From Eco-Business, Published on July 21, 2016
Global name-brand companies are increasingly looking for ways to lower or offset their carbon footprint. Many of them are concerned about the viability of their operations in a warming world, since changes in weather patterns and temperature extremes could affect, for instance, the farmers supplying their cotton, or increase the cost of cooling their data centers. Others are doing it so they’re not caught flat-footed when new climate regulations take effect.
According to a new report by the NGO Forest Trends, 314 companies — nearly 20% of the 1,896 companies that publicly disclosed their 2014 emissions data to CDP (formerly known as the Carbon Disclosure Project) in 2015 — were engaged in the purchase or sale of carbon credits in order to draw down their emissions.
The majority of them — some 248 companies — purchased offsets, defined as a metric ton of carbon dioxide equivalent, whether they did so voluntarily or because they fall under one of the world’s regulatory carbon pricing programs, such as the one run by the state of California.
Another 79 companies are offset originators, meaning they create carbon credits by reducing the emissions from their own operations or supply chains in order to meet voluntary or compliance emissions reduction targets, or simply because they wanted to sell those offsets to other companies. 13 companies reported doing both, purchasing and originating carbon offsets, per the report.
Altogether, these companies purchased 39.8 million metric tons of carbon dioxide equivalent (MtCO2e) and originated another 102.4 MtCO2e in 2014. Forest Trends said in a statement accompanying the report that all of those carbon offsets would have the same impact on the climate as not burning 16 billion gallons of gasoline, or taking 30 million passenger vehicles off the road for a whole year.
“Offsets come from real projects on the ground, from installing new renewable energy capacity, to capturing and destroying global-warming gases released through manufacturing, to conserving endangered forests,” the group explained in the statement.
The top voluntary carbon offset buyers have remained fairly consistent over the last three years, Forest Trends found. Automaker General Motors took the top offset buyer spot in 2014 as it continued to try and green its image by offsetting the emissions generated by its Chevrolet business unit.
GM’s offset purchases alone represent nearly one percent of total transaction volume on voluntary markets to date, which Forest Trends tracked through its ecosystem marketplace initiative.
Delta Air Lines, the second top voluntary offset buyer in 2014, became a major player in the carbon markets in preparation for international aviation regulations — the International Civil Aviation Organization plans to launch a market-based mechanism in 2021, and Delta is looking to get ahead of the game.
Meanwhile, some companies are generating offsets within their own supply chain. A total of 79 businesses generated 102.4 MtCO2e in emissions reductions within their own operations or supply chains in 2014. Cosmetics maker L’Oréal, for example, distributes cleaner-burning stoves to women in Burkina Faso who boil the shea nuts used in its products.
And some 435 companies have adopted an internal carbon price, while as many as 538 have announced plans to do the same in the next couple of years. Barclays, Disney, Microsoft, and Swiss Re are among the companies that go even further by charging their various business units a fee based on the emissions they generate.
Perhaps unsurprisingly, Forest Trends found that companies engaging in offset-inclusive carbon management are reducing their emissions at a much higher rate than companies that don’t.
“Collectively, the 314 reporting companies engaged in offsetting spent $42 billion on direct emissions reductions in 2014 – more than the $41 billion spent by the much greater number of companies (1,522) that did not purchase or originate offsets,” the report notes. “As a result, companies engaged in offsetting mitigated a greater proportion of their greenhouse gas emissions, on average.”
For additional reading regarding carbon management, please refer to the following links:
More Cities to have Low-Carbon Future
Why is it Beneficial to Consistently Strive for a High CDP Score?
Setting Emissions Reduction Targets within the Corporate Sector – Part 3
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