The Climate Of Business #133: Rapid increase in unprecedented weather, UK on its way out of coal blocks new coal mines, ban on fossil fuel ads

Climate Change Reality

• Scientists warn 70% of the world’s population to see rapid increase in ‘unprecedented’ weather (Euronews )
• Wildfires sweep Amazon as Brazil suffers worst drought on record (Financial Times )
• At least 236 killed in Myanmar flooding from Typhoon Yagi (Al Jazeera )
• Summer 2024 the hottest ever, EU climate change monitor says (World Economic Forum )

• 52 million tonnes of plastic pollution entered the environment in 2020 (World Economic Forum )
• Portugal battles deadly wildfires (Al Jazeera )
• Extreme heat due to climate crisis puts people at greater risk of kidney disease (The Guardian )
• Barcelona and Majorca will shift to a desert-like climate by 2050, new drought study warns (Euronews )
• Oil-rich nations ‘pushback’ against fossil fuel phaseout (Financial Times )

Business Climate Reality

• Pharma groups to tackle greenhouse gases from asthma inhalers (Financial Times )
• UK high court blocks first new coal mine in 30 years. (Euronews )
• 50% of net-zero emissions reductions are projected to come from emerging technologies by 2050 (World Economic Forum )
• The Hague to ban fossil fuel ads from January (Al Jazeera )
• Climate summit opens in Kenya as Africa demands more say and financing (Al Jazeera )
• UK farming's 'net zero' climate target in doubt (BBC )

• Climate change could reduce global GDP by up to 14% and displace 1.2 billion people as climate refugees by 2050 (World Economic Forum )
• Almost 68% of Australia’s tourism sites at major risk if climate crisis continues, report says (The Guardian )
• Global carbon pricing needed to avert trade friction, says WTO chief (Financial Times )
• Wind and solar have risen to ‘new highs’ in the EU overtaking fossil fuels for the first time ever (Euronews )

Reality Check?

Carbon offsetting is a mechanism that allows individuals or companies to compensate for their carbon emissions by investing in projects that reduce or remove an equivalent amount of CO2 from the atmosphere. By reducing or removing greenhouse gases to compensate for emissions made elsewhere, offsetting projects allow companies and individuals to invest in quantifiable environmental projects to balance their carbon emissions. Accordingly, this week’s newsletter will discuss the nature of offsetting, along with the viability of carbon offsets as effective decarbonisation strategies.

What does carbon offsetting actually involve?

Carbon offsetting technologies (or projects) include reforestation, renewable energy projects and carbon capture. It is part of any corporate sustainability strategy that aims to reach net-zero when it complements a decarbonisation strategy. Each of these projects contributes to the reduction of carbon from the atmosphere. Examples of common offsetting projects include:

• Carbon capture and storage (CCS): This is the process of capturing carbon dioxide from chemical or biomass power plants and storing it underground to prevent the release of carbon dioxide. Carbon capture technologies range from forestry to air-filtering machinery capable of capturing airborne CO2.?
• Renewable energy projects: These involve developing wind farms, solar parks, and other renewable energy sources that replace fossil fuels.
• Reforestation projects: This includes planting trees to absorb CO2 from the atmosphere. Not only does this help to absorb CO2, but also restores degraded forests and prevents deforestation.
• Energy efficiency improvements: This includes investment in projects to improve energy efficiency in buildings, industrial processes, and transportation to reduce overall energy consumption and emissions.

Is carbon offsetting a good practice for corporate sustainability?

Whilst carbon offsetting is often seen as a tool for immediate carbon mitigation, offsets can easily be misused, leading to accusations of greenwashing. When reducing direct emissions is challenging, offsets offer a flexible and cost-effective approach for companies to support various global sustainability projects (e.g. carbon capture).?

However, companies can use offsetting to ‘greenwash’ or appear more sustainable than they actually are. This is because investment in offsetting projects can detract from efforts to reduce direct emissions, as companies might rely on offsetting rather than implementing more challenging internal changes. Meanwhile, there are widespread criticisms about the credibility and effectiveness of some offset projects, particularly those that do not have rigorous certification or verification standards.?

Further risks of carbon offsetting

Beyond the above cons, carbon offsetting is associated with further potential risks such as double counting, non-permanence, and over-reliance. These risks are explained below:

• Double counting: Double-counting occurs when a single offset is claimed by more than one entity, which can undermine the integrity of carbon offsetting schemes and lead to inflated claims of emission reductions.
• Non-permanence: Many offset projects, particularly those involving forestry, face risks of reversal (e.g., a forest planted to offset emissions may later be destroyed by fire, pests, or logging), questioning the permanency of the claimed emission reductions.
• Over-reliance: Companies might invest heavily in offsets at the expense of reducing their own emissions. This can delay necessary operational changes and technological innovations needed for long-term sustainability.

How can offsetting be effectively integrated into a net-zero strategy?

Despite the risks associated with offsetting, companies prioritising direct emissions reductions can effectively incorporate carbon offsetting into their comprehensive net-zero strategy. Businesses should implement a wider sustainability strategy that prioritises the reduction of direct emissions via improving operational efficiencies, adopting sustainable business practices, reducing energy consumption, investing in renewable energy, and investing in green technologies (e.g. carbon management software).

Ultimately, offsetting can complement but should not substitute ongoing efforts to minimise carbon footprints directly. Yet, organisations that choose to integrate carbon offsetting into their wider strategy must ensure transparent reporting, rigorous verification of offset projects, and continuous reassessment of internal emission reduction opportunities.

Schedule a call with Plan A. Our experts are ready to discuss how your company can lead in sustainability and leverage ambitious decarbonisation strategies to gain a competitive edge.?

Carbon Price