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 Market Mysteries of the week

   How are corporations addressing their carbon footprint? 

Answer:

Corporations can either

change how they operate

to directly reduce their emissions

or invest in carbon offsets

to counteract their carbon footprint. 

What is a carbon footprint?

A

carbon footprint

is

the amount of carbon dioxide a company, organization, or individual releases into the atmosphere

due to its activities. Carbon dioxide makes up 80% of all greenhouse gases emitted in the US, making it the single

most significant driver of global warming.

We're running out of time to slow or reverse global warming.

Climate scientists warn that

a 1.5˚C increase

in global temperatures above pre-industrial levels will put us at a much higher risk of

more extreme weather events

and severe damage to natural ecosystems. The Intergovernmental Panel on Climate Change (IPCC), a coalition of global experts on the subject, warns we are o

n pace to cross that threshold in the next decade

 and exceed it significantly within the next century. Top international scientists warn we

have limited understanding of the degree of possible negative scenarios.

This week, a new report cautioned policymakers to

consider mass extinction scenarios within the next several decades.

By 2070,

two billion people could face Sahara Desert-level average temperatures year-round

. That kind of heat could have unknown impacts not only on people, plants, and animals but also on the region's nuclear energy facilities and dangerous pathogen containment centers. We can't wait to find out.

Do corporations care about their carbon footprint?

They need to. Beyond the long-term unknowns,

climate change threatens to disrupt supply chains

, and policymakers have

increased pressure on corporate leaders to take responsibility

for reducing their greenhouse gas emissions.

As we've discussed

, the

first step for businesses is calculating and analyzing their carbon emissions

. Then, it's all about finding ways to

reduce their footprint

, minimizing direct operational emissions by switching to things like electric-powered transport, renewable energy sources, or recycled packaging.

It's difficult for companies to eliminate their emissions

, so the next step is counteracting the rest of their carbon footprint by

investing in carbon offsets

. 

What are carbon offsets?

A carbon offset is a reduction, avoidance, or removal of carbon emissions

that already exist in the atmosphere. Carbon offset projects can be anything from planting trees to investing in renewable energy. These projects are a popular option for companies that can't or won't reduce their emissions upfront and offer a means to take a positive climate protection step.

Carbon offsets are gaining popularity as companies pledge to reach

net-zero carbon or carbon neutral

. Since 2017, offset CO2 has more than doubled, reaching

95 million metric tons in 2020

. That's still only a fraction of the total

43 billion tons of CO2

emitted that year, though.

There are four main types of carbon offset projects: 

• Reforestation and forest conservation are the most popular. Trees take carbon dioxide out of the air and convert it to oxygen. These projects either plant new trees or protect existing ones from being cut down.

• Renewable energy offsets help fund wind, solar or hydroelectric projects worldwide. Investing in these projects increases the proportion of renewable energy on the grid, reducing broader dependence on high-emission fossil fuels.

• Community project offsets focus on building energy efficiency infrastructure across communities and nations.

• Waste to energy projects capture methane gas from landfills, human waste, or agricultural waste and convert it to electricity. 

Will carbon offsets save our planet?

No, but they can help.

Carbon offsets alone are not going to stop global warming.

The ease of counteracting emissions by buying offsets may actually

disincentivize companies

from taking steps to reduce their direct emissions.

Carbon offsets should be used in conjunction with other sustainability measures. 

There is a lot of

skepticism

about the effectiveness of carbon offsets. Not every project can be certified, so their quality and impact remain unverified. Companies might say they are offsetting 10 tons of carbon by planting 60 trees without actually proving that those 10 tons of carbon are permanently taken out of the atmosphere. Even certified projects have

outcomes that are difficult to predict

in the long term.

We can all do our part by

speaking up at our companies and taking steps to reduce our own carbon footprint.

Calculate your carbon footprint here

.

💙 The Share Scoops Team

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