U.S. markets closed
  • S&P 500

    +1.77 (+0.03%)
  • Dow 30

    +62.42 (+0.16%)
  • Nasdaq

    -44.80 (-0.28%)
  • Russell 2000

    +2.85 (+0.14%)
  • Crude Oil

    -2.04 (-2.60%)
  • Gold

    +15.10 (+0.74%)
  • Silver

    +0.19 (+0.84%)

    -0.0005 (-0.04%)
  • 10-Yr Bond

    -0.0670 (-1.55%)

    +0.0015 (+0.12%)

    -0.0600 (-0.04%)
  • Bitcoin USD

    -36.30 (-0.07%)
  • CMC Crypto 200

    0.00 (0.00%)
  • FTSE 100

    +21.79 (+0.28%)
  • Nikkei 225

    +836.48 (+2.19%)

Firms such as Hong Kong's Swire that use credits to offset carbon footprint are more likely to see lower emissions, report says

Companies buying credits to offset their carbon footprint are more likely to report lower emissions and invest more in their reduction, compared with businesses not taking part in voluntary carbon markets, according to a report by data compiler Ecosystem Marketplace.

Businesses engaging in voluntary carbon markets are already addressing climate change in their direct operations and throughout their value chains, and thus reducing emissions more quickly than peers, according to the report released on Tuesday by Ecosystem Marketplace, which monitors voluntary carbon credits trading data globally.

"Companies investing in voluntary carbon markets are outperforming their peers across a range of key indicators," said Stephen Donofrio, Ecosystem Marketplace's managing director.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

A carbon credit is a permit that allows the holder to emit a certain amount of carbon dioxide or other greenhouse gases over a period of time. One credit is typically equivalent to one tonne of carbon dioxide, and polluters use carbon credits to offset emissions from their operations that they cannot otherwise reduce, to meet their climate targets.

The report analysed voluntary carbon market transactions, and corporate climate disclosures made to the non-profit Climate Disclosure Project by 7,415 organisations on behalf of 590 institutional investor signatories with a combined US$110 trillion in assets and more than 200 major purchasers with more than US$5.5 trillion in procurement spending.

Companies taking part in voluntary carbon markets were 1.8 times more likely to be decarbonising on a year-on-year basis compared to those that were not, according to the report.

Buyers of voluntary carbon credits were also three times more likely to include Scope 3 emissions, or those attributable to the companies' customers or suppliers and along their value chain, in their climate targets. Scope 3 emissions account for about 91 per cent of carbon buyers' emissions, according to the report.

Carbon credits, however, represent a very small share of the overall action needed to reduce emissions. The analysis shows that the credits companies are buying represent on average just more than 2 per cent of their total emissions, according to the report.

"This research clearly shows that companies which are investing in carbon markets - far from being laggards or greenwashers - are using carbon credits as part of ambitious, holistic decarbonisation strategies," Maria Mendiluce, CEO of the We Mean Business coalition, said in a statement.

"Participation in high-integrity carbon markets is credible action against climate change and nature depletion," she said.

Hong Kong-listed firms, such as conglomerate Swire Pacific, have been using carbon offsets as part of their strategy to reach net-zero emissions.

"Carbon offsets can play a vital role in our net-zero strategy, as they allow us to compensate for hard-to-abate emissions within our value chain and emissions from technologically constrained sectors," Swire Pacific said in its 2022 sustainable development report released in April.

Under the current policy, all of Swire Pacific's subsidiaries are required to offset the emissions associated with staff business air travel. Offsets bought must, at a minimum, meet the Verified Carbon Standard or gold standard, according to the report. In 2022, the group bought more than 154 tonnes of carbon offsets through its Fly Greener programme.

Some companies are, however, avoiding talking about their carbon credits transactions for fear of being accused of greenwashing.

"Corporate leaders have become reluctant to 'talk their walk' about carbon market strategies for fear of being type-cast as greenwashers, but I hope this report will help dispel mistrust and encourage more CEOs to invest and disclose more about their carbon credit investments," Mark Kenber, CEO of the Voluntary Carbon Markets Integrity Initiative, said in a statement accompanying the report.

This phenomenon has led to the rise of so-called "greenhushing", which is "the other side of the spectrum from greenwashing, where companies don't talk enough about their green initiatives", said Luca Fong, managing director of sustainability and experience design lead at Accenture Song, speaking on a panel at the ReThink HK 2023 conference on September 15.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.