NECESSARY HALF-MEASURES?

Making offsets meaningful

Many business travel industry players see programmes to reduce and offset carbon emissions working hand-in-hand. According to GBTA’s 2022 State of Sustainability in the Global Business Travel Sector report, 70 per cent of industry respondents said that offsetting emissions by investing in environmental projects should be encouraged or mandated as part of a green travel programme – an approval rating similar to reduction strategies like prioritising travel routes with the smallest CO2 footprint and prioritising flights or airlines that use sustainable aviation fuels.

“In terms of business travel, we think offsetting is a responsible part of any business travel programme, but it must be tied with a meaningful strategy for reducing emissions to get to net zero,” says Brennan. “Carbon-avoidance offsets will get a business to carbon neutral, but not net zero,” which he says, “will only be achieved through carbon reductions in the travel programme, and carbon-reduction style offsetting.”

Alyson Genovese, global head of corporate responsibility at S&P Global, believes that “if not used as part of a carbon reduction scheme, offsets simply are a way to excuse bad behaviour.”

What’s the difference?

Carbon offsetting takes two fundamental forms: carbon avoidance offsets, which include funding new renewable energy programmes like solar farms or providing efficient cooking stoves to rural communities to replace coal or wood stoves; and carbon reduction offsets, such as the development and use of SAFs, direct capture of airborne carbon emissions, “and – some might argue – tree planting,” says Brennan.

Carbon credits are similar to carbon offsets: under a cap-and-trade carbon credit programme, companies can trade carbon credits to meet mandatory emissions requirements. Carbon offset programmes, on the other hand, are a voluntary initiative undertaken by companies as part of a broader sustainability policy.

Jop Weterings, expert associate partner on net zero initiatives at McKinsey & Co, says voluntary carbon-reduction programmes helped remove 173 million pounds of CO2 from the atmosphere last year. “That sounds like a lot, but it’s less than half of a per cent of global emissions,” he explains. Still, that number was up 53 per cent over 2020, and such programmes are expected to increase tenfold by 2030.

For every company there’s a different motivation. “Some just want to do the right thing on climate action. Others realise there’s a real risk in the business chain. Investors expect alignment with net zero. There are consumer expectations among the younger generation especially. And good talent wants purpose-led employers, especially in a tight labour market,” says Weterlings.

Watch out for greenwashing

‘Greenwashing’ – taking questionable environmental decisions or fudging the numbers to make sustainability efforts look more impactful than they really are – remains a serious problem in the world of carbon offsetting, both among suppliers and purchasers. Poor quality control feeds public perception that carbon offset programmes lack legitimacy, amplifying the need for regulation of the marketplace, says Brennan.

“There are heaps of high-quality projects that deliver meaningful reductions and are accelerating decarbonisation in low-income parts of the world, but I think the general member of the public thinks of offsets as a scam,” he says.

He continues: “In general, the simpler ‘less sexy’ offset methods are the hardest to apply dubious accounting to – the effect of a solar panel or wind farm is quite straightforward to calculate, for example. The most important thing is making sure there is a high-quality verifier behind the programme, such as GoldStandard or Verra.”

SCS Global Services is another well-regarded player in the carbon offset verification market. The Environmental Defense Fund, World Wildlife Fund, and Oeko-Institut also collaborated on a tool (see carboncreditquality.org) to assess carbon credit quality, initially focusing on three popular types of carbon-reduction programmes: landfill gas utilisation, efficient cooking stoves, and afforestation and reforestation projects.

An offsetting journey

S&P Global has been able to achieve 100 per cent carbon offsetting of its travel programme by working with Natural Capital Partners, which connects companies with vetted programmes in the voluntary carbon market.

The financial information and analytics firm has coupled reductions in its travel budget with carbon offset programmes like preserving Amazon rainforest, solar-powered water programmes in India and clean cooking initiatives in China.

“National Capital Partners gives us a portfolio of programmes to choose from,” says director of global travel and meetings, Ann Dery. The company also planted 35,000 trees – one for each employee – when it merged with IHS Markit in February 2022. “There are so many scams out there when it comes to offset programmes,” warns Dery.

Thrust Carbnon’s Brennan says: “While carbon-reduction offsets are superior, they’re nascent technologies and it’s not really feasible to completely get a businesses emissions to zero using them at this time due to low availability and therefore prohibitive cost.

“So the best businesses are analysing their footprint to reduce their emissions, phasing in reduction-style offsets of 10 to 20 years, and using avoidance-style offsets to do something about their footprint in the meantime.”

That suitably describes S&P Global, which has set a hard deadline of 2040 to achieve net zero while continuing to reduce and offset its emissions.

Dery predicts the supply chain “will eventually rely less heavily on carbon offset programmes as more companies require preferred vendors to commit to science-based targets and fixed dates to achieve net zero. Corporate responsibility coupled with government intervention will push organisations to reduce their carbon footprint over time,” she believes.

“Carbon offsets will be here for the near future,” Dery says, adding that achieving widespread net zero for US corporate travel will likely require more government and regulatory intervention, as has been the case in Europe. “If we leave it up to corporate responsibility, change will be quite slow,” she says.

Minimal offsets, maximum success

Once companies integrate carbon reduction into their sustainability programme, the ultimate goal should be to wean off carbon avoidance programmes.

Scott Gillespie, founder and CEO of travel management and justification consulting firm tClara, says the perception that offset programmes are an effective strategy must change in order for companies to shift focus towards carbon reduction.

“The company’s sustainability officer needs to communicate to travellers that carbon offsetting has no significant impact in the short term,” says Gillespie. “The only practical way to reduce carbon emissions in the short term is to reduce travel. The goal must be to eliminate low-value trips.”

S&P Global’s Genovese suggests that rising costs may make purchasing offsets less attractive. “Instead, the money can be used to decarbonise operations or working with supply chains [to achieve] actual emissions reductions,” she says.

Ultimately, says Brennan, “Offsetting is an important component to a sustainability programme, but must always be secondary to reduction. If we want to prevent a climate disaster, every business will need to reach net zero by 2050,” he says. “Net zero can only be achieved with reductions, so that will leave no place for avoidance-style offsets. Reduction-style offsets will always be necessary for unavoidable emissions.”