‘Lack of trust’: Four in 10 sustainability professionals avoid using carbon offsets in decarbonisation plans
A new study of hundreds of senior sustainability professionals has found that many still do not trust the quality and reliability of carbon offsets and credits, despite many noting that they will need to use them at some point as part of net-zero targets.
The ‘Carbon Offsetting in 2023’ report commissioned by AI specialists AiDash surveyed more than 500 senior sustainability officers across the globe, covering attitudes towards sustainability actions that corporates can make.
The report found that 97% of businesses consider carbon management in investment decisions. It also found that CSOs have much more accountability internally, with 79% reporting into the boardroom.
However, with 56% of respondents citing net-zero targets on or before 2030, the survey showcases the key challenges that businesses have in covering unavoidable and residual emissions through offsetting.
With the Science Based Targets initiative’s (SBTi) own Net-Zero standard stating that up to 10% of a companies remaining emissions can be covered by offsets there is a growing acceptance within the green economy that these carbon credits and markets have a role to play.
AiDash’s new report finds that 43% of companies use carbon offsets for hard-to-reduce emissions, combining these credits with direct reduction measures. However, 41% of respondents claim they are not using carbon credits, citing a lack of trust in them. Key concerns were raised about inconsistent measuring, poor monitoring and an overall failure to prove that the offsets are based on additional carbon captured.
Of those using carbon offsets, 4% claimed they do not validate them, at all, while 35% only purchase from government-backed or voluntary certified schemes. Additionally, 43% have turned to external credit rating agencies and 35% undertake their own validation or third-party due diligence. Four in 10 businesses use a combination of the above. Businesses are concerned by a lack of harmonisation as to how credits should be utilised.
It is the latest piece of research that explores the interest and reservations that businesses have in utilising carbon credits and markets.
Earlier this month, for example, a new global survey of more than 500 business leaders, coordinated by Conservation International and We Mean Business Coalition explored the priorities of businesses seeking to reduce emissions.
It found that 51% of businesses feel that carbon credits will enable them to address climate impacts this decade and reduce emissions in the long-term. In total, 89% felt that carbon credits were an important part of decarbonisation efforts.
One-third of businesses are actively investing in the voluntary carbon market, while 51% view it as a viable option in the future. However, concerns around greenwashing (44%), carbon credit quality (33%) and a lack of market regulation and transparency (38%) are the current barriers to increasing corporate investment in this area.
These markets collectively surpassed $1bn in value in 2021. Mark Carney’s Taskforce on Scaling Voluntary Carbon Markets is predicting that their scale in 2050 may be up to 160 times larger than in 2020. The fact that net-zero targets now cover 91% of GDP is a strong indication that further exponential demand growth is on the horizon.
Progress was made at COP27. Beyond the big, top-line visions agreed upon by nations, discussions also continued to flesh out details on Article 6 of the Paris Agreement – the part of the accord ‘rulebook’ pertaining to carbon markets and credits.
Article 6 covers both “compliance” markets, enabling nations to trade emissions credits garnered from reduction and removal activities with each other (under Article 6.2), and “hybrid” national-private markets, enabling countries to sell credits to businesses (under Article 6.4). Article 6.2 is gradually replacing the existing Clean Development Mechanism; nations have been trading carbon credits for more than a decade already. But whether this has actually led to anywhere near the stated level of climate benefits is debatable.
However, those close to these markets have warned that the quality of credits being generated are “junk” which in turn could undermine corporate efforts to balance emissions through offsetting initiatives. This could derail net-zero commitments in the long-run.
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