In the autumn of 2005, CarbonSense was commissioned to write a ‘think piece’ on the subject of carbon neutrality. A growing number of companies claimed to be ‘carbon neutral’ or were advancing the idea that a particular product could be ‘climate neutral’, although such claims were also the subject of widespread criticism.
To consider what leadership on climate change might look like, we were able to draw on the experience of working on developmental pathways for businesses a decade previously, when attempts had been made to translate sustainable development into something meaningful at the level of an individual enterprise.
Wider influence
Although effective management processes for new and complex issues need to be established, these processes in effect form only a baseline for any forward-looking company. We recognised that ‘carbon management’, once established, would be ongoing but should not be an end goal in itself. Once emissions are quantified, reported and reduced, the wider influence – up and down the supply chain and with other stakeholders – would also be the concern of tomorrow's company.
Restorative enterprise
The notion of a restorative enterprise, i.e. a business that aimed to not only be sustainable but also to actively help repair the natural environment, had been around for some years. Although no company had fully accomplished this, the fact that such ambitions had been expressed suggested that true leadership might involve an aim more far-sighted than offsetting and a goal more positive than neutrality.
Positive solutions
We postulated that by actively engaging in the issues and developing new, decarbonising business models, a company might be able to move beyond just reducing emissions and develop business geared towards more positive solutions.
Problems with offsetting
While offsetting appeared to be part of a broader pathway to positive actions, our analyses suggested that in practice it was of limited value. Voluntary offsetting was mostly being undertaken by businesses with low direct emissions and the boundaries of the carbon being counted were very narrow. The emissions being offset were frequently described as ‘unavoidable’ but closer examination suggested that this usually meant ‘costly’, ‘inconvenient’, ‘calculated by our offset provider’ or, more fundamentally, ‘would involve changing our business model’.
Greenwash
The offsets being purchased mostly appeared to be of only very marginal benefit in addressing the climate challenge. We also found that most offset vendors were more interested in selling offsets than in helping their customers to reduce emissions. This was not surprising as a reduction in emissions could result in reduced sales for offset vendors.
Many offset vendors were selling offsetting to companies by targeting the people with marketing budgets rather than those actually tasked with working on reducing emissions. Marketing-led claims to be ‘green’ or ‘carbon neutral’ often amounted to little more than greenwash - a gloss that might bring benefits in terms of image and reputation but lacked depth and integrity.
Carbon accounting
The carbon accounting processes involved in offsetting are based on a host of assumptions that do not stand up to scrutiny. For example, to consider all carbon to be equal over time is to ignore the changes of a dynamic system. Global warming potential is compared over 100 years. This made sense when it appeared that we had several decades in which to start to take action but it makes limited sense now. A ten or twenty year comparison would draw more attention to the need to reduce methane emissions. The concept of additionality is convenient but widely abused. In addition, the very processes of carbon markets encourage a kind of colonialism in which wealthy nations avoid action by investing in developing countries for their own purposes.
Unsatisfactory aim
Although there may be some exceptions, in our view offsetting and carbon neutrality were generally treated by businesses as a means to convey an impression, to tick a box, so that they could continue operating in much the same way as usual. Given the limitations of offsetting that we observed, a claim of carbon neutrality based on offsetting did not seem to be a satisfactory aim for business or government.
Carbon positive
To make clear that we were concerned with a goal that was both more holistic and more ambitious, we coined the term ‘carbon positive’. We wrote a further paper about the ‘carbon journey’ in which we set out key actions for a business to take in order to move towards this carbon positive goal. Subsequently, many companies have sought our advice about the carbon journey and although a minority have gone on to make claims about neutrality, most have eschewed offsetting in favour of more integrated strategies.
Climate change underestimated
The challenge ahead is becoming more starkly defined. The climate system is changing faster than models have predicted. Feedbacks are being driven by other ‘positive’ feedbacks, adding to and accelerating the changes rather than holding them back. Some scientists now advise that for the climate to be stabilised, we should aim for an atmospheric CO2 concentration of no more than 350ppm. That is significantly below the actual concentration of 385ppm and far below the 550ppm target of the EU. Nicholas Stern has acknowledged that, in his report to the UK Government, the pace of climate change was underestimated. Other studies have suggested that to achieve climate stabilisation it will be necessary to stop CO2 emissions altogether.
Targets and mobilisation
In the U.S., the Earth Policy Institute has drawn up proposals for an 80% emission cut by 2020 and in the UK the Centre for Alternative Technology has mapped out an alternative energy strategy to achieve a Zero Carbon Britain by 2020. In addition, rapid rises in oil and energy prices, and concern about Peak Oil and energy security are becoming increasingly allied to concerns about climate change. Escalating food prices – partly a result of climate change and the switch to biofuels – are further spurring grassroots mobilisation in the UK and elsewhere. There is also a growing movement advocating re-localisation, re-skilling for local resilience, and the decoupling of growth from carbon.
Tipping points
There are calls for not only a ‘low carbon’ economy but also a ‘negative-carbon’, ‘carbon absorption’ or ‘carbon removal’ economy. There are demands for carbon sequestration at the point of emission and technologies that will enable carbon to be captured from the atmosphere. Questions are being raised about whether growth itself is a holy cow, about ‘post growth’ and ‘post carbon’. As Lester Brown, President of the Earth Policy Institute, has stated: “We are in a race between tipping points in natural and political systems”.
Marginal adjustments
It is not yet clear whether companies are reconfiguring their businesses for a carbon constrained world, or simply making marginal adjustments under new headlines. A number of established companies have begun to test their business models against the scenarios of carbon constraint and climate change. They may be eclipsed by new players using disruptive technologies and new organising principles. Many ‘green’ start-ups are now developing propositions specifically related to carbon and climate change. Their impact could escalate as investors seek climate change-related opportunities and a carbon literate society develops.
Leadership
Offset vendors, carbon traders, banks and other players continue to jump on to the offsetting bandwagon. There will undoubtedly be other red herrings too, but if we are to rise to the challenge of climate change, we will need to quickly improve or reject inadequate ‘solutions’ and develop new ones. It is clear that the kind of leadership that the climate challenge demands will require looking beyond claims of carbon neutral. Forward-looking companies are working towards decarbonising business models and starting to frame their objectives in terms of zero carbon and carbon positive.
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