View articleDossier of the week
State-guaranteed loans: where are we one year later?2021/03/16
Carbon offsets: real progress for the environment – or window-dressing?
A growing number of businesses are committing to carbon offsets. Is this real progress and an effective way to work toward the Paris Agreement climate targets? Or is it, as critics claim, an easy solution for companies to pay to reduce their carbon footprint without actually transforming their business models?
What is a carbon offset scheme?
Corporations have three major tools they can use to achieve the ambitions of the Paris Agreement.
The first, upstream of any activity, is avoiding any harm to the environment (choosing construction/operating sites that conserve natural surroundings, zero-CO₂ emissions technology, etc.).
The second is reducing the emissions that cannot be adequately avoided, by completely overhauling their business model along their entire value chain, from procurement, through to production and distribution, energy use, and design of the products and services they put on the market.
The last lever consists of offsetting any greenhouse gas emissions that cannot be avoided nor reduced.
For any business, offsetting carbon means counterbalancing its own CO₂ emissions by financing projects to reduce other emissions or sequestering carbon.
In concrete terms, what does this look like?
According to the French national energy agency (ADEME), companies that want to launch a useful, reliable carbon offset process must take the following steps:
- Create their greenhouse gas emissions report and make it public,
- Choose offset projects certified by authorised organisations,
- Choose to finance projects presenting “sustainable development” approaches,
- Show evidence of fair interest in national and international projects, and
- Practice responsible reporting.
Carbon offset projects may take different forms:
• renewable energy projects that substitute fossil fuel (coal, oil or natural gas) with a source of clean renewable energy, such as power generation using photovoltaic solar panels, wind farms or geothermal energy;
• energy-efficiency projects that reduce energy consumption, including improving the energy performance of buildings through renovations or new construction to include energy-saving systems (low-energy consumption equipment, more efficient insulation, renewable energy for electricity); ride-sharing, which reduces the number of vehicles in traffic and thereby limits pollution; increasing the number of electric vehicles used for shipping;
• waste-recovery projects for the manufacture of low-carbon fuels such as natural gas and biofuels;
• agroforestry projects that plant trees and protect existing forests that face a high risk of deforestation, thereby promoting the absorption and storage of CO₂ released into the atmosphere.
Offset versus reduction: if I'm offsetting, do I really need to reduce?
Absolutely, yes! “Carbon offsets are not our get-out-of-jail free card”, explains the UN Environment Programme. The organisation is actually warning of the danger of moving directly into the “offset” box without first reducing emissions. Theoretically, offset is reserved for emissions that really cannot be reduced.
For example, certain airlines and oil groups are expanding their funding of projects to reduce or sequester CO₂ even outside their own scope of activity (e.g. planting trees or installing wind farms), but still not reducing their carbon footprint, which is, for UN Environment, a sort of “camouflage” for polluters.
What actions is Crédit Agricole Group taking to offset carbon?
After implementing several initiatives, including the use of 100% renewable electricity at all its French sites, Crédit Agricole S.A. has committed to cutting its greenhouse gas emissions (GHGs) by 15%, including energy (in respect of square metres) and transport (in respect of FTEs) over the 2016-2020 period.
Accordingly, each Group entity has rolled out action plans to reduce the energy consumption of its buildings and its data centres, as well as the carbon footprint of employee travel. These action plans have produced results, with scope 1* and scope 2* GHG emissions having decreased by 7% and 5% between 2018 and 2019.
Crédit Agricole S.A. has reduced its GHG emissions by 22% in five years. Emissions measured in CO₂ equivalent have fallen from 62,000 tonnes to 48,000 tonnes. The work initiated in recent years by the CSR Department has helped to substantially cut emissions from travel, energy and waste. In 2018, a mobility plan was implemented at the Evergreen and St Quentin campuses. The objectives of the plan – to considerably develop teleworking, expand the fleet of electric bikes and carsharing vehicles, improve bike access to the site and introduce a carpooling app – have all been achieved. In a further development, with the Purchasing Department, the travel policy has been reinforced with a ban (excluding exceptional exemptions) on taking planes wherever the destination can be reached by a train journey of under two-and-a-half hours. For the Crédit Agricole S.A. parent company, this policy has been respected overall. These initiatives together have served to reduce travel-related emissions by 30%.
In addition, the Group’s climate strategy is aimed at fully controlling the risks and opportunities stemming from climate change, notably through the gradual reallocation of its financing, investments and savings under management to the benefit of the energy transition. The reallocation will follow the trend in the global energy mix as projected by the external scenarios (particularly the International Energy Agency’s Sustainable Development Scenario, the Climate Analytics report, and the Science Based Targets) selected by the Group’s Scientific Committee. It will take concrete form notably in a schedule for the complete exit from thermal coal according to a timeline consistent with the Paris Agreement.
The coal exposure of our portfolios will follow a scenario of a complete exit from coal, by 2030 for EU and OECD countries and by 2040 for the rest of the world. To ensure transparency, the Group has committed to communicating on the thermal coal exposure of its financing/investment portfolios every year, starting from end-2019.
For several years now, the Group has also invested in the Livelihoods Carbon Fund (see inset).
Through this fund, structured by CACIB's Sustainable Banking team, the Group offset more than 73,000 tonnes of CO₂ in 2019 (energy- and transport-related emissions across the scope of UES Crédit Agricole S.A., Amundi and Crédit Agricole CIB).
In addition to the Livelihoods Carbon Fund, Crédit Agricole S.A. supports programmes and projects that help to maintain biodiversity and support a fair transition.
In 2019, Crédit Agricole Assurances increased its commitment to reforestation and sustainable forest management in France, launching an operation in partnership with Reforest'Action that plants a tree for every savings or death & disability policy taken out. The goal of 300,000 trees per year was exceeded as of 31 December 2019. Forests, which are considered the second most important carbon sink after oceans, are an essential component of biodiversity.
In addition, Crédit Agricole Assurances donated €178,000 to the French association Plantons pour l'avenir.
In Switzerland, the CA Indosuez Wealth Management Foundation supports actions that have an impact on local communities through environmental projects that involve reforestation, agroforestry, and water management.
So there are different, complementary approaches throughout the Group which pool efforts to achieve the carbon neutrality required by the Paris Agreement.
|What are Livelihoods Funds ?|
The Livelihoods Funds allow businesses to finance agroforestry, planting, and equipment-modification projects. In return, with the money invested, investors receive carbon credits they can use to offset their emissions. A carbon credit corresponds to a certain volume of CO₂ offset by the project.
* Scope 1 includes the GHGs emitted directly from the burning of fossil fuels within the scope of an organisation; scope 2 covers the GHGs resulting from the production of the electricity, heat and steam required for the business activities of an organisation.
|The Livelihoods Carbon Funds, our carbon offsetting approach|
The methodology used by the Livelihoods Carbon Funds is based on six main principles:
1. Reducing CO₂ first and foremost All investors and Livelihoods partner companies must have an ambitious policy to reduce CO₂ emissions. Carbon offsetting only occurs after this reduction.
2. Impact All Livelihoods projects have a positive environmental or social impact on the countries or regions where they are implemented, and they contribute to the fight against global warming.
3. Large-scale projects Livelihoods Funds provide seed funding to NGOs seeking to implement large-scale projects.
4. Risk management Livelihoods is not a commercial organization and does not buy carbon credits to resell directly to businesses. It is a mutual fund created by companies that invest in high-risk stocks and earn carbon credits.
5. Long-term projects Livelihoods funds are a long-term investment vehicle. Contracts are drawn up based on projects that will be spread over 10 or 20 years.
6. Direct beneficiaries The value created by Livelihoods Funds stays in the regions where it works. Livelihoods does not own any land, trees or crops.
Sources : les échos, Livelihoods, huffingtonpost, https://www.credit-agricole.com/assets/ca-com-front/temp/PDF/CASA_DPEF_2019_UK.pdf