Relying on carbon credits to achieve carbon neutrality is like eating a carrot cake as a substitute for your daily recommended intake of vegetables.
Technically, you could argue you have addressed the immediate issue, but did you really solve the problem? Did you miss a step? I remember all the commercials on TV about recycling in the early 90s. And although the message was a positive one, the message was being sent from the world’s largest plastic producers in a ploy to make us use more. Plastics production is today almost 400 per cent more than in 1989 and yet the plastics recycling rate in Australia is only 11 per cent.
Similarly, an offset program is not a quick-fix certification that deems your company “environmentally-friendly.” As a method to achieve carbon neutrality, it is not the most effective way. Carbon credits have even come under intense scrutiny, gaining and losing support in recent years. This is, in part, due to their immense complexity and dubious accuracy of impact measurement.
The temptation to depend on an imperfect solution
At this stage, it is also important to remember that carbon offsets are just one step of many in the process to achieving carbon neutrality. Indeed, they are the last step of the process.
Reduce, reuse, recycle is more than a catchy phrase – it is a hierarchy. Before we depend on the easy yet imperfect solution, we must consider how the problem started. Industry sources have found that energy accounts for around 75 per cent of a building’s emissions.
The majority of the remaining 25 per cent is from water, waste and refrigerants. Hence the United Nations have included sustainable consumption and production a target pattern in their sustainable development goals.
There is no doubt – that when used correctly – carbon offsets can slow and potentially help avert dangerous climate change. But they are definitely not a get-out-of-jail-free card. We cannot offset our way out of this environmental challenge without first examining our unsustainable consumption.
A building approach: Assess, avoid and then offset
As new technologies continue to evolve and improve the accuracy and quality of carbon offsetting, there are several other, simple ways that property owners can begin the process of managing climate-related risks. The questions to assess environmental readiness include:
- Energy / waste / water efficiency: Have we fully optimised the building’s energy/waste/water efficiency and minimised consumption?
- Renewable energy: Have we taken advantage of any potential for on-site renewables?
- Carbon neutrality: How do we select offsets that fully embrace the offsetting principles of Additionality, Permanence, Double-counting, Quantifiable and Verifiable?
Managers that take the lead in showing regulators, investors and the public that they are putting in the steps to optimise their response to climate-related issues will improve environmental performance for the retention and enhancement of investment value and betterment of the greater community.
If companies can use high-quality offsets sooner that address quality offsetting principles, then we can build in good to our environment sooner. But the way forward depends on the evolution of technology to track, measure and trace the impact of offsets over time.
Fortunately, there’s signs of innovation in this space.
The Techstars Sustainable Supply Chains Challenge is seeking start-ups to solve sustainability issues in our supply chains. Already, there have been innovative pitches from entrepreneurs who are creating tech solutions to measure, reduce then effectively offset emissions so that we can track if an offset that we acquired to regenerate flora is not affected by bushfire in the future or if the offset we acquired to invest in carbon removal technology, did eventuate in a product that does so.
We cannot use carbon credits to provide us with the comfort to consume more. When we depend on them as the “lazy” solution, we risk being caught in a dangerous cycle that fails to address the problem. Purchasing carbon credits should be the last resort for property managers just as carrot cake should be the last resort for your recommended daily vegetable intake.
Linh Pham has over ten years’ experience in the industry and works closely with EG’s Executive Team in new business and fund development, fund analysis, sourcing new capital partners and maintaining key investor relationships. Prior to joining EG, Linh advised ASX and FTSE listed real estate focused clients on accounting, compliance and process improvement issues. Linh also has a CA, adding a further analytical perspective to the EG approach, uniquely focused on the numbers.