Of the FTSE 350 listed companies, 96% have increased their spending on carbon offset projects and/or carbon credits in the last two years, finds a study commissioned by Kana Earth, a company that is building an auditable ledger for UK carbon offset units.
More than half (59%) have “dramatically” increased their spend and almost half (47%) plan to do so again over the next two years, while 42% plan to increase expenditure “slightly”, according to the research, which is based on the responses of 100 FTSE 350 board directors in the UK in June 2022.
Carbon offsets are often part of corporate net-zero strategies; they allow companies to offset their own emissions with cheaper emissions reductions elsewhere. However, controversy rages over the quality of some offsets.
“With so many companies relying on carbon offsetting to meet their net-zero emission targets, it is vital the UK market, which is currently fragmented and lacks scale, is made more efficient and centralised,” said Andy Creak, CEO of Kana Earth, in a statement.
Carbon offsetting came under fire at COP27 for lacking a framework robust enough to mitigate potential carbon credit abuses such as double counting.
A global survey of more than 500 senior sustainability officers, commissioned by AiDash, a provider of AI-powered sustainability solutions, has found 41% of chief sustainability officers (CSOs) do not use carbon offsets due to trust issues, with an additional 43% seeking assurance from rating agencies for validation. The survey highlights a major lack of trust in carbon offsetting, despite its need for businesses to meet net-zero goals, say the researchers.
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The study, published on 17 January, reports that sustainability and carbon management are now mainstream concerns, with 97% of businesses including them in investment decisions, 79% of CSOs already accountable to their boards or the public, 98% doing more than legally required to reduce emissions and 56% of businesses committed to net-zero targets for or before 2030.
However, more than half of businesses (56%) do not have operational control over most of their greenhouse gas (GHG) emissions and nearly half (43%) use carbon offsets for hard-to-reduce GHG emissions alongside direct measures, says AiDash.
A major issue highlighted by the survey is the inconsistency in validation methods for carbon credits, which impacts the accuracy and comparability of corporate sustainability measurements.
While 89% of CSOs confirm they use key performance indicator metrics to track the progress of their sustainability plans, the three biggest challenges to meeting net-zero goals are data related, including collating reference data such as regional electricity and airline emissions factors (26%), lack of common reporting frameworks (19%) and difficulty collating internal information (18%).
The survey also revealed that CSOs are turning their eyes towards biodiversity. While only 24% currently include biodiversity impact in their sustainability strategies, 66% already have someone working for them on biodiversity impact, with a substantial proportion intending to introduce such a role in the next two years.