Nett unravels the mysteries of carbon offsets and explores some of the ways businesses like yours can become more sustainable.
* Green Business feature proudly supported by BP Australia *
A cleaner way?
It’s an improbable link. The Chhattisgarh region of India and the busy HQ of your local plumber. However, as Joe Blow’s plumbers dash from job to job in their company utes, Indian farmers in Chhattisgarh are replacing inefficient diesel pumps with non-polluting treadle pumps to irrigate their crops.
And the link? Each tonne of carbon emitted by Joe Blow’s business in Sydney can be offset by the carbon these farmers save by ditching their diesel pumps. In the middle of these two scenarios is a booming industry of carbon offset providers, acting as brokers for carbon lost and saved.
Any business or individual can now easily offset their carbon emissions. A quick scan of Carbon Offset Guide Australia reveals that, as of October 2007, there were more than 30 offset providers in Australia.
The global market for voluntary offsets is growing rapidly and is estimated to expand to $400 million by 2010. As offsetting booms, there is an accompanying flurry of critics and naysayers who question many of the principles behind it. Yet with the federal government and the ACCC weighing in to promise tighter regulation, it looks like carbon offsetting is here to stay.
Critics maintain that purchasing offsets allows polluters to feel as though they have compensated for their actions and do not need to fundamentally change their behaviour. Others say companies use offsetting and claims of carbon neutrality as greenwash.
Corin Millais is the managing director of carbon offset provider Climate Care Australia. Millais says that, contrary to popular perception, offsets are not the easy way out. “In our experience, there’s very little greenwash put out by large fossil-fuel driven companies who turn to offsetting for public relations,” he says. “Offsetting is part of an overall carbon management toolbox that would also include reducing energy or making it more efficient.“But can you name a company, or an individual, who never travels? Offsetting fits into the carbon balance sheet with no easy solution, such as unavoidable travel.”
According to Millais, the attraction of offsetting for smaller businesses is that they can tailor their program. Depending on how much scrutiny an SMB is seeking, it can choose to formally audit its operations prior to buying offsets, or not take this step at all.
“The main impact for most companies will be their premises and their transport,” says Millais. “You can look at these glaring carbon problems and make an informed review without the expense of an audit.”
After an assessment is done, a calculator with a billing system calculates CO2 emissions from the client’s core sources. The client then purchases a package of offsets and leaves the rest to Climate Care.
Independent carbon offset providers are not the only ones offering solutions in Australia. Energy providers including Origin Energy and AGL offer schemes to customers as do ANZ, Bendigo Bank and BP Australia.
BP’s scheme is called Global Choice and has been running since 2001. Global Choice fuel customers choose the proportion of carbon to be offset and pay a small premium on all or part of this. BP then purchases carbon reductions from third-party projects.
BP Global Choice programme manager, Jenny Norman, says BP researched the entire life cycle of its fuel. “We looked at the carbon cost of the exploration, drilling, extraction, shipping, manufacturing and distribution.
“Burning the fuel was the next carbon cost, which is where 90 per cent of the carbon is found. We offset 100 per cent of this through Global Choice.”
Norman says Global Choice appeals to SMBs because they are unlikely to have a department already dealing with counting carbon. “It’s very specialist information so it makes sense for them to outsource it.”
As for the explosion in the offsetting industry, Millais believes it has been driven by all the right reasons.
“Individuals and companies are trying to take responsibility for their carbon impact. It will become a commoditised product, but it’s understandable people need to kick the tyres a bit first.”
What does Big Business know about being green?
Barely a month slips by without another slickly produced sustainability report emerging, bursting with photos of rolling green hills peppered with windmills, or healthy-looking kids playing in the sun. Not to mention lots of pie-graphs and quotes from people with the word ‘sustainability’ centre-stage of their title.
However, many Australian corporations are making genuine headway in becoming part of the environmental solution, rather than just a large part of the problem. And although small-to-medium sized businesses may not wield the same cash or clout, they have several advantages over the big guys when it comes to doing their bit.
The green chain gang
No small business-owner enjoys the mountain of paperwork involved in keeping a business afloat. After hurdling BAS, GST, changing workplace relations laws and the many other record-keeping necessities, dealing with your company’s environmental impact can seem downright unreasonable.
But with corporations now peering further than their own CBD stomping grounds to scrutinise their supply chains, it may mean the difference between winning or losing a lucrative contract.
“Tenders and B2B supply agreements are increasingly including environmental performance in the list of requirements,” says Brad Pace, director of environmental consulting firm Emission Statement. “The demand for companies that are openly searching out ways to positively contribute to climate change is expected to increase.”
It is unlikely that any supply-side small business could afford to watch as its ‘supplier of choice’ status evaporated due to lack of green credentials.
As resources such as energy and water increase in cost, implementing more efficient practices now will help reduce future costs. And in a tight labour market, businesses able to display their sturdy environmental practices will attract better candidates.
A colossal weight
Jean Cannon operates her own small business, an environmental management consultancy called EnviroAction. She has worked with SMBs (small-to-medium businesses) for 20 years and sees the imperative for their involvement in starker terms.
“SMBs should not be treated differently,” says Cannon. “Everyone, including private individuals and big businesses, need to pull their weight.”
When it is added up – this weight is colossal. The Council of Small Business Australia (COSBOA) estimates there are around 1.8 million small businesses operating in Australia, employing around 3.6 million people. The impact of one business may be tiny but collectively SMBs can make a huge impact.
“It’s amazing how much energy even one small office sucks up,” says Cannon. “An average small server creates as much greenhouse gas per year as a four-wheel drive. I was horrified to realise that about my own server but it made sense, considering I’ve been storing it in the laundry to dry the washing!”
Little but lithe
While SMBs feel the pressure of paperwork and complex tax systems, listed businesses are increasingly feeling the heat as more investors examine their sustainability qualifications. Green Capital has worked with business, government and NGOs in furthering corporate sustainability and responsibility since it was founded in 2002.
“Sustainability considerations are moving away from the boutique ethical investment houses into the more mainstream finance community,” says Danielle Domone, Green Capital sustainability education manager.
As such, these companies are looking at issues such as human rights in the supply chain, good governance and increasing their transparency and reporting. There are escalating expectations for businesses to join measurement and reporting initiatives such as the Global Reporting Initiative, Carbon Disclosure Project or the Dow Jones Sustainability Index. Big business is also busy preparing for the introduction of an official carbon trading scheme by the new Federal Government in 2010. It is no wonder they are creating departments dedicated to managing their sustainable operations.
“It is increasingly common for larger companies to employ a Sustainability Manager or a team with key responsibilities,” says Domone. “However, to make sustainability a reality, it really depends on senior management commitment.”
Which is where small-to-medium businesses have the distinct upper hand. In a smaller business, senior management commitment does not require wading through layer after layer of departmental sign-offs. By default of their smaller size, SMBs can make authoritative decisions faster and implement them sooner. In effect, they can start walking the talk while big business is still gathering together its internal communications materials.
Small-to-medium businesses also have the ability to personally connect with their workforce – a huge boon when making changes to habitual work practices that will help reduce environmental impact.
“Reducing impact works best when the entire workforce is enthusiastically involved and this is far easier with smaller businesses,” says Cannon. “Often, there’s only one floor in which to go around and switch off printers and monitors, for example. It’s harder for the message to get lost.”
Cannon has worked with large business in the past but says she prefers the down-to-earth approach of small business.
“Personally, I find the firewalls in larger businesses to be frustrating. People tend to be more up-front in SMBs.”