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Carbon Offseting, Friend or Foe?

The number of companies claiming to be carbon neutral, or moving toward being net zero carbon emitters is on the rise. This is a trend that should be both celebrated and encouraged. However, like many of the superficial changes that firms announce to engender goodwill from an increasingly environmentally conscious public, carbon neutrality does not necessarily equate to a reduction in greenhouse gas (GHG) emissions. For many of these companies, the pathway to carbon neutrality relies heavily – if not entirely – on carbon offsetting, which can be dangerous. An over-reliance on carbon offsetting will distract us from the ultimate goal of actually lowering energy usage and delay the meaningful changes that are required to keep us in line with the long term goal of The Paris Agreement (adopted at COP21 in December, 2015 ) of keeping global temperature rise well below 2°C.  

The most recent IPCC report, published in 2018, highlighted the many challenges of limiting global warming to 1.5°C, as well as the wide-ranging implications if we don’t. Overcoming these challenges requires meaningful action from governments, businesses, and individuals. The UK government has already taken the first step with their pledge to reach net zero emissions by 2050. With that law passed, it is imperative that companies follow suit and adapt their business models to align themselves with the transition to a low carbon economy. However, organisations in the UK have not been reacting to the climate crisis with sufficient urgency, and investors have allowed them to get away with ‘greenwashing’ rather than making fundamental changes to their business practices. 

According to analysis by EcoAct at the end of 2019, only 8% of companies in the FTSE 100 had attained carbon neutrality and only 10% more had committed to doing so. These figures are worryingly low, especially when considering what carbon neutrality can look like in practice. The sustainability reports of many of these companies do not show significant decreases in GHG emissions; instead purchasing carbon offsets. 

Carbon offset schemes have been in existence for many years now and are quickly gaining popularity – the number of FTSE 100 companies using them increased from 12% to 27% from 2018 to 2019 [EcoAct]. The principle is straightforward: for every ton of emissions produced, an equivalent ton of emissions is removed through a scheme that you support. It is vitally important that the removal is permanent, and this is where many offsetting schemes fall short. A huge number of offsetting projects have sprung up to try and meet the large growth in demand in recent years and clearly, not all of them are effective. A European Commission study found that a majority of projects would have gone ahead anyway – meaning that there was no additional removal of carbon at all.

In addition to company-level carbon offset schemes, firms are also using carbon offsetting as a means to entice customers to make “guilt-free” purchases. 

As consumers become more conscious of the impact that their lifestyle choices have on the environment, it becomes necessary for businesses to change the way that they market their product. In the food and beverage industry for example, it is becoming more commonplace for packaging to include the product’s carbon footprint. Companies such as Oatly are capitalising on this trend by making customers aware of their milk’s low carbon intensity compared to dairy products. 

Innovations such as this are beneficial; unfortunately however, some heavy carbon emitters are also using similar marketing efforts in a more sinister manner.  Airlines now provide you with the option of purchasing carbon offsetting credits in order to make your flight carbon neutral. This tactic now allows many individuals to fly as often as they’d like without it weighing on their conscience. This kind of incentive structure is dangerous. We should be incentivising people to take less flights not more, as we should be encouraging a change in habits with respect to all forms of consumption so that the most sustainable option is the most attractive. 

The arguments made here are not to discredit the veracity and integrity of carbon offsetting programs. There are many good schemes out there, and they do certainly have a vital role to play in the transition to a low carbon economy. The important thing to remember is that the goal should be a drastic reduction in our emissions – not simply business as normal and then attempts to negate these emissions afterwards. 

If carbon offsetting is used to allow consumers to pursue activities and choices for which there are legitimate alternatives that do not pollute the atmosphere, then clearly this is dangerous. Likewise, if corporations feel they can continue at their current level of emissions with no penalty, then this is also incredibly dangerous. 

In every scenario that the IPCC lays out for keeping warming below the all important 1.5°C level, there is a drastic reduction in polluting activities required. The longer that carbon offsetting is used by companies in place of making substantial changes to their emissions, the less likely it is that we will be able to avoid the impending crisis.