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Carbon Offsetting Challenge

As climate change gains more attention around the world, a new focus on carbon emissions has emerged. Consumers are becoming aware of their carbon footprint and as they start to look for ways to reduce their impact on the planet, and many businesses use carbon reduction or offsetting to differentiate themselves and their products or services from their competition. A new generation of environmental claims around reducing and offsetting carbon emissions is emerging. Subsequently an entire new market of carbon offset trading has appeared.

The increase in carbon neutral or low carbon claims has also created the potential for confusion. As there are no universally accepted definitions of these terms, understanding of the terms varies among consumers. False or misleading claims damage consumer perception of carbon offsetting, thereby damaging the emerging industry.

To enable consumers to make informed decisions it is essential that consumers are provided with accurate and full information about carbon reduction and offset claims associated with products or services. Providing consumers with the full picture is essential to ensure they are not misled.

Most relevant to carbon claims are:

  • Sponsorship – businesses should not give the impression they have the backing of another party when they do not. The unauthorised use of a trademark or logo may breach this provision
  • Approval – businesses should not claim to have approval from a government agency or licensing board when no such approval has been given
  • Performance characteristics – businesses should not falsely claim that their product or service has certain capabilities or effects they do not have; for example, overstating the impact in relation to a product or service of any particular offset program in place.
  • Benefits – businesses should not claim that a product or service has carbon-related environmental benefits if these claims cannot be substantiated.

Carbon offset claims

Carbon offsets are simply credits for emission reductions achieved by projects such as tree planting or energy efficiency projects. By purchasing these credits you can reduce your net impact on the environment.

Carbon offsets are used to counteract the negative environmental impact of your carbon emissions by achieving a reduction in emissions elsewhere.

When making claims about your organisation’s carbon neutrality or about products and services you have offset, be aware that inappropriate or unverified offsets may leave you at risk of having unsubstantiated carbon offset claims.

Additionality

A basic requirement for a legitimate carbon offset is ‘additionality’ – the idea that benefits of carbon reduction under the project were ‘in addition’ to those that would have happened anyway in business as usual.

Without additionality, a particular reduction is not legitimately able to be tied to another specific emission and therefore the climate impact is not offset – even though some reduction may have occurred. Such offset becomes problematic when making an offset claim.

Timing and forward credited offsets

When offsets are forward credited, the buyer pays and has the offsets credited to them upfront, although the offsets will be produced in the future (e.g. tree planting). Clearly, forward crediting carries the risk of claiming credits that may not eventuate. Liability for these risks should be carefully considered when producing carbon offsets.

Offset providers offering credits that are not already realised, (or that may take long periods of time to be realised) such as tree planting, should disclose this fact to consumers.

Double counted offsets

Double counting occurs when an offset is not ‘retired’ or ‘cancelled’ and two or more businesses claim the same emissions reduction.

Buying a carbon offset represents purchasing an environmental outcome – a specific reduction of carbon emissions. If this environmental outcome does not occur, then the purchaser has not received the reduction they paid for and has been misled. In turn, this could result in a consumer being misled when purchasing carbon neutral products that were supposedly offset using these credits.

Permanence and risk management

An emissions reduction project may not be entirely secure or may involve a range of risks. For example, a reforestation project may have risks from fire or pest infestation. As with forward crediting, obtaining some form of guarantee that purchased credits will be maintained and replaced if destroyed, or alternatively, that the prospect of some degree of damage has been factored into the credit calculation, may help alleviate the potential for misleading conduct based on poor risk management.

Co-benefits

Co-benefits from emission reduction projects might include such things as the reduction of other pollutants, an increase in habitats for biodiversity, reducing reliance on fossil fuels in the economy or educational benefits from the installation of new energy efficient technologies.

However, while co-benefits may be an important aspect of an offset’s environmental credentials, they should not be used to compensate for essentially poor quality offsets.

Standards, accreditation and logos

As mentioned, there are many standards for carbon offsetting and the calculation of carbon neutrality, and many sources of accreditation and verification of offsets. If you make claims about your product or service being compliant with a certain standard, ensure you adhere to that standard.

Carbon neutral and low carbon claims

‘Carbon neutral’ is a term increasingly employed by businesses looking to promote themselves or their products to environmentally conscious consumers. However, there is no universally accepted definition of the term. Despite its widespread use, there is diverse opinion and expectation about what it should entail.

Department of Energy and Climate Change, UK defines it as:

“Carbon neutral means that – through a transparent process of measuring emissions, reducing those emissions and offsetting residual emissions – net calculated carbon emissions equal zero.”

The term carbon neutral may convey a wide range of meanings in the minds of consumers. Therefore, this term should not be used indiscriminately. As with any term that may be unclear or uncertain, extra care should be used to ensure consumers are not misled.

Carbon neutral may be taken by consumers as an absolute term, that is, it may suggest to consumers that the equivalent of all emissions of a business have been eliminated through emissions reductions and offsets. Similarly, when applied to a product the term may create an impression that emissions from the complete lifecycle of the product have been taken into account.

To prevent confusion, clearly explain how and what you have offset. Be specific – a clear statement about which elements of the product lifecycle or your business activities have been offset will help avoid consumer confusion.

Carbon Footprint Calculators

Carbon footprint calculators are often advertised as a means by which consumers can assess the amount of carbon emissions they generate with particular activities, such as for a flight, and then offset their emissions on this basis.

When using such a tool from a website or elsewhere you should be clear about what is and is not included in your calculations.

Future statements

To make a claim about a future matter, you must have reasonable grounds for making the representation. Without a robust implementation strategy, making claims about the inspirational goals such as ‘going carbon neutral by 2030’ may place your organisation at risk of engaging in misleading and deceptive behaviour. The overall impression generated by such claims may be that more is being done than the actual outcomes reflect.

If challenged, your organisation may be required to establish that there was a reasonable basis for making this claim. A structured implementation strategy including interim goals and periodic reassessment may help substantiate this claim.

Things to remember when making carbon claims

1. Think about the message that will be taken away by your target audience when producing your advertising.

2. Provide accurate and complete information to consumers on which to base their purchasing decisions. This may include how an offset has been sourced and how its validity will be maintained.

3. Misleading conduct can include silence. It is essential that your consumers have the full picture.

4. Clarify your carbon claims.

5. There are many varied standards of measurement, accounting and accreditation, so when making claims based on these, be sure to explain to consumers what you refer to and where to find further information.

6. When making claims of carbon neutrality, spell out exactly what is included in your claim to avoid misleading consumers.

7. Be aware that there is no universal definition of carbon neutrality and that consumer understanding of the term may vary.

8. If you are making statements as to the future, ensure you have a reasonable basis for making them.

9. How you would answer a query about your future statement and on what basis you made it.


Source: Guidelines for Carbon Claims, Commerce Commission, New Zealand






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