41% of leaders don’t use carbon offsets to support their net zero goals because they don’t trust them enough, according to a study from software as a service provider, AiDash.
The survey asked senior sustainability decision-makers from over 530 medium and large companies across 19 industries to understand the effectiveness of the carbon offset market on the path to net zero.
The report highlights how sustainability and carbon management are now mainstream areas, with more than three quarters (79%) of chief sustainability officers (CSO) stating they are already accountable to their boards and/or public.
“There’s no question that organizations around the world are embracing sustainability and carbon management.” said the report.
According to the survey, the ambitions for achieving net zero is there, with 56% of respondents having set net zero targets on or before 2030. However, there are still significant barriers to achieving these goals, with over half (56%) saying they have no direct operational control over the majority of their greenhouse gas (GHG) emissions.
Lack of control has led many to rely on carbon offsets to achieve net zero targets, with 43% of leaders using them for hard-to-reduce GHG emissions alongside direct measures. While “understandable” the report admits offsets can be “fraught with risk”.
The carbon market as grown significantly in popularity recently, soaring 164% in 2021 to a record high of £667 billion. This growth was mainly due to an increased demand for carbon permits, which culminated in surging prices.
Despite their popularity, many CSOs do not fully trust carbon offsets due to lack of consistent regulation, and they seek a reliable mechanism to validate the efficacy. 41% of respondents admitted to not using carbon offsets because they do not trust them enough.
“Clearly, the world’s businesses are responding to the demands of society — shareholders and customers — as well as the requirements of the environment. These organizations’ dependence on carbon offsets to meet the fast-approaching 2030 deadline they’ve set themselves for reaching net-zero is understandable and fraught with risk.” says the report authors.
Lack of trust in the carbon market has not gone unnoticed. In September, Salesforce announced it will be launching a ‘first of its kind’ emission offset marketplace. The initiative combines offset providers and rating agencies in an effort to reduce confusion about which offerings are legitimate and encourage companies to invest without uncertainty in their decision.
However, while carbon offsets appear to be an effective way for companies to compensate for their emissions, the method is not without its detractors. In October, the UK’s climate council expressed concerns that currently cheap carbon offsets may hinder companies efforts to cut, or avoid, their emissions and ultimately slow the delivery of climate goals.
Elsewhere in the report, CSO’s share that biodiversity will be the next big thing for them. In this area, 66% already have biodiversity positions, 14% intend to create biodiversity positions, and 24% already include biodiversity impact in their environmental strategy.
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