If we use Carbon Offsetting, can Net-Zero truly be achieved?
Update April 2024: No change has been made to the SBTi current standards however, in July 2024, a discussion paper with a draft proposal from SBTi about potential changes to Scope 3 will be published which will feed into the standard draft (drafting phase). As part of the Standard revision process, and following consultations with all the relevant stakeholders, a first draft of basic rules, thresholds, and guardrails for the potential use of environmental attribute certificates for abatement purposes of Scope 3 emissions will be issued by SBTi by July 2024.
The urgency to combat climate change has opened up discussions around achieving net-zero across Scope 1-3 carbon emissions. As businesses seek ways to reduce their carbon footprint, the use of carbon offsetting has emerged as a preferred option to help support the transition. However, it is not without controversy. In this article, we will explore the controversy surrounding carbon offsetting and its benefits, and provide advice to businesses on how to effectively reach net-zero targets. In later articles, we plan to highlight the option of carbon insetting ( the addition of nature-based projects within a company's own supply chain).
Understanding Carbon Offsetting: What is Carbon Offsetting?
Carbon offsetting involves making up for greenhouse gas emissions produced by an organisation by investing in projects that reduce emissions elsewhere. These projects can include renewable energy development, reforestation efforts, or energy efficiency initiatives. The idea is that by supporting such projects, the emissions reduction achieved offsets the emissions generated by the business.
The Controversy Surrounding Carbon Offsetting
One of the key controversies with carbon offsetting lies in its potential to enable "greenwashing." Greenwashing occurs when companies overstate their environmental efforts to present a more environmentally friendly image than is warranted. Critics argue that some businesses use carbon offsetting as a way to sidestep the responsibility of true emissions reduction.
Furthermore, concerns have been raised about the potential lack of transparency and accountability in carbon offset projects. The quality and effectiveness of offset projects can vary, and there is a need for standardised methodologies and verification processes to ensure that they deliver genuine emissions reductions.
The Use Case for Carbon Offsetting
Despite the controversies, carbon offsetting has its own set of benefits. It provides a mechanism for companies to take immediate action by funding projects that have a positive impact on climate change. Offset projects can contribute to the creation of clean energy infrastructure, protect biodiversity through reforestation efforts, and support local communities through job creation.
Additionally, carbon offsetting can act as a stepping stone towards long-term emissions reduction. It enables businesses to bridge the gap between the emissions they are currently unable to eliminate and their net-zero targets. Moreover, it could incentivise investment in low-carbon technologies and thus, shifts towards more sustainable practices.
Can Carbon Offsetting be used for my SBTi targets?
The Science-Based Targets initiative (SBTi) has set clear rules for utilising carbon offsetting as a strategy to achieve net-zero targets. SBTi recognises that while emissions reductions should be the primary focus, some residual emissions may be challenging to eliminate. In such cases, companies are permitted to invest in high-quality carbon offset projects. However, the process must be rigorous, transparent, and verifiable. SBTi mandates that the offset projects comply with recognised standards and focus on emissions reductions in sectors that the company cannot directly influence. Additionally, companies are required to prioritise reducing their own emissions before resorting to offsetting. By establishing these rules, SBTi ensures that carbon offsetting remains a tool to complement emissions reduction efforts rather than a substitute, enabling companies to achieve their net-zero targets sustainably and credibly.
If we use Carbon Offsets, can Net-Zero truly be achieved?
Carbon offsets have become a popular mechanism for companies to claim they are achieving net-zero emissions. However, questions arise around the effectiveness of such offsets if they simply allow companies to avoid making substantial changes to their business practices. While carbon offsets may have a role to play in reducing emissions, they should not be seen as a panacea for achieving true net-zero. Allowing companies to continue business as usual while relying solely on offsets runs the risk of perpetuating unsustainable practices. Companies must prioritise substantial emission reductions within their own operations and supply chains before turning to offsets. Relying too heavily on offsets without making meaningful changes to business practices may ultimately undermine the goal of achieving a sustainable, low-carbon economy.
Advice for Businesses: Reaching Net-Zero Targets
To effectively reach net-zero targets, businesses should consider the following suggestions:
1. Reduce emissions internally: Focus on reducing emissions within your own operations by adopting energy-efficient technologies, improving waste management processes, and integrating sustainability into your supply chain.
2. Set ambitious targets: Establish clear and meaningful goals for emissions reduction, aligned with science-based targets or international frameworks such as the Paris Agreement. These targets will guide your overall strategy.
3. Prioritise emissions reduction: Actively pursue emission reduction opportunities within your operations, supply chain, and business model. Only offset unavoidable emissions after significant reduction efforts.
4. Choose credible offset projects: Carefully select offset projects that meet recognised standards and certifications. Look for projects with strong social and environmental co-benefits and ensure rigorous verification and monitoring processes are in place.
5. Communicate transparently: Provide clear and reliable information about your emissions reduction strategies, including the use of carbon offsets, to avoid accusations of greenwashing. Honesty and transparency are key to maintaining credibility.
6. Get trusted advise: To support your businesses journey to Net-Zero, whatever stage this is, it is important to get science-based, trusted advise so that you can be confident that you are supporting the environment and your business’s commercial interests. If you would like support or advise on what Net-Zero could look like for your company- get in touch with Oakdene Hollins.
Carbon offsetting is not a standalone solution, but it can play a crucial role in helping businesses achieve their net-zero targets. By approaching carbon offsetting with caution, transparency, and a genuine commitment to emissions reduction, companies can make meaningful contributions to the fight against climate change while driving sustainable practices across industries.
Disclaimer: The information provided in this article should not be considered as financial or legal advice. Please consult with appropriate experts for specific guidance based on your business's circumstances. Please get in touch if you would like to discuss this with our technical sustainability experts at Oakdene Hollins.