Why Green Energy is Good?

There are a number of key commercial drivers that make it an imperative to put action on climate change at the heart of business strategy.

Investor Interest

Investors and analysts recognise that carbon emissions represent a real business cost. They look at carbon assets and liabilities as they would any other item on a company’s balance sheet.
Put simply, if investors feel a company is not strategically managing its climate change impacts, that will be reflected in the share price. Companies are being screened against environmental and social criteria, and indices such as FTSE4good are becoming significant influencers.

Legislation

With the world’s legislators required to deliver a 80% reduction in emissions over the next 30-50 years, the pressure on companies is likely to get tighter. Even 'indirect’ legislation from Local Planning Authorities will put pressure on businesses for energy efficiency and renewable energy.

Public Demand

Society is changing. Environmental and climate issues are being taken far more seriously. We are changing the way we live, how we travel and what food we buy. For example, 40% of eggs bought in the UK are now free-range, despite their higher cost. Companies who are operating in the ethical arena have seen their profits soar. And they're proving that what’s good for the shareholder is also good for the environment.

"In the US, the consumer segment which makes its buying decisions in keeping with their values of social and environmental responsibility is growing at 1% per year … but the dollar (spend) going into the market --now at $355 billion -- is escalating about 10% a year."

Supply Chain Issues

‘Greening the supply chain’ has passed into the corporate dictionary. This has important implications for suppliers.

Even service-based companies with a small direct environmental footprint can be making high indirect impacts on climate change.

A bank’s choice of paper suppliers, for example, could have a damaging effect on their reputation. And as it’s now common for procurement departments to interrogate the environmental credentials of their suppliers, this can seriously impact on gaining and retaining business.

“Environmental credentials are important to Honda. We have moved more and more of our courier business to a company that has made a commitment to going ‘green’ by going Influxive”

John Kingston, Environment Manager, Honda 

Reducing Raw Materials

The big industry users of energy - those first to feel the cost of carbon compliance - will be passing on those costs to their customers.
Businesses that rely heavily on energy and raw materials like iron, steel and cement, will feel an immediate impact on their bottom line. Many organisations are taking the opportunity to reduce their carbon footprint at the same time as improving, efficiency, cutting costs and reducing their own climate change footprint.

Corporations and shoppers in the United States spent more than $54 million last year on carbon offset credits toward tree planting, wind farms, solar plants and other projects to balance the emissions created by, say, using a laptop computer or flying on a jet.

But where exactly is that money going?

'Carbon offset projects' is a useful but sometimes misleading shorthand because it contains a sense that the projects have no value in themselves - and that's not the case.  Individuals and businesses can pay to 'offset' or compensate for their emissions on a tonne by tonne basis.  For every one tonne, money is paid to projects to reduce one tonne CO2 and it is that money which helps make the project viable in the first place. It's through 'carbon finance' that new, low carbon technologies can really get established in countries that need them.

We work with our clients to build a portfolio of carbon credits that works with their criteria for geography, technology, volume, local community impact, profile of the client brand and budget. Over the ten years we have been in business, we have continued to invest in a quality assurance programme which underpins everything we do.

Standards

Projects used for carbon offsetting generate emission reductions (traded as 'carbon credits'). Standards or 'protocols' are used to measure the level of emissions reduction and that they are real, measurable, permanent and verifiable. It's the Protocol used that determines the type of carbon credit a project can sell eg Verified Emission Reductions (VERs).

There are projects that meet standards which will automatically pass through the Protocol eg Certified Emission Reductions (CERs), CDM, Gold Standard, and (once formalised) Voluntary Carbon Standard. For VER projects which have not met those standards but which are strong, we apply the base tests and criteria of the Protocol.

Carbon offset integrity and best practice

Carbon offset is a 'virtual' buy and a secure audit trail has always been a critical part of our company policy. We have robust procedures for selecting and contracting project partners, and we maintain first class databases to record all transactions. 

The Federal Trade Commission, which regulates advertising claims, raised the question Tuesday in its first hearing in a series on green marketing, this one focusing on carbon offsets.

As more companies use offset programs to create an environmental halo over their products, the commission said it was growing increasingly concerned that some green marketing assertions were not substantiated. Environmentalists have a word for such misleading advertising: “greenwashing.”

With the rapid growth of green programs like carbon offsets, “there’s a heightened potential for deception,” said Deborah Platt Majoras, chairwoman of the commission. The F.T.C. has not updated its environmental advertising guidelines, known as the Green Guides, since 1998. Back then, the agency did not create definitions for phrases that are common now — like renewable energy, carbon offsets and sustainability. For now, it is soliciting comments on how to update its guidelines and is gathering information about how carbon-offset programs work.

Consumers seem to be confronted with green-sounding offers at every turn.

Volkswagen told buyers last year that it would offset their first year of driving by planting in what it called the VW Forest in the lower Mississippi alluvial valley (the price starts at $18).

Dell lets visitors to its site fill their shopping carts with carbon offsets for their printers, computer monitors and even for themselves (the last at a cost of $99 a year).

Continental Airlines lets travelers track the carbon impact of their itineraries.

General Electric and Bank of America will translate credit card rewards points into offsets.

Most suppliers of carbon offsets say that the cost of planting a tree is roughly $5, and the tree must live for at least 100 years to fully compensate for the emissions in question. By comparison, an offset sold by Dell for three years’ use of a notebook computer costs $2.

To supply and manage the carbon offsets, big consumer brands are turning to a growing number of little-known companies, like TerraPass, and nonprofits, like Carbonfund.org. These intermediaries also cater to corporations that want to become “carbon-neutral” by purchasing offsets for the carbon dioxide they release.

Ms. Majoras of the F.T.C. pointed out that spokesmen for events like the Super Bowl and the Academy Awards have recently started saying that their events are carbon-neutral (though the Academy Awards drew criticism for the way its offsets were handled). The F.T.C. has not accused anyone of wrongdoing — neither the providers of carbon offsets nor the consumer brands that sell them. But environmentalists say — and the F.T.C.’s hearings suggest — that it is only a matter of time until the market faces greater scrutiny from the government or environmental organizations.

“Is there green substance behind the green sparkle?” said Daniel C. Esty, director of the Center for Business and the Environment at Yale University and author of “Green to Gold,” a book about how companies use environmental strategies to their advantage. “The carbon market is a leading example of the challenge of making sure that when people put their money into what they hope will improve their planet, that there is real follow-through.”

Carbon offsets are essentially promises to use money in a way that will reduce carbon emissions. Panelists at the F.T.C.’s session on Tuesday raised a number of questions about certifications behind the claims, wondering if the offset companies might be double-counting carbon reductions that would have happened even without their efforts. There is even disagreement over how much carbon dioxide can be neutralized by tree-planting, which is the type of offset that is easiest to grasp.

Carbonfund.org, for example, which provides offsets to companies like Amtrak and Allstate, uses the offset money in three ways: to plant trees; to subsidize wind and solar power so that it can be sold at more competitive prices; and to purchase credits on the Chicago Climate Exchange, which barters among hundreds of companies trying to reduce their emissions.

Even the companies that market carbon offsets say they have wondered if the providers were living up to their promises. When Gaiam, a yoga-equipment company, began selling offsets for shipping to consumers through the Conservation Fund, a nonprofit organization, Chris Fisher, the company’s general manager, says he insisted on visiting one of the tree sites in Louisiana.

“Not only did I want to know it existed, I wanted to make sure it was being done the way they said it was being done,” Mr. Fisher said. “It’s not just ‘did they do it?’ — it’s ‘did they do it right?’”

Gaiam has sold more than $200,000 in offset credits in the last two years, Mr. Fisher said.

Other companies have not had immediate success marketing the offsets. Last spring, Delta Air Lines began selling flight offsets — $5.50 for domestic round-trips, and $11 for international ones — but has so far not sold as many as it hoped, said Jena Thompson, director of Go Zero program at the Conservation Fund, which manages Delta’s offsets.

Delta is trying to draw more attention to the program this month by setting up a carbon-offset kiosk at the Sundance Film Festival in Park City, Utah.

The airline did not consider increasing all ticket prices by the cost of carbon offsets because customers are price-sensitive, a spokeswoman, Betsy Talton, said.

Volkswagen has provided free offsets to everyone who purchased a car in the last five months. The offsets cover a year of driving for a typical driver

, a spokesman, Keith Price, said. The company also gave customers the chance to buy offsets for additional years, an option that Mr. Price said had proved most popular in Southern California and the suburbs of Boston.