It seems that carbon offsetting makes headlines every week. But the real issues, and those that aren’t always written about, are whether offsetting emissions actually does anything to combat climate change and whether the organisations that run the schemes are to be trusted with corporate cash.

While some offsetting organisations have their activities audited, providing assurance that money is indeed going towards valid offsetting schemes, some do not. And opinion is divided over whether the schemes actually achieve anything ­ after all, the theory entertains the notion that corporates can emit as much carbon as they want, as long as they offset it later.

Climate change is affecting business in a number of ways. Legislation such as the climate change bill, the aim of which is for the UK to reduce emissions by 60% by 2050; the energy white paper and the Kyoto Protocol are testament to that.
However, for the finance director, being environmentally friendly doesn’t have to be about abiding by cumbersome legislation. Nor does it mean hugging trees. The truth is that the money a company can save from being energy efficient, sending less waste to landfill sites and changing to renewable suppliers are noticeable.

Off the FDs’ radar

Carbon offsetting, however, is a strategy that hasn’t really entered the finance director’s field of vision.

Offsetting allows companies and individuals to calculate the emissions they produce and then adopt a scheme that, in theory at least, will reduce the carbon dioxide in the atmosphere by the same amount. It’s not about saving money or growing your bottom line, it’s about the environment. So why should a company offset its carbon emissions?

Catherine Staveley, ethics communication advisor for the Co-operative Bank, believes that it has to do with company image. According to Staveley, Co-operative’s mortgage package, which offsets houses’ carbon emissions at no extra cost to the borrower, is just as popular as its mortgage holiday schemes, proving that the consumer does not see green issues as a fad.

Co-operative bank offsets its own operational emissions as well as a further 10% to cover historical emissions, but this is a unique selling point of a bank which has been offsetting since 2000.

Silverjet, the business class airline, came up with the idea that all its tickets would include a carbon offset within the price. However, the company doesn’t offset its own operational emissions ­ IT director George Henderson, who came up with the ticket offset strategy, believes that the company’s own emissions are a drop in the ocean.

He says it’s not feasible to hire a consultant to evaluate the company’s carbon footprint and offset for such a small number of people.

And while you might think that the last organisation to oppose carbon offset schemes would be Friends of the Earth, director, Tony Juniper, says that the schemes are being used as “a smokescreen to avoid real measures to tackle climate change”. He claims that the schemes encourage businesses to continue or even increase their climate bad behaviour, as they can just offset.

Last resort

Martin Gibson, director of Envirowise, believes that carbon offsetting should be an absolute last resort. A company should always reduce its emissions first, saying that “offsetting has a part to play, but is not the answer”. Gibson concedes that the scale of carbon emission reduction needed is too large for offsetting, which begs the question: why should companies bother? “It is fairly well accepted that we need to reduce carbon emissions by at least two-thirds or three-quarters” he says.

While technology is not, at present, able to supply companies with this mass reduction, what cannot be reduced should be offset. “Companies are currently doing this off their own back,” says Gibson, but what we need is a “mixture of incentives and regulation”.

Dr Sally Uren, director for business programme at environmental consultants, Forum for the Future, believes that while offsetting may never be the ultimate answer, for industries such as aviation where they have little choice, it is worth the investment.
The overall idea of carbon offsetting, according to Uren, is not something that will “get us out of climate change, but is a step in the right direction”.