Eco-Finance

Joining the dots between cost and carbon reduction for finance directors

Carbon neutral – a definition?

Earlier this month, the government published new advice on how businesses should measure and report their greenhouse gas emissions; there is a guide for large businesses, especially appropriate with the latest ‘clarification’ of the Carbon Reduction Commitment Energy Efficiency Scheme (CRCEES), and one for small businesses who will not (for the time being, at least) fall under the scheme but who may want guidance on how to effectively measure their emissions.

This advice comes with the government’s first ever published definition of carbon neutrality, presumably so that businesses are more likely to measure properly and so be able to market themselves as ‘carbon neutral’.

This, however, creates a real issue if we, in the business community, are serious about genuinely reducing our carbon emissions as part of a greater understanding that it is key to the future sustainability and growth of our businesses.

The issue sits with the definition the government have created, which is:
Carbon neutral means that – through a transparent process of calculating emissions, reducing those emissions and offsetting residual emissions – net carbon emissions equal zero”

This won’t do at all. The government’s own press release states that the definition “reinforces the need for emissions reduction measures to be at the heart of carbon management activity”… except it conveniently includes an offsetting opt-out which takes the whole story back about two to three years when the general consensus in the business community seemed to be that if we all buy a few trees in Africa we’ll be OK and our conscience would be clear; a strategy that missed the essential truth that unless we all measurably reduce our carbon emissions and thereby reduce our reliance upon carbon based energy resource, we may not actually still be in a position to do business over the coming decades - or that we might not manage to slow the pace of climate change which, although not wholly caused by our business energy burn rate, we are certainly not helping.

Fortunately, the CRC scheme takes no account of offsetting in its calculations but a braver government might have omitted the phrase “offsetting residual emissions”.

A second, and equally serious, point about this definition is that there still remains a lot of work to do before we can properly and scientifically define a true calculation of the carbon emissions involved in… anything, really.

A number of companies have exploited the unresolved science around carbon emission calculation to good effect (remember the hype when Walkers first put a number on every packet of crisps?) but emissions calculations are truly complex; if you are an office worker, for example, what is your contribution? Do you calculate your journey to work… and if so, how? What about the lunchtime sandwich you buy?

With the money floating around for green tech development, perhaps we should be seeing more going into this. No definition is ever going to have any credibility without it; the government’s current definition certainly leaves something to be desired and we must hope that the ‘accidental’ opt-out clause of offsetting does not divert eyes away from the real challenge – genuine, significant and measurable carbon reduction.



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