Not all carbon schemes are equal, or even of real value
IT seems that everywhere these days people are talking about climate change and the idea of carbon neutrality. Carbon neutral’ became so popular that the Oxford University Press declared it Word of the Year in 2006.
In responding to the climate change challenge, individuals and governments are increasingly looking to the private sector to lead the way and demonstrate what they are doing to minimise their carbon footprint.
Being recognised as a market leader in climate change has alluring PR opportunities, and businesses are responding accordingly. Every day another business announces it intends to become carbon neutral’’.
But how does the climate conscious business cut through all the carbon speak’’ and isolate the best options available to it to reduce its carbon footprint?
There are compelling reasons for a business to invest in a carbon reduction strategy. Reducing emissions output can be part of a commitment to corporate social responsibility and a general sustainability strategy. Likewise, a reduction in energy consumption can generate financial gains through increased energy efficiency and productivity, and a reduction in production costs.
A carbon reduction strategy can also help maintain a long- term, stable business model by minimising the business’s exposure to the cost of complying with mandatory government measures to reduce carbon emissions, such as an emissions trading scheme.
For business, the starting point is to recognise that there is no one size fits all’’ approach to carbon neutrality.
To begin with, a business needs to independently verify its direct and indirect emissions to an existing accredited standard, such as the Australian Greenhouse Friendly scheme. A life- cycle assessment of the business’s activities reviews the emissions associated with the business’s own operations as well as those emissions caused by the business’s suppliers and the products that it makes.
Then, to maximise environmental, financial and social outcomes, the business needs to look at opportunities to reduce its own emissions — before considering carbon offsets. This usually involves seeking greater energy or process efficiency within its plant or facility, resulting in a reduction of emissions directly within the control of the business.
These internal actions can be complemented by purchasing Greenpower electricity. The business could also encourage its suppliers to become carbon conscious as well — for example, requiring tenderers for the supply of goods and services to outline their own carbon reduction activities.
Following the reduction of direct emissions, a growing number of businesses are choosing to augment their emissions reductions strategy by participating in one of the expanding number of voluntary carbon schemes, even though they currently are not required by law to do so.
For businesses in emissions- intensive industries, such as the energy and resources sector, this can be an important part of their emissions management strategy. Businesses are able to offset’’ the emissions they produce through approved abatement activities such as the generation of renewable energy or forestry sequestration of carbon dioxide.
Accredited offsets that are independently audited and verified are available through programs such as the Australian Government’s Greenhouse Challenge Plus Program and the Origin Energy Carbon Reduction Scheme. Both are voluntary partnerships between industry and business that give priority to the reduction of greenhouse gas emissions at the source but also facilitate the reduction of emissions through accredited offsets.
A word of caution needs to be sounded, however. Not all carbon offsets are the same. Voluntary offset schemes have varying degrees of accreditation and verifiability and some may not meet the ( yet to be determined) criteria for recognition under the commonwealth Government’s proposed emissions trading scheme.
Therefore, a business needs to carefully consider what exactly it wants to use the offset for, before purchasing offsets — is it just for PR or is it to comply with Government regulation?
In particular, businesses needs to take care to ensure they can prove their claims of carbon neutrality and that they do not overstate their environmental credentials.
In Australia, a business that takes a less than rigorous approach to carbon neutrality potentially exposes itself to legal action for breach of the Trade Practices Act, or tort, or even for breach of director’s duties under the Corporations Act.