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Climate ChangeWhen Should Businesses Put money into Carbon Reduction vs. Carbon Offsets?

When Should Businesses Put money into Carbon Reduction vs. Carbon Offsets?

Because the planet rapidly warms and causes disruptive weather events, businesses increasingly understand that they need to deal with climate change.

Without aggressive motion, corporations could find themselves with unreliable supply chains (e.g., because of crop failures or shipping delays), and alienated customers, amongst other negative consequences.

The excellent news is that over 4,600 corporations are already taking motion by working with the Science-Based Targets initiative (SBTi). Meaning they’re setting targets to limit “global warming to well-below 2°C above pre-industrial levels and pursuing efforts to limit warming to 1.5°C,” the SBTi explains.

Amongst these corporations, nearly 1,700 have already set SBTi net-zero commitments. For many corporations, that involves cutting carbon emissions by at the very least 90% by 2050, with carbon removals used for remaining emissions that may’t be eliminated.

In that sense, the choice of whether to speculate in carbon reduction vs. carbon offsets is fairly easy:

For those who can reasonably reduce carbon emissions, do this first. Once you’ve gotten a carbon reduction plan in place and are making consistent progress on that plan, use carbon offsets to deal with emissions you may’t eliminate because of technological, financial, or other constraints.

In this text, we’ll take a deeper dive into this issue of reducing vs. offsetting emissions to allow you to make more informed decisions for the advantage of each what you are promoting and the planet.

Calculate, Reduce, Offset

To make the most effective carbon-related climate decisions for what you are promoting, consider the next three steps, taken in chronological order:

  1. Calculate: To know what it’s worthwhile to cut or offset, it’s worthwhile to first calculate your carbon footprint.Just as a CFO probably wouldn’t start slashing expenses in the event that they didn’t know overall spend vs. revenue, it doesn’t make much sense to attempt to align with science-based targets in the event you’re undecided how much carbon you’re emitting overall.Importantly, this implies calculating emissions from all sources, including third-party suppliers and vendors. While these and other Scope 3 emissions sources are inclined to be harder to calculate, as they’re generally outside your direct control, they have a tendency to make up nearly all of an organization’s emissions.

    On average, 75% of emissions come from Scope 3 sources, finds CDP.

    But in the event you know what that full footprint looks like, you may higher calculate the price of, say, switching to lower-emission suppliers as a way to reach reduction targets. And in the event you can’t disengage with some suppliers, then you definately can higher understand how much it’s worthwhile to spend money on carbon offsets.

    To find out your current emissions, you should utilize online carbon footprint calculators to get an initial understanding. From there, you would possibly work with consultants or other organizations that specialise in calculating carbon emissions through a deep review of what you are promoting.

  2. Reduce: With an understanding of your carbon footprint, you may start to scale back emissions where viable. That may take many approaches, similar to:
    • Switching to more energy-efficient appliances, similar to replacing a furnace with a heat pump
    • Installing solar panels to generate renewable electricity on-site
    • Switching from gas-powered to electric vehicles for company fleets
    • Encouraging employees to make money working from home to scale back commuting emissions
    • Setting emissions limits with suppliers and vendors

Nonetheless, it’s not at all times practical to scale back carbon emissions, because of aspects similar to:

Operational Control
For those who don’t operationally control the emissions, then there’s only a lot you may do to impress change.

You would possibly ask suppliers to make changes, but they is perhaps unwilling to achieve this. A small business, for instance, may not hold enough buying power to persuade suppliers to chop emissions, and there may not be any higher alternatives to change to.

Emissions Balance Image of Factories Emitting Carbon

Financial Viability
While you would possibly have good intentions around reducing emissions, it may not be economically feasible to, say, switch to a supplier that costs twice as much as your current one, simply to get a small reduction in emissions.

Or, perhaps you should spend money on more energy-efficient or renewable energy projects, yet you’re not within the financial position to achieve this yet. These investments can take time. There’s a reason net-zero targets are inclined to be set over many years, relatively than assuming all business can cut to zero immediately.

Technological Limitations

Even in the event you’re willing to spend money to scale back carbon emissions, sometimes the technology isn’t available, or exists at such a small scale, that you could’t reasonably make changes to chop emissions.

For instance, many industrial manufacturing processes depend on natural gas furnaces, and there are not any alternatives on the required scale.

Or, perhaps some sorts of business travel have to proceed in the intervening time. As much as you are attempting to chop down on flights, as an example, perhaps attending a world conference is integral to securing business growth (Let’s face it, networking at virtual conferences isn’t the identical, at the very least for now.). In that case, provided that sustainable aviation fuel stays in its infancy, there’s only a lot emissions-cutting you may do.

  1. Offset: On condition that some emissions sources can’t be cut, at the very least within the near term, a great solution is to offset your remaining emissions after you’ve began your carbon reduction plan.One other option to take into consideration that is to be carbon neutral on the option to net zero.As you spend money on using recycled and low-carbon materials in your production processes, for instance, you may also spend money on forestry carbon offsets. Not only can that balance your emissions sooner but it will probably also yield additional advantages, similar to protecting biodiversity via forest conservation/restoration.Offsets also are inclined to be a more cost-effective option to tackle emissions given the dimensions of those projects in comparison with what you’d construct internally.

    So, you may turn out to be carbon neutral sooner with offsets. When you’re able to scale back emissions more yourself, you would possibly then decrease your carbon offset purchases or proceed to fund carbon offsets to turn out to be climate positive.

    Carbon offsets may buy you time until viable technologies turn out to be available. And considering that corporations with net-zero goals will still likely have 10% or so of their emissions that may’t be reduced, carbon offsets will play a key role in meeting these targets.

Starting Improving Your Emissions Balance

While net zero is a terrific goal, it’s a long-term one. Meanwhile, climate change is wreaking havoc now. So, the concept of foregoing carbon offsets is dangerous. For cases where emissions can’t be cut, offsets will play a key role in helping the planet

As the UN notes, “net zero refers to a state by which the greenhouse gases going into the atmosphere are reduced as near zero as possible and any residual emissions are balanced by everlasting removals from the atmosphere.”

Within the short term, investing in high-quality carbon offsets may help your organization support climate stability, while long run, we are able to all work toward ongoing reductions that keep emissions from entering the atmosphere in the primary place.

For those who’re ready to start out investing in carbon offsets or need to explore custom sustainability solutions for what you are promoting, Terrapass may help.

Schedule a consultation now to speed up your carbon-neutral and net-zero path.

Delivered to you by terrapass.com


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