At this moment, corporate climate commitments/strategies are the shiniest of the shiny new objects. Corporate Net-Zero pledges are as popular as sweatpants right now. I’ve posted previously about considerations in using carbon offsets as part of a corporate climate strategy. Today, we’ll explore the reality of carbon offsets in more detail, shining more light on on their risks and liabilities.
Net-Zero commitments allow companies to continue CO2 emitting activities while balancing them out (“offsetting”) by working with external parties who either operate CO2 absorbing assets like forests, or will eliminate actual CO2 emissions through permanent operational changes. These transactions tend to take place in a voluntary market governed by contracts rather than legislation.
The topic of offsets is a complicated one, and fraught with hyperbole, mysticism and even fraud. We need a light saber to cut through the opacity and get to not only the reality, but the practicality of carbon offsets. Fortunately, our new Advisory Board member is a Jedi master with superb light saber skills – Dr. Mark Trexler, who has worked in the climate space for 30 years and offsets since the concept’s inception.
Mark has written extensively on offsets over the years. One of his recent blogs explains some fundamental problems with offsets. You can read his post for the details, but in sum it’s hard to ensure that offsets meet the “additionality” test:
“Additionality” means “reductions that can be traced back to the existence of, operation of, and/or financial incentives created by a carbon market, whether voluntary or regulated.” In other words, there must be specific intent created by a carbon market. Doing something – or not doing something – you would do as a normal course of business does not meet the definition of additionality and therefore does not create valid offsets.
Another complicated factor with offsets is figuring out whether they provide realistic time horizons for ultimately achieving the goal amount of CO2 uptake or avoidance. I’ve blogged about the risk that some companies may not be in business by the time their pledged offsets are achieved. Even assuming the company survives the test of time, the CO2 assets they rely on may not. For example, tree-planting isn’t the only way to generate offsets, but it seems to be garnering the most attention at the moment. But will the trees actually be here for the long-haul? Risks to long-term forest viability include drought, pest infestations, fires and even changing market dynamics for fiber.
Even further, nobody really knows how much CO2 uptake a tree will give you. More specifically, people are making extremely optimistic assumptions to arrive at published numbers:
Many tree planting efforts focus on the number of saplings planted or their initial rate of growth – both of which are poor indicators of the forest’s ultimate carbon storage capacity and even poorer metric of biodiversity. More importantly, viewing natural ecosystems as “climate solutions” gives the misleading impression that forests can function like an infinitely absorbent mop to clean up the ever increasing flood of human caused CO₂ emissions.
Bonnie Waring, Imperial College London
What You Can Do
If you are involved in your company’s carbon strategy, here are a few ways you can get your arms around this – and help your company avoid scrutiny:
- Learn carbon management basics, the lexicon and relevant acronyms/abbreviations – it is a whole new language. You don’t need to become a climate scientist overnight but you need to be generally conversant on the topic.
- Understand the breadth of the company’s plans and commitments.
- Educate yourself on carbon reduction options in general and on the suite of solutions the company plans on using.
- Ask questions, explore options and critically analyze them. Let’s be honest, climate strategy and its implementation are complicated with plenty of risk.
- Evaluate contingency and risk mitigation plans if one or more solution fails or does not meet expectations.
- Be clear, transparent and specific in corporate communications. Mark describes a number of things he feels are important as meaningful in one type of disclosure/communication. Be wary of greenwashing.
Postscript
This brings us to our new subscriber tree planting offer. We chose to have our trees planted in US National Forests rather than in a commercial mono crop setting. Professional US Park Service foresters select tree species that are indigenous to the location, with the main goal to restore or maintain biodiversity (for instance, in areas ravaged by wildfires) rather than carbon uptake.
