A 2.8°C temperature rise by the end of the century is where the current policies are leading us. This was the conclusion of the Emission Gap Report that was published in October 2022 by the UN Environment Programme. The gap between the 1.5°C target and the current path has to be closed urgently – and companies need to take this into consideration when planning their climate action and targets.
This year, many powerful institutions have highlighted the importance of carbon removals and additional climate action beyond companies’ net zero targets. The latest IPCC report, published in spring 2022, considers carbon removals as ‘unavoidable’. The Science Based Targets initiative, to which many corporations have committed, stresses the demand for so-called beyond value chain mitigation (BVCM). The SBTi urges companies to take action to mitigate emissions outside their value chains, such as purchasing high-quality carbon credits. Also, the United Nations’ high-level expert group states in its report , published during COP27 in November, that ‘High integrity carbon credits in voluntary markets should be used for beyond value chain mitigation but cannot be counted toward a non-state actor’s interim emissions reductions required by its net zero pathway’.
The latest IPCC report considers carbon removals as ‘unavoidable’.
The key takeaways for companies are clear. First, carbon offsetting should never replace emission reductions, which is highlighted also in the so-called Oxford principles . Second, companies should offset in addition to reducing their carbon footprint, but only with high integrity carbon credits that have a true climate impact.
The current state of the voluntary carbon market requires a critical evaluation of the carbon projects
Compensate has evaluated more than 170 nature-based, certified carbon projects and out of those, less than 10% meet our criteria co-created with the scientific community. The voluntary carbon market undoubtedly has some flaws. Currently, the Integrity Council for the Voluntary Carbon Market (ICVCM) is aiming to establish the Core Carbon Principles (CCPs) for high-quality carbon credits. The ICVCM focuses on setting new threshold standards for high quality carbon credits that have a real, verifiable climate impact based on science. In the meanwhile, we do not advise companies to wait for a perfect market but instead, to critically evaluate also those carbon projects that have been certified.
When it comes to the transparency of using carbon offsets and the issue of so-called double counting , which is heavily related to the climate impact of carbon credits, the UN report states the following: ‘Any credit transactions must be transparently reported, and associated claims must be easily understandable, consistent and verified (where land-based activities are concerned, they should be geo-referenced). Whether or not the credits used can also be counted towards Nationally Determined Contributions under the Paris Agreement must be transparently reported’.
Compensate strongly advises companies to use carbon credits that are not double-counted . Otherwise, the company has not actually counterbalanced its emissions but rather, contributed to the carbon project’s host country’s nationally determined contribution (NDC), or climate target, under the Paris Agreement.
With carbon offsets, social justice should not be left unmentioned
Taking responsibility for business emissions cannot be considered purely as climate action, as it has a strong correlation with social justice and human rights. Many companies have committed to several or all of the UN’s Sustainable Development Goals (SDGs), and the climate crisis harms, for example, people's health and well-being, hunger, and life below water and on land. In Eastern Africa, the constant drought and other factors have caused 18,4-19,3 million people to face hunger and malnutrition . In Pakistan, at least 1700 people died and 33 million people became ill after the heatwave ended and torrential monsoon rains led to devastating floods . One eye-opening fact is that while Africa has caused 4% of the global climate emissions, 60% of the climate refugees might come from Sub-Saharan Africa by 2050 in the World Bank’s worst-case scenario .
As net zero targets are set years or even decades away, the amount of carbon in the atmosphere will keep increasing in the meanwhile. If a company doesn’t take responsibility for its current unavoidable emissions, it keeps causing harm – not just to the climate and the environment but also to the people. Also, the negative consequences of rising global emissions affect disproportionally those people and communities who are least responsible for causing the climate crisis.
The urgency of the climate crisis calls us to take immediate responsibility also for those emissions that we cause today and will continue to cause in the near future. There are already many great examples, such as Microsoft, that has committed to take responsibility also for its historical emissions. We need more companies to take similar leadership.
Read more: What is Beyond Value Chain Mitigation (BVCM)?
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