At COP21: carbon offset strategies are 'good for business'
The role business must play in meeting greenhouse gas reduction targets is in the spotlight in Paris this week at the climate negotiations known as COP 21. Nine businesses, including Aviva (LON:AV), Sky (LON:SKY), Fuji Xerox and DPD (NYSE:DPD) have joined Christiana Figueres, Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC), to speak about the benefits of offsetting carbon emissions.
On December 2nd a video released at COP 21 provides a platform for these companies to explain why offset strategies make good commercial business sense, and necessitate generating a holistic view of the entire organization. It begins with “analyzing the carbon footprint of the entire supply chain” says Lachlan Feggans, National Environment Manager at Fuji Xerox.
The importance of paying attention to the supply chain on many levels has become increasingly clear over the last few years around better corporate governance and sustainable business, as covered by me here on Forbes earlier this year.
Watch the video – produced by the International Carbon Reduction Offset Alliance (ICROA) below, with an introduction by Ms. Figueres and interviews with each company – and join the conversation on Twitter via #offset.
“Offsetting is a valid way to reduce global carbon emissions quickly and cost effectively,” says Ms. Figueres. Businesses that offset also tend to take the lead in reducing carbon emissions, suggests recent research from the Carbon Disclosure Project. Its data shows that the typical offset buyer cuts almost 17 percent of their direct emissions, compared to non-offset buyers who reduced emissions by less than 5 percent in the same year.
Using carbon finance to offset emissions “delivers an immediate response and can bridge the gap between internal reductions and meeting meaningful commitments” says Climate Care, which works together with business, governments and society to improve lives and in Twitter parlance, #BTHECHANGE.
Global businesses such as Microsoft (NASDAQ:MSFT), Jaguar Land Rover and the retailer Marks and Spencer (LON:MKS) have adopted carbon-offset approaches to enable them to go beyond the reduction targets they could achieve through internal change.
Investors might also be interested in noting that by supporting carbon-offset projects, businesses are investing in the local environment and communities, thereby delivering positive impacts beyond the carbon reduction, says Climate Care. While these ‘co-benefits’ vary by project, a market representative average was recently calculated by London University’s Imperial College at $664 for every tonne of carbon offset.
Carbon risk should be at the heart of investment strategy, according to Hermes Investment Management, the £29.5 billion (US $44.4bn) manager, which has just published a report, Turning Down The Heat, which focuses on the risks carbon poses to investment portfolios.
“It is crucial that we create the right outcomes from our investment decisions – and the right outcomes on a 30-year time horizon are those that mitigate risk, including carbon risk. In just 20 years, if circumstances don’t change, we will already be approaching dangerous levels of warming” says Saker Nusseibeh, CEO, Hermes Investment Management.
On Thursday Dec. 4 at COP 21 CEOs and experts from leading Dutch financial institutions will discuss the challenges to the development and implementation of carbon foot printing and target setting for investments on route to a low carbon society.
“Our initiative intends to experiment with annual carbon foot printing, disclosure and target setting for investments. These elements are key in developing and implementing investment strategies bringing about a low carbon society” says the Dutch Platform Carbon Accounting Financials, which is organizing it.
Dina Medland is an independent writer, editor and commentator with a strong focus on issues around corporate governance, ethics, the workings of the boardroom and sustainable business. She is on the team of contributors to @ForbesEurope and is an ex-Financial Times staff member who has been a regular contributor in recent years. Further details about her background and a portfolio of work – including her commercially sponsored blog ‘Board Talk’ are available on her website http://www.dinamedland.com