Stop Saying "Offsetting": Toward Carbon Neutrality for Businesses That Benefit Local Communities

Don't say "compensation" anymoreThe Carbone 4 series on the new carbon neutralityEpisode 1: Toward Carbon Neutrality for Businesses to Benefit Local Communities By César Dugast and Renaud Bettin

  On Monday, May 20, the study “ZEN 2050 - Envisioning and Building a Carbon-Neutral France” by Entreprises pour l’environnement (EpE). This forward-looking study, to which Carbone 4 is proud to have contributed, aims to explore the feasibility of achieving a “net-zero emissions” target by mid-century across France. To this end, it offers both a sector-by-sector analysis of the economy and a sociological examination of changes in French lifestyles. The study conducted by EpE is interesting in that it is companies who are trying to define their role with the goal of carbon neutrality on a national scale, without ever mentioning “their own” carbon neutrality.But what connection exists—and what connection should there be—between the neutrality of territories and that of companies?

Territorial neutrality: a concept that can be applied at all levels

The exercise of developing a vision for a “ZEN” France in 2050 is based on a definition of carbon neutrality that is described as “territorial.” It consists of to balance greenhouse gas emissions and removals within a given geographic area. This definition can easily be applied on any scale: the entire planet, first and foremost (Article 4 of the Paris Agreement, IPCC Special Report on 1.5°C); the national territory (EpE study, National Low-Carbon Strategy) as well as regions, public intermunicipal cooperation entities (EPCI), and cities. The reasoning remains the same: to balance carbon emissions and sinks within the given area, excluding imports, and without taking into account any purchase of “offsets” on international markets.

Corporate Neutrality: A Vague Concept

The concept of carbon neutrality is also very popular in the business world. Powerful, unifying, and seemingly simple, the goal of zero emissions is often claimed, pursued, and publicized—with varying degrees of ambition and transparency. Today, a “neutral” company almost always follows the same procedure: Measure, Reduce, Offset. This trio, which seems like common sense at first glance, nevertheless faces several pitfalls that are becoming increasingly difficult to ignore.

• First of all, no one defines neutrality in the same way scope of emissions. Some are “neutral” across their entire value chain, while others are neutral only with regard to emissions related to their office operations… and yet they all claim to share the same goal, since there is only one term—“neutral”—to describe a multitude of possible scenarios.
• Next, the discounts Expected emissions are often self-reported, based on marginal and incremental improvements that do not challenge the business as usual, and are under no obligation whatsoever to align with climate scenarios compatible with limiting global warming to +2°C or +1.5°C. Furthermore, these are merely commitments for the future: the granting and maintenance of “neutral” status is almost never contingent on meeting these reduction targets. In other words, in practice, companies that claim to be “neutral” may actually see their emissions increase over time!
• Finally, the “ carbon offsetting "… currently suffers from a tarnished image. This mechanism, though beneficial when used properly, has for too long been used as a way to shirk one’s own reduction obligations at minimal cost. It can even prove dangerous—as it inhibits action—when it amounts to nothing more than “buying a clear conscience.” And let’s not forget that the carbon offsets have never been officially recognized as genuine emissions reductions in corporate carbon accounting. The goal, therefore, is to restore the prestige of this fundamental tool of carbon finance.

The concept of carbon neutrality for organizations is currently hampered not only bya regrettable lack of conceptual clarity, but is otherwise “detached from reality”: no connection to local or national neutrality goals is ever sought or claimed. It would therefore be a shame to continue associating such an unambitious definition—like the one that prevails today—with this powerful concept.

The Need for a Common Language

It has never been more urgent to take action. And we will need all stakeholders and all funding mechanisms for the transition to achieve our goals. Let us therefore finally align the actions of companies—which rightly wish to move toward carbon-neutral approaches—with the obligation to achieve results at the regional level. The goal is to create the frameworks and tools that enable this integration. Let’s move beyond the self-centered view of individual carbon neutrality. Let’s recognize that the real challenge lies in working collectively toward “net-zero emissions”—whether on a global, national, or local scale. Let’s do everything we can to encourage the diverse contributions that everyone—businesses, citizens, and public authorities—is able to make. It's time to rethink how we “talk about” neutrality. We believe that a company that takes neutrality seriously is, above all, serious aboutits contribution to a region's achievement of carbon neutrality, whether it’s a city, a country, or even the entire planet. We believe that the first step toward achieving this necessary alignment between regions and businesses is to reinvent the metrics, tools, and concepts that companies use to manage their carbon neutrality. The framework currently being developed by Net Zero Initiative, based on a triple emissions accounting system, aims to address this need. A common language, shared by all according to the same rules and indicators, a story of solidarity and contribution: beyond carbon neutrality, it’s up to us to make our future positive and desirable!

This is the first installment in Carbone 4’s series of articles on the new carbon neutrality.

Check out Episode 2: From Compensation to Contribution