Five weeks ago, the Climate Friendly team was excited to receive the results of a research report which demonstrated how purchased carbon offset credits create benefits beyond carbon reduction. As I covered in my one year anniversary at Climate Friendly article back in May, carbon offset projects have always had co-benefits such as health, infrastructure development, biodiversity, educational and cultural benefits, but now, finally, these metrics are more quantifiable. This article explains the importance of this report to the industry and summarises its contents.
The report, “Unlocking the Hidden Value of Carbon Offsetting”, was prepared by Imperial College London with the International Carbon Reduction and Offset Alliance (ICROA, a not-for-profit alliance of leading carbon reduction and offset providers that sets the benchmark for the voluntary carbon industry). It collected data from 59 carbon projects worldwide, before quantifying and monetising each social and economic benefit the project had using established methodologies including environmental economics. These were then converted to a per tonne number.
The research’s key finding is that offsetting one tonne of carbon brings US$664 worth of social, economic and environmental benefits to the communities where the carbon reduction projects are based. This is based on $609 in environmental benefit, $52 in fuel savings, $3 in economic benefit and $0.56 in skills and jobs benefits. Non-financial metrics were also found for technology transfer, public health, air quality and water resources.
The concept of quantifying carbon project co-benefits works in other ways: last year UK insurer Aviva’s carbon offset portfolio had positively impacted 200,000 lives. Dollar benefits are better because they are more relevant to the current trend of “strategic community investment”, where corporate donations expect a measured social return from their financial support. This was a major theme coming out of “The Good, the Generous and the Galvanic” joint event of the Australian Marketing Institute (AMI) and Australian Centre for Corporate Social Responsibility (ACCSR) back in August, that I touched on in a previous post on speaking the language of sustainability outside the industry.
This is an important research paper for the industry. It comes at a time where leading voluntary carbon retailers and project developers such as Climate Friendly, South Pole, TCNC and ClimateCare are increasing emphasis on the co-benefits of carbon projects to demonstrate their value beyond just carbon. A repositioning of carbon credits is under way: no longer are carbon credits just a convenient way to reduce your footprint, they are a strategic community investment that can be used to demonstrate positive action on a wide range of material sustainability issues.
As an example, here is South Pole’s Kariba REDD+ Project:
The sustainability issues here include deforestation, wildlife and habitat conservation, forests, soil erosion and quality, climate change, sustainable agriculture, wildlife poaching, local economic development, air quality and pollution, and childhood education. By buying one tonne of Kariba REDD+ carbon credits, you are supporting a project that is positively impacting all these other sustainability issues! Clearly, the opinion that companies use carbon offsets to greenwash and avoid internal reduction initiatives is extremely dated. Similarly, the notion that carbon offsets are poor quality environmental projects, double-counted and non-transparent is woefully inaccurate. Click here for an extensive critique I wrote in June.
This report marks the first quantification of the social, environmental and economic benefits beyond carbon for offset projects. It is a step towards changing the understanding of offsets from pure carbon instruments, and more towards sustainable development projects. Projects that cost well under the $664 in benefits. While compelling, these numbers do not exist yet on a per-project basis. But when this happens, organisations that buy carbon credits will be able to articulate its measured social returns on investment with the kind of assurance and verifiability that corporate volunteering days and local community project sponsorship will struggle to be able to match. Irresistible.