Climate change & net-zero: Why the lack of urgency?
by Richard Jardine
Olivier Levallois is the guest author of this post. He is the director of Hamerkop Climate Impacts, a consulting firm working with carbon project developers, NGOs, governments and international organisations to structure greenhouse gas mitigation projects following best practice. He provides his opinion on the five steps companies can follow to ensure the integrity of their offsetting approach, companies can follow these five steps:
The purpose that leads a company to adopt a holistic offsetting approach should be specific, focussed and support (not replace) the broader decarbonisation strategy. Offsetting should not be used to address all of a company’s emissions, and unavoidable emissions should be defined clearly and objectively. Offsetting should be considered as part of a mid to long-term strategy, and fit within a company's broader climate and business objectives to reduce emissions beyond what can be achieved in their scope 1, 2 and 3.
Companies have an increasing number of options available for balancing out their residual emissions. Buying “off-the-shelf” credits year on year remains the most common pre-net-zero era approach. Leaders are increasingly getting involved in dedicated projects they can shape to better fit their own long-term strategy. While larger companies have the possibility to invest in their own mitigation activities, smaller organisations can co-invest in such activities.
Both types of organisation can launch calls for projects to support over the long term, and find a range of options, from standalone local project developers, to dedicated international project development firms and project aggregators. Numerous early-stage projects are formulated and are looking for investment, which leaves companies the chance to shape some of the project’s aspects before it starts. For some companies, project activities can take place on their supply chains.
It can take from two to five years before a project can trigger carbon credits usable for climate-related claims. In the meantime, companies may need or want to acquire “off-the-shelf” credits, and rely on third-party rating agencies or consultants for assessing their robustness.
Balancing out or offsetting emissions with third-party project activities is not all about carbon. Guidance on best practices is developing fast. Companies can ensure the project they support will generate emission reductions that align with the Core Carbon Principles set out by the Integrity Council for the Voluntary Carbon Market, with VCMI’s Claims Code of Practice, with SBTi’s reporting requirements, and with the Oxford offsetting principles short to long-term strategy on using offsetting in line with net-zero objectives.
This guidance will have implications on the project type and design, on certification standards used, and on the way mitigation outcomes can be claimed.
Companies sponsoring such ventures can involve key team members in the project’s design and certification, and ensure the robustness of the approach and conservativeness of assumptions made to calculate emission reductions.
The launch and operation of project activities producing carbon credits provides plenty of opportunities for engaging stakeholders, notably employees, suppliers and customers. Supporting a project from the onset provides a great educational experience, which can be used by companies to communicate about their activities, their climate goals, and to give meaning to the activities they support.
The ongoing and continuous monitoring requirements of the carbon certification standards generate a significant amount of information, which can be used not only to communicate, but most importantly, to amend and improve project design over time. This is a great opportunity for sponsors to improve the project activities.
Companies that will be adopting leading approaches will be perceived as role models, and have the credibility to advocate in favour of a broader adoption of such strategies. This could be done in the form of conferences, white papers, “lessons learned” and can only reflect positively on the company.