Carbon offsetting has been hailed by many as the go-to solution for businesses to get a handle on their carbon emissions. But, while offsetting is a necessary part of the puzzle, here, Mauro Cozzi, Co-Founder at Emitwise, the carbon management platform, discusses why this approach has its flaws and where businesses can focus instead.
We are seeing companies proclaiming that they are everything from carbon neutral to net zero because they have invested heavily in carbon offsets. This is misleading, and it undermines the gold standard set by the Science Based Targets Initiative (SBTi) – that businesses should fundamentally reduce 90% of their emissions. Of course, there is nothing to prevent businesses from doing both in parallel; in fact, the best businesses do exactly this. However, companies that only refer to offsetting are greenwashing – end of story.
Another point worth mentioning is that there is a huge difference in the quality of offsets available on the market – a significant one being robustness. Where offsetting is necessary, companies must look for high-quality options from trusted providers, such as Climate Care and Pachama. If a business is only interested in buying the cheapest offsets, you can bet that it will be guilty of greenwashing.
Undoubtedly, the price of an offset per tonne of carbon it claims to compensate for indicates its quality. We are seeing offsets listed at £5 per tonne of carbon compensated – this is ridiculously cheap and will likely be ineffective. Think about it this way – one tree absorbs roughly one tonne of carbon over one hundred years. Can you imagine that £5 can protect the life of a tree over one hundred years? I think not.
Businesses that take offsetting seriously pay closer to £100 per tonne of carbon addressed. They understand that even if that’s not the price today, that’s what it will cost soon, when the markets are pricing them effectively.
Cutting carbon footprints
Turning our attention to cutting operational and supply chain emissions, as advised by the SBTi, is the ‘proper’ way to address corporate carbon reduction However, the hardest thing is understanding what to cut and defining realistic strategies to do so.
Step one is developing a strong baseline across all three scopes, highlighting the carbon hotspots to drill into and focus on. The best way to accomplish step one is to take carbon data as seriously as your company does financial information. This granularity isolates which manufacturing sites, suppliers, or activities, for example, need to be addressed.
Initiatives to drive down emissions are not always intuitive. They need to be informed by good data. Take Walmart. The multinational retail corporation used data to discover that it could seriously cut the emissions it was responsible for by decreasing the size of its wooden pallets used to ship goods. By decreasing the air gaps in its pallets, Walmart could ship more products per shipment. As a result, fewer shipments are now required – meaning decreased fuel consumption.
Addressing supply chain emissions
Of course, achieving net zero requires companies to tackle their upstream, and where possible downstream emissions. The preliminary accounting for Scope 3 emissions can be done using spend data from your procurement teams. However, primary data is needed to get the granularity of information necessary to help suppliers reduce their emissions. This is where supplier engagement is needed. Companies who are leaders in sustainability know this and are working towards understanding and decreasing Scope 3, even before regulation requires it. At Emitwise, we are working to make it easier for these companies – we map out full supply chain carbon footprints and advise on actionable ways to align, engage and influence suppliers for positive change.
Given that up to 90% of a company’s carbon footprint owes to supply chains, it must be a focus for the business community. I’m afraid that businesses turning a blind eye to this reality are also greenwashing.
A final word
Carbon offsets have been positioned as attractive, low-hanging fruit for businesses to reach net zero.
In reality, businesses serious about hitting net zero before 2050 need to invest in transforming emission-heavy activities – offsetting is just a supporting act.
