How to approach carbon offsetting on your path to net zero 🍃

Over the past couple of years, and even more noticeably since the beginning of the global pandemic, an increasing number of companies have made ambitious climate pledges, linked to the Paris Agreement – the international treaty on climate change aimed at limiting global warming to well below 2°C, preferably to 1.5°C, compared to pre-industrial levels.

While these pledges are urgently needed, it will often not be possible to become climate neutral or net zero without some level of carbon offsetting.

This is a topic that remains relatively new for most of us. Further, it presents many challenges, among which is the infamous concept of “greenwashing”, whereby companies claim environmental credentials, but do not live up to them or fail to disclose information about their choice of offsets. At Capgemini Invent, we’re putting our clients on a Path to Net Zero, with a portfolio of strategic and operational services designed to accelerate sustainable transformation ambitions. And one of the pillars of Path to Net Zero is built on carbon pricing and offsets. This sees us helping clients leverage the right carbon strategy to support their transformation and set their carbon offset strategy around their ambition, constraints and risks, technical requirements, governance, and an offset roadmap.

Getting started with offsetting

We’re often asked how to get started with carbon offsetting and, for this reason, we have produced the following to highlight some of the key aspects to consider.

First, carbon offsetting can only be credible if it comes after a real program to physically reduce your carbon footprint at every opportunity. Climate change calls for an urgent and ambitious response to massively reduce emissions in the first place. We should also remember that offsetting solutions require some of our planet’s resources (land, energy…), and can therefore put further pressure on the resources, so the first target must be to reduce emissions as much as possible first.

That being said, while the actual process of carbon removal offsetting comes later in the day, the offsetting journey should be anticipated and planned from Day 1 of your net zero transformation. Indeed, getting from the first definition of your long-term strategy to having it validated and purchasing your first credits will take time. For this reason, while the Capgemini Group puts its ambitious carbon reduction targets as the primary focus of its own journey to net zero, it has developed carbon offsetting criteria to define a future strategy for offsetting and has already begun discussions with carbon offset suppliers to inform that strategy.

Meanwhile, taking a step back and looking at the bigger picture, we observe that anticipation is key to the whole market: to be able to secure its future needs for offsets, we cannot simply rely on the market and purchase credits on the spot market each year. As demand for offsets rises, we’re now entering the long game, and those who succeed will be those who make sure that supply can meet their future needs (at least, for the next decade). This presupposes that they have set a forecast trajectory for reducing emissions, taking into account climate pledge, targets, etc., in order to anticipate the investments in offsetting.

Although anticipation is key, the offsetting journey also demands agility in order to cope with market uncertainties, adapt the volume of credit to the actual emissions beyond the trajectory, and seize the technological opportunities that are likely to emerge in the coming years. For example, possible technology developments around capturing and storing carbon directly from the air might be viewed as sources for potential offsets in the coming years. Organizations would be well advised to retain some leeway to adjust their offset portfolio each year to seize such opportunities as they arise.

Key points to consider

For a credible offsetting program, other conditions for success include:

• The quality of the offsets: today, while there are a few internationally recognized standards offering some minimum guarantee of quality, a company must set its own criteria and run its own due diligence on the projects it selects.
• The mobilization of a whole ecosystem internally: assessing the offset needs, securing the budgeting approach, purchasing the credits … will all need inputs from different teams, such as CSR, Finance and Procurement.
• A dedicated governance, empowered to make strategic decisions in line with the business DNA, for the next 10 to 15 years. Remember, this will weigh on the company’s budget and impact its credibility regarding its climate pledge. This governance must involve the company’s CxOs, such as CFO, head of CSR, head of Procurement and, ideally, several members of the executive board.

Clearly, offsetting is not an easy task, but it is part of the long-term net zero story. It requires resources and robust market intelligence, as well as strong sponsorship for building a structured strategy over time.

Find out more

Want to continue this conversation? Contact me here or check out my blog and more here.

Find out more about Capgemini Invent’s recommended approach to carbon pricing & offsetting and how our Net Zero strategy offer can accelerate your journey to sustainable business success.

Author - Maelle Bouvier

Co-author - Etienne Receveur