Consider voluntary offsets as we await a new climate change policy framework

As Australia transitions between the outgoing Clean Energy Future carbon reduction framework and the planned Direct Action range of measures, voluntary offsetting is a viable option for companies wanting continued recognition for best practice and those simply wanting to ‘walk their talk’. The marketplace must be navigated to ensure maximum reputational benefits are balanced with cost considerations and risk management.

We need to go further than just doing less bad. We need to start doing more good.

Puma General Manager Martyn Bowen in a speech about the company’s REDD offset investments.

Why should you consider it?

Because it sets an example

The top reason cited by those in the voluntary market is ‘Corporate Social Responsibility’ followed by a ‘desire to demonstrate climate leadership’. An emerging trend, as reported in the ‘State of the Voluntary Carbon Markets 2013’1  report, is the private sector’s use of offsets to promote climate resilience in their supply chains and spheres of influence. There is an emerging relationship between buyers’ business sectors and the project categories from which they contract offsets. For example, buyers in the agricultural and forest products sector, and the food and beverage sector, source the majority of their credits from land-use and forestry sector projects. Those in the manufacturing sector bought most of their credits from energy efficiency and renewable energy projects.

Because consumers are demanding it 

Consumer-facing businesses often choose to offset and/or provide offset options to their customers. With the repeal of carbon legislation in Australia this type of action is likely to escalate if policy makers do not address climate and environmental concerns. 

Other sectors choose to offset because of supply chain or regulatory risks and opportunities.

Because your competitors are

90% of all voluntary offset volumes in 2012 were contracted by the private sector. This was led by the manufacturing industry, followed by energy retailers (who despite being liable under mandatory schemes still offer customers carbon or ‘Climate-neutral” energy products) and the transportation sector (in particular airlines). Interestingly, cheapest is not always best.  In 2012, voluntary actors paid a volume-weighted average price of US$5.90/tCO2-e which is significantly higher than the UN-issued CERs which are trading sub US$1/tCO2-e.1

Voluntary offsetting – five-step process

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