It sounds an obvious enough thing to do, but people have a tendency to stand around the pipe brandishing a mop, telling everyone how they honestly mean to fix the leak at some point but there’s no need to worry, because look at this brilliant mop they’ve just bought. After all, fixing the leak sounds like a chore, which makes it all the more tempting to believe that the leak’s under control. And then the house floods.
Human-caused climate breakdown is like a really bad leak. It poses an urgent threat on a vast scale, and requires action that addresses the root cause: the amount of greenhouse gasses being released into the atmosphere.
But most businesses are more interested in expanding the clean-up operation. Rather than working to reduce emissions at source – rather than fixing the leak – they pay to have the emissions “offset” so that they can achieve “carbon neutrality”.
The subtext is that business can continue as usual. It’s fine to carry on trashing the planet just so long as we mop up after ourselves, or pay somebody else to do it for us. The damage can be conveniently undone by the mysterious alchemy of offsets.
It’s an appealing notion. Unfortunately, it doesn’t work: the clean-up operation simply can’t keep pace with the leak. Offsets are rarely as effective as they claim. Meanwhile, and just as problematically, they provide false reassurance and encourage complacency.
“Offsets are rarely as effective as they claim. Meanwhile, and just as problematically, they provide false reassurance and encourage complacency.”
The purpose of this post isn’t to tell you how perfect we are, because we’re certainly not that. As an online retailer, we’re complicit in a model of consumerism that is wasteful and resource-intensive and perhaps even incompatible with our stated environmental aims. We’re trying to change that model for the better, but we’re also a business trying to remain commercially viable. In any event, we all need clothes – the focus has to be on making and delivering them as sustainably as possible. The more retailers and brands that share this mandate, the smaller the market share of those competitors that don’t.
Nor are we against paying third parties to plant trees, the most common form of offset. We fund several tree-planting operations, because we believe they can be an effective way of restoring biodiversity and reabsorbing some carbon from the atmosphere. We just don’t do so as part of an offset scheme, or in exchange for carbon “credits”, or as a substitute for cutting emissions.
What we hope to highlight is the way the offset economy distorts the conversation, offering a kind of palliative care that masquerades as the cure. Our own experience suggests that transitioning away from fossil fuels isn’t nearly as costly as generally assumed. Indeed, it may make sense from a purely business point of view.
Targets are easy to set and fun to tell everyone about, but very hard to hit. They also vary in quality or usefulness – good targets will be robust and clearly defined, in line with the latest science, and independently validated. Our own targets were set within the Science Based Targets framework, the most credible and ambitious system for corporate climate action.
But while aims and ambitions are a necessary starting point, they don’t have real, tangible effects on the environment. That’s why at IFG, we’d rather communicate our achievements than our goals. The important thing isn’t that we signed some paperwork, but that since 2018, when we set out on our decarbonisation journey, we’ve reduced our scope 1 and 2 emissions by 93.67% (80.31% of this reduction was achieved by 2019, the real work, and the remaining reductions can be seen as a result of covid and changing working habits).
Of course, not every company that shouts about signing off on a climate target is guilty of greenwashing. At the heart of the conundrum is the choice between carbon neutral and net zero.
These two terms are thrown around a lot, whether invoked as targets to hit or as evidence of a company’s sustainable bona fides. On the face of it they sound like the same thing, but in the legalese of carbon accountancy they place very different obligations on a company.
Carbon neutral is an intricate game of give and take, whereby an organisation attempts to balance or neutralise its carbon emissions by purchasing carbon credits, which represent offsets. According to the logic of carbon neutral, you don’t need to worry about the nasty stuff on the left-hand side of the balance sheet, because it can all be cancelled out – removed from the atmosphere, wiped from your conscience – by the carbon credits on the right-hand side.
It sounds good – a little too good, in fact. It’s the “creative accounting” approach to the environment, similar in its ethos to tax avoidance (although as we’ll see, not necessarily as profitable). The writer and environmentalist George Monbiot once compared the offset industry to the medieval practice of buying and selling indulgences. To return to the leaking pipe analogy, carbon neutral is the mother of all mops – impressive-looking and in certain situations effective, but still not nearly adequate to the scale of the leak.
Net zero, on the other hand, requires that an organisation actually reduces its carbon emissions to zero, the aim being to reach this point by 2050 at the latest. This is the approach that looks to stop the problem at source, and the one that is recognised by IPCC as the best way of halting temperature rise to 1.5°C.
So this is the first point: carbon neutral doesn’t work as a stand-alone strategy without a net zero framework. Take the UN’s own Clean Development Program, whereby countries fund overseas projects that reduce emissions, then include these “saved” emissions in the credit column of the balance sheet, helping them meet targets. A few years ago, the European Commission took a closer look at these projects, and estimated that 85% of them had “a low likelihood of ensuring environmental integrity (i.e. ensuring that emission reductions are additional and not over-estimated)”. Only 7% of the credit supply generated had a “high likelihood” of delivering the promised benefits.
The word “additional” is important here: if an offset isn’t additional, it means it would have occurred anyway, independently of whether it was purchased as offset credits. Paying for offsets of this sort does nothing to reduce atmospheric levels of CO2, and when it’s used to justify continued or increased emissions (as it often is), it actively contributes to climate breakdown.
Now consider that there’s an enormous carbon credit surplus, five to seven times greater than annual demand, and that as a result, many credits on the market are historic – in other words they involve paying for offsets that have already happened. And consider also that carbon removal offsets – offsets that physically remove carbon from the atmosphere, as opposed to reducing how much continues to be emitted – currently account for just 4% of the carbon credit market.
So the offset you think you’re paying for may happen anyway, in fact it may have happened already, and in any case it may not actually remove any carbon from the atmosphere. But what also must be factored in is that carbon-intensive practices emit a whole lot of carbon into the atmosphere in a very short period, whereas reductions and removals tend to operate over a much longer timespan.
Those trees planted in your name will take years to absorb the carbon emitted in, say, a single long-haul flight. Meanwhile the Earth is edging towards various environmental tipping points that, when reached, may cause cascading and irreversible damage. Our emissions push us towards these tipping points all in one go, whereas our offsets (if indeed they do anything at all) pull us slowly away from the brink, possibly too late. And who’s to say your trees won’t be chopped down in a few years’ time? Or lost in a wildfire? Or that the emissions-reducing project you helped fund won’t be abandoned prematurely?
All in all, it’s a system virtually designed to be gamed, by buyers and sellers alike. Uncertainty and ignorance are rife, because the system treats all offset credits equally, rather than reflecting quality, additionality, and permanence.
Offset buyers can’t be sure their investment is doing what it was intended to do. Many take the credits without giving them too much thought, believing they’ve done their bit, and now have the green light to carry on burning fossil fuels as before.
To reiterate, the problem isn’t planting trees per se, which can be an effective tool, as can effective carbon credits. The problem is the offset economy, a perverse system of incentives that diverts attention away from direct emissions and implicitly sanctions, even encourages them. It assuages environmental guilt, and allows companies to indulge in environmental grandstanding, but the environment itself gains little from the deal.
Genuine offsets are a good thing, as far as they go. But if they’re the only response to the climate emergency they will serve merely to elongate the death spiral, rather than change our ultimate trajectory. Eliminating carbon outright will require ingenuity, but it’s the only serious option.
So, you can’t fool the planet with this kind of clever accounting, but surely you can save money in the short term? Isn’t that what makes it clever, after all?
We’ve found the opposite to be true. Adopting a net zero strategy has saved us money and proven cheaper than a carbon neutral strategy would have, casting serious doubts on any hard-nosed, financially driven argument against taking the necessary steps to cut emissions.
In 2018, we consolidated various operations into one highly efficient warehouse, installed a solar PV system on the roof that now supplies much of our electricity, and switched to long-term 100% renewable energy contracts to supply the remainder. In the process we’ve shielded ourselves from the volatile electricity market and basically broken even, ending up £46,500 better off than if we’d continued with our business-as-usual approach.
That’s without factoring in what we would have had to spend on carbon credits in order to match – in carbon neutral terms – the 93.67% reduction in scope 1 and 2 emissions we’ve achieved. Towards the lower end of the market, the equivalent in credits would have cost us around £60k a year and done little if anything to mitigate our emissions. Credits linked to more reliable offsets would have cost around £180k a year.
Suffice to say our CFO is pleased we avoided those costs, and pleased with our approach in general. And it’s not just us saving money: by reducing CO2 emissions by 619 million tonnes in 2020, members of the Carbon Disclosure Project saved $34 billion.
To be sure, some thorough and considered plans will take on aspects of both the carbon neutral and the net zero approach, incorporating carbon credit purchases while placing the emphasis firmly on reducing emissions. Many companies, however, go all in on carbon neutral as their sole environmental strategy and think that’s good enough. We don’t think it is. It cheats all the stakeholders involved, including those whose main interest is financial.
One unavoidable reality of the climate crisis is that no organisation – no individual, for that matter – can achieve net zero alone. In the densely interconnected modern world, all businesses rely on external suppliers of services and goods, which almost certainly still emit carbon as part of their processes.
These indirect emissions are known as scope 3 emissions. (Scopes 1 and 2 cover the emissions a business is directly responsible for within its own operations). When an organisation opts for the tokenistic carbon neutral approach and simultaneously neglects to reduce its emissions, it affects every other link in the chain, holding back all those who are working towards net zero.
All of this is why we’re proud to have co-developed our charity partners Protect Our Winters UK’s new pledge system. It’s a perfect “stepping off point” for any organisation looking to create the most effective climate action plan possible, and ideal for helping our suppliers tackle things at their end.
Because there is another unavoidable reality of the climate crisis: everyone is to some degree complicit, everyone is a hypocrite. We’re not perfect by any means, and no doubt some will suggest we should get back in our box until we’ve disentangled ourselves from the whole system. But what would that achieve?
Sustainability shouldn’t be a competitive space. We hope that by sharing our efforts and achievements, we may just help others to move their own approach along, thus creating a positive feedback loop. They can help us move ours along too – this is partly why we’re shouting about it here.
But we’re also shouting about it because we think it makes sense. Not only has our strategy achieved real carbon emission reductions, it has also saved us money. Think that’s known as a win-win.
The options we considered are laid out below: