13: Is carbon offsetting good enough for companies?

This week’s entry reports on what companies should be doing about net zero.

The main message is that it is not good enough just to calculate a company’s carbon emissions and pay for carbon offsetting that matches them. Furthermore, carbon offsetting is often done with little assurance that it will be (a) permanent, (b) in time, (c) not happening anyway and (d) not being double counted.

The ‘Science Based Targets initiative’ (SBTi) has defined net zero targets for companies as follows:

‘To reach a state of net zero emissions for companies implies two conditions:
1. To achieve a scale of value-chain emission reductions consistent with the depth of abatement achieved in pathways that limit warming to 1.5°C with no or limited overshoot and;
2. To neutralise the impact of any source of residual emissions that remains unfeasible to be eliminated by permanently removing an equivalent amount of atmospheric carbon dioxide.’

Let’s break down what this means. The first and most obvious point is that there are two conditions – emissions reductions as well as offsetting – offsetting alone isn’t good enough. Companies who declare they are net zero because they have offset their emissions but are carrying on as they were before otherwise do not satisfy the agreed definition, and nor should they.

Secondly, the definition refers to ‘value-chain emissions’, what are those? Also known as Scope 3 emissions, they are emissions that companies are responsible for, but outside their own operations. (Scope 1 are direct emissions such as gases escaping from running a boiler or a company car, Scope 2 are indirect emissions such as using electricity that has been produced by burning fossil fuels).

Value-chain emissions are important because for companies they represent the majority of the emissions they are responsible for, something like 70% for a typical business, but have less control over them. Let’s take the example of paper, which is much used in offices – although perhaps rather less since we got used to remote working during the pandemic. Both the emissions associated with manufacture and disposal of paper are Scope 3 emissions, ‘upstream’ (before it gets to your company) and ‘downstream’ (after it leaves your company) respectively.

Scope 3 also includes emissions resulting from business travel, employee commuting and company investments. See this page from the Carbon Trust for fuller details.

How can you reduce your Scope 3 emissions when they are not generally in your direct control? You still have control over your suppliers. Taking the paper example, it would be a case of checking whether your current supplier had a valid net zero strategy to which it was adhering, and switching supplier to one that did if the answers were unsatisfactory and the original supplier was not prepared to comply. On a less procedural level, choosing a supplier that used sustainable sources with a low carbon impact and whose products were recyclable would be preferable to one that was not.

It is fairly clear how to reduce your travel emissions, although switching to electric-powered travel will only become emission-free once the generation of that electricity is emission-free, and if there is commuting or business travel over a long distance there may be no alternative. Perhaps working from home and remote meetings will be part of companies’ net zero strategies, but I would hope that the human interaction of face-to-face meetings is not lost.

Back to the definition – the remainder of the first limb is about companies having a net zero trajectory that is similar to the national trajectory, in particular a steady reduction over the whole period to 2050 rather than leaving big reductions to the end.

The second limb of the definition is about offsetting the emissions that remain; key words here are ‘permanent’, ‘removing’, an unsaid, but also clear, assurance that the removal is uniquely attributable to the emitter concerned. If you plant some trees for emissions happening now, the trees will take 40 years to remove CO2 at their maximum rate which represents a significant delay, but associating a company’s emissions with already grown trees is unlikely to count as they would have been grown anyway. Are the trees really going to represent permanent removal, as well?

There really ought to be a register like there will be for biodiversity net gain where offsetting activities are listed and attributed to emitters so that there is no double counting and it is all transparent.

I am pleased to say that BDB Pitmans has recently had its carbon reduction plans approved by the Science Based Targets initiative, author of the definition above. Thus if we are part of your Scope 3 emissions you can be assured that we are aligned with your own net zero plans, and if we are not, you can choose us if you want to reduce your Scope 3 emissions with confidence.