Comment: Carbon offsets make good business sense

The CBI conference this week made it clear that businesses will need to be "green to grow." They must think seriously about cutting their emissions and build carbon management into their corporate DNA says Lionel Fretz, CEO Carbon Capital Markets.

The CBI Climate Change Task Force report comes from some of the UK's biggest companies and highlights how businesses can play their part in helping the UK cut their emissions and meet renewable targets.

This is the first time we have seen senior representatives from every major sector of UK business coming together to to identify the actions necessary to tackle problems posed by climate change. But behind the scenes the use of carbon credits to offset emissions is becoming part of mainstream corporate governance.

As consumer expectations about the role of corporations in delivering envirionmental benefits rise, companies such as BSkyB, HSBC, M&S and others are working to lower their carbon footprints and some will be using carbon credits to offset part of their emissions.

Companies realise that their reputation and brand value is in part derived from their impact on the environment. Consumers exercise choice by buying products and services from companies whose values mirror their own. Increasingly consumers care about climate change. Put simply, offsetting emissions associated with your product or service is becoming a minimum expected standard of behaviour.

The carbon market helps reduce emissions at lowest cost and has experienced phenomenal growth in the last few years. An estimated US$ 22 billion of carbon credits was traded in the carbon market in the first half of 2007 and is expected to enter into a new phase in 2008. Carbon credits are now being transformed from a niche commodity into an established asset class.

But companies must be sure that the offsets purchased provide real environmental and social benefits. One of the ways to do this is to only buy emission reductions that have already been achieved, not promises of future delivery .

This is what Carbon Capital Markets does. Having developed our reputation by trading within the Kyoto compliance markets, we have now started offering Certified Emission Reduction credits (CERs) to the voluntary or offset market.

Earlier this year, a UK Government consultation on a Code of Practice for Carbon Offsets recommended only the use of UN approved Kyoto compliant credits because they meet strict international standards in terms of the certification and monitoring of emissions reductions.

This ensures that high standards and a transparent audit trail process are imposed on project developers.

Companies buying Kyoto compliant offsets can be sure they are sourced from projects which make a genuine contribution to mitigating climate change and promoting sustainable development.

In addition, we donate a portion of our revenues to local development charities and other community organisations to ensure wider sustainable benefits - such as healthcare and education - are attained in the countries where CDM projects are developed.

Carbon Capital Markets can give details of these projects so that firms can communicate their valuable participation to stakeholders and beyond.

Businesses backing the CBI Climate Change report have shown real leadership. This coupled with international policy and consumer power should push more corporations towards management of carbon emissions.

With the need to demonstrate your attempts to lower your firms carbon footprint becoming increasingly powerful, offsetting your carbon emissions through the purchase of already achieved, UN approved credits could be the fastest, most efficient means of getting the job done.

Lionel Fretz, CEO, Carbon Capital Markets
www.carboncapitalmarkets.com

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