Danny Chen
Business Reduction Goal and Greenwashing
Voluntary carbon credits are influential. However, does that mean any business could purchase carbon credits to offset all their Scope 1 and Scope 2 greenhouse gas(GHG) emissions as their reduction efforts?
Probably no. When we talk about emission reduction, sustainable resource/equipment procurement, process optimization, and human behavior change are the 3 standard practices. For businesses, the cost of an internal emission reduction plan is usually higher than the cost of voluntary carbon credit procurements. Suppose we encourage using carbon credits as substitutes for the internal reduction plan. In that case, it will slow down the progress of the net-zero transition of equipment improvements and process optimization.
Unlike individuals, business activities are often predictable and have clear profit goals. In addition, they are the process of serving an individual purpose. From a traditional perspective, businesses like governments hold great financial power to drive meaningful change. However, without individual market demands, businesses will not exist long term. To address climate change, we must ensure that people who benefit from these activities are responsible for their external costs.
So, should we forbid businesses to stop using voluntary carbon credits? Not really.
Carbon credits are helpful. They channel funding to projects that could reduce or remove GHG emissions using scientific methodology at a lower cost. However, we should encourage more enterprises to emphasize their efforts on internal emission reduction plans as much as possible and neutralize residual emissions with carbon credits.
As you can tell, even when companies claim they have net-zero GHG emission impacts, their method of achieving the goal is totally different. Accordingly, to avoid misleading information, people give 2 definitions to describe the 2 corporate climate actions as follows:
- Carbon Neutral: A business purchases enough carbon credits, regardless of reduction or removal, to offset its annual emissions. It requires relatively low effort.
- Net Zero: A business commits to reducing its emissions as much as possible with the limited use of carbon credits. It requires relatively high effort.
Next time, when you engage with stakeholders, remember they are different in their reduction efforts.