offsetting
Carbon offsetting has become a familiar term in the lexicon of companies seeking to reduce their carbon footprint. The practice has aroused both interest and debate, as it raises questions about its real effectiveness and its role in the transition to a low-carbon economy.
🧐 What is carbon offsetting?
Carbon offsetting aims to balance the greenhouse gas emissions generated by an activity, product or service by financing initiatives that reduce or remove an equivalent quantity of GHGs from the atmosphere.
They can take various forms: reforestation, energy efficiency, renewable energy, reduction of industrial emissions...
Carbon offsetting emerged as a response to the challenge of climate change, at the time of the 1997 Kyoto Protocol. Initially aimed at national governments, the concept has since been extended to companies and individuals keen to reduce their greenhouse gas emissions.
Two compensation mechanisms have been established:
- The Clean Development Mechanism (CDM): This enables emission reduction projects to be implemented in developing countries.
- Joint Implementation (JI): This concerns projects carried out in industrialized countries that have ratified the Kyoto Protocol.
There are two types of carbon markets linked to carbon offsetting:
- The compliance market, mandatory for companies and governments subject to strict regulations on greenhouse gas emissions,
- The voluntary offset market, where companies and individuals voluntarily choose to offset their emissions.
⭐ Perceived benefits of carbon offsetting
Companies that opt for carbon offsetting point to several potential benefits:
🌿 Environmental responsibility: carbon offsetting demonstrates a commitment to reducing GHG emissions and protecting the environment. It can reinforce a company's reputation for sustainability and environmental responsibility, which is increasingly valued by consumers and investors.
🗓️ Ease of implementation: Carbon offsetting can be implemented relatively quickly, making it an attractive solution for companies looking to reduce their carbon footprint without long lead times.
☁️ Neutralizing unavoidable emissions: Some emissions are difficult to eliminate completely, for example in the air transport sector. Carbon offsetting offers a solution to compensate for these unavoidable emissions by financing reduction initiatives elsewhere.
⚡ S upporting the energy transition: financing sustainable initiatives through carbon offsetting can help accelerate the transition to a low-carbon economy by promoting the adoption of renewable energies and other clean technologies.
Criticism and concerns about carbon offsetting in the workplace
The perceived benefits of carbon offsetting are not without controversy, as some stakeholders question the real effectiveness of carbon offsetting in reducing global GHG emissions.
🏞️ Low-quality projects: some do not guarantee the promised emissions reductions or have no significant impact.
🌲 So cial and environmental impact: Carbon offsetting, like reforestation, can have negative social and environmental impacts if not implemented ethically and responsibly.
🟩 Risk of greenwashing: carbon offsetting carries the risk of greenwashing, i.e. companies could use offsetting to give the appearance of sustainability without making real emission reductions.
🤹♂️ Risk of shifting responsibilities: companies may rely excessively on carbon offsetting to justify ongoing emissions, rather than taking direct action to reduce their carbon footprint.
📈 Quantifying actual emissions reductions: measuring the exact impact of these projects and ensuring that they actually balance the offset emissions is a complex challenge. Verification standards and calculation methodologies vary, which can lead to opacity and uncertainty about the effectiveness of offset efforts.
🚫 S ustainability not guaranteed: the long-term sustainability of some carbon offset projects is not guaranteed, particularly for many reforestation programs that are cleverly promoted but lack solid long-term management. This raises questions about what happens if offsetting fails and long-term obligations are not met.
These problems make it difficult for compensation entities to prove that they have fulfilled their commitments, which can be detrimental to consumers. There are concerns about possible abuses, fraudulent actions and scandals in future claims.
In fact, the term "compensation" is beginning to be replaced by "contribution".
Optimizing carbon offsetting in the workplace
📍 Key indicators for objectively assessing the effectiveness of corporate carbon offsetting
The first step in optimizing a carbon offset strategy is to establish key performance indicators.
They provide an objective assessment of the effectiveness of compensation efforts. Key indicators include :
📊 Ca rrying out a GHG assessment: Precise measurement of GHG emissions to identify priority areas for improvement, then monitoring this reduction target with new calculations taking into account these improved consumption data. However, there will always be an "incompressible carbon" that can be offset through carbon offset projects.
👀 Track actual emissions reductions: closely monitor reductions generated by offsetting initiatives to ensure they match targets.
🌿 Evaluate social and environmental impact: Assess the effects of offset projects on the local community and the environment.
💪 Recommendations for companies wishing to engage in carbon offsetting responsibly
For responsible carbon offsetting, companies can follow several recommendations, including:
✅ Choosing high-quality projects: certifications and labels on carbon offset projects are guarantees of quality and transparency. They include standards such as the Verified Carbon Standard (VCS), the Gold Standard, the Low-Carbon Label, CCB Standards and ISO 14064. They are essential to guarantee the credibility of carbon offset initiatives.
✅ Transparency and communication: a carbon offset project must be transparent, providing full information on how it works, while guaranteeing that the credits it generates are unique, thus preventing duplication or resale of these credits. This ensures the integrity of the project and the credibility of its emissions reductions.
✅ Long-term commitment: commit to compensation over the long term to ensure ongoing impact.
✅ Reducing GHG emissions first and foremost: it is essential to understand that carbon offsetting must be complementary to direct emissions reduction. Offsetting should not be used as a means of justifying ongoing emissions, but rather as a mechanism to compensate for residual emissions that are difficult to eliminate completely. Companies must first strive to reduce their emissions at source before considering offsetting.
Depending on the company's strategic choices, the GCI platform offers voluntary carbon offset projects to manage residual direct and indirect emissions (scopes 1, 2 and 3).
They are in line with the Sustainable Development Goals set by the member states of the United Nations.
GCI projects not only reduce greenhouse gas emissions, but also have an impact on factors such as job creation, support for local communities, preservation and development of natural areas at risk, and other local socio-economic factors.
GCI offers projects, in partnership with Evolution Markets, in the following sectors: forestry, recycling, renewable energies, energy efficiency and related industries.
Its technical team manages all aspects of your project to define, implement and deliver a project that meets all environmental and social requirements.
Since its foundation, Evolution Markets has evolved along with the markets and our customers. We now offer trading services in nearly two dozen global commodity markets from offices in the United States and the United Kingdom.
Over time, Evolution Markets has become a trusted global partner for our customers, leveraging our in-depth market knowledge and world-class, value-added transaction execution.
