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Global Brands Are Putting a Price on Carbon, Offsetting Emissions in Creative Ways

A growing number of leading businesses are thinking long-term about climate change and adopting comprehensive strategies for reducing their carbon footprints - report by Ecosystem Marketplace,14 July 2016 | Washington, D.C.

Among a group of nearly 2,000 companies that publicly disclosed data in 2015, 17% use offsetting as part of a carbon reduction strategy – including familiar household names such as L’Oréal, General Motors, and Delta Air Lines – according to a new report by Forest Trends’ Ecosystem Marketplace, “Buying in: Taking Stock of the Role of Carbon Offsets in Corporate Carbon Strategies.”

Some of these brands have very real operational concerns that drive them to fight climate change. Sportswear manufacturer PUMA worries that weather changes and temperature extremes could affect its cotton farmers. In the tech sector, global warming might increase the cost of cooling large data centers for businesses like Google and Microsoft. Delta anticipates that since higher temperatures decrease air density, climate change may increasingly force their planes to carry lighter loads (e.g., fewer passengers), leading to a drop in revenue.

How are these companies tackling the challenge?

With few other options to reduce emissions (there is no carbon-neutral jet fuel yet), Delta has turned to purchasing voluntary carbon offsets to address some of its unavoidable emissions – and also to prepare for coming regulation. They’re hardly alone: of all 1,896 companies who publicly disclosed data to CDP (formerly Carbon Disclosure Project) last year, 248 invested in projects to reduce climate-changing emissions outside of their immediate operations, purchasing the equivalent of 39.8 million tonnes of carbon dioxide (MtCO2e) in 2014. Others are taking a different approach by generating offsets within their own supply chain – L’Oréal, for instance, does so by distributing cleaner-burning stoves to women in Burkina Faso who boil the shea nuts used in its cosmetics products. In total, 79 businesses generated 102.4 MtCO2e in emissions reductions within their own operations or supply chains in 2014, often to meet voluntary targets.

Aside from offsetting, 435 companies now assign an internal carbon price – triple the number of companies that had a price in 2014 – and another 538 have plans to do so in the next couple of years, indicating that businesses are starting to quantify climate risk and factor it into their operational budgets. Some – Barclays, Disney, Microsoft, and Swiss Re are prominent examples – go so far as to charge their business divisions a fee based on their emissions, incentivizing them to reduce their carbon footprint while also raising money that can then be reinvested in energy efficiency or used to purchase offsets. The price companies assigned ranged widely, but the median value of US$18/tonnemakes the average price for offsets on the voluntary market (US$3.3/tonne) look like a good deal for many companies looking to reduce their climate risk.

The vast majority of the 248 companies purchasing offsets did so on a voluntary basis, while only 21% reported purchasing these offsets to comply with regulations in places like California. The single sector with the most voluntary offset buyers was finance, where one in five firms voluntarily purchased offsets; top buyers in this category included Deutsche Bank, Credit Suisse, and JPMorgan Chase & Co.

Another significant portion of buyers hailed from sectors where reputation – keeping in good standing with consumers, shareholders, and employees – is an important factor for success, such as consumer goods & retail, and technology. Led by Delta (#3 among voluntary buyers, by volume) and Qantas (#13), 11 airlines offset carbon in preparation for industry-wide regulation from the International Civil Aviation Organization (ICAO). In analyzing where companies’ reported emissions come from, the report found that three-quarters of companies’ collective emissions are indirect – they happen upstream in supply chains or downstream in customers’ use of products. Compared to Top Voluntary Offset Buyers in 2014 General Motors 1,848,766 tCO2e Delta Air Lines 995,037 tCO2e Barclays Africa 880,000 tCO2e Microsoft 396,531 tCO2e Deutsche Bank 325,000 tCO2e direct emissions, which can be reduced by taking steps like installing renewable energy and increasing efficiency, these indirect emissions are still the “elephant in the room” – and offsetting is one of the only ways to address them immediately.

Those companies that choose to offset are more proactive than other companies in reducing both their direct and indirect emissions, the report finds. Last year, EM’s previous report on this topic showed that offset buyers had more ambitious greenhouse gas reduction targets and did more across the board to directly reduce emissions compared to companies that don’t offset. This year’s report adds to this by finding that 88% of voluntary offset buyers and 92% of compliance buyers had emissions reductions targets and that a number of companies also signed on to the Science Based Targets Initiative, aligning themselves with the larger goal of limiting global warming to a maximum of 2 degrees Celsius. In addition to demonstrating a “big picture” perspective, companies that use offsets also did not shy away from putting their money where their mouth is, and in 2014 these 327 businesses invested more than US$42 billion in emissions reductions activities, surpassing the combined investment of the 1,522 companies who did not engage in offsetting (US$41 billion).

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CARBON PRICING

"There has never been a global movement to put a price on carbon at this level and with this degree of unison. It marks a turning point from the debate on the economic systems needed for low carbon growth to the implementation of policies and pricing mechanisms to deliver jobs, clean growth and prosperity.
The science is clear, the economics compelling and we now see political leadership emerging to take green investment to scale at a speed commensurate with the climate challenge."

— WORLD BANK GROUP PRESIDENT JIM YONG KIM

LEADERS UNITE IN CALLING FOR A PRICE ON CARBON

For the first time Heads of State, city and provincial leaders have come together with the support of leading companies to urge countries and companies around the world to put a price on carbon pollution.

These global leaders have taken steps to price carbon, through emissions trading programs, carbon taxes and fees, and other pricing mechanisms, that provide incentives to invest in a greener economy.

Strong public policy gives the private sector the certainty and predictability to make the necessary long-term investments in climate smart development and prevent catastrophic impacts from climate change.

Convened by World Bank Group President Jim Yong Kim and the International Monetary Fund’s Managing Director Christine Lagarde, the Carbon Pricing Panel is calling on their peers to follow their lead and put a price on carbon. The call comes ahead of the Paris climate talks this December with the aim to spur further, faster action towards the necessary low carbon, productive, competitive economy of the future. They are joined in this effort by OECD Secretary General Angel Gurria.

Members of the Carbon Pricing Panel include German Chancellor Angela Merkel, Chilean President Michelle Bachelet, French President François Hollande, Ethiopian Prime Minister Hailemariam Desalegn, Philippines President Benigno Aquino III, Mexican President Enrique Peña Nieto, Canadian Prime Minister Justin Trudeau, Governor Jerry Brown of California, and Mayor Eduardo Paes of Rio de Janeiro.

The panel provides political momentum to complement the voices of government and industry leaders in the Carbon Pricing Leadership Coalition – an action based platform set up on the back of support for carbon pricing from 74 countries and 1,000 companies at the United Nations Climate Summit in September 2014.

Private sector support comes from US Institutional Investor Calpers, Engie of France, Mahindra Group of India, and Netherlands based Royal DSM who, with other leading businesses, work to link business needs with public policies through the Carbon Pricing Leadership Coalition.


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Angela Merkel - Chancellor Of Germany

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Jerry Brown - Governor Of California

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Enrique Peña Nieto, President Of Mexico

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Eduardo Paes, Rio De Janeiro Mayor


CARBON PRICING PANEL MEMBERS:

Jim Yong Kim, World Bank Group President

Christine Lagarde, Managing Director of the International Monetary Fund

Angel Gurria, OECD Secretary General

Angela Merkel, Chancellor of Germany

Francois Hollande, President of France

Enrique Peña Nieto, President of Mexico

Jerry Brown, Governor of California

Michelle Bachelet, President of Chile

Benigno Aquino III, Prime Minister of Philippines

Hailemariam Desalegn, Prime Minister of Ethiopia

Edoardo Paes, Major of Rio de Janeiro


PRIVATE SECTOR SUPPORTERS

Anne Stausboll, CEO of the California Public Employees' Retirement System (CalPERS)

Gérard Mestrallet, CEO of Engie

Anand Mahindra, Chairman & Managing Director, Mahindra Group

Feike Sijbesma, CEO, Royal DSM


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Anne Stausboll, CEO Of CalPers

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Gerard Mestrallet, CEO Of ENGIE

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Anand Mahindra, Chairman And Managing Director Of Mahindra Group Of India

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Feike Sijbesma, Chairman And CEO Of Royal DSM

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ITC Knowledge Partnership

We have developed our venture over 17 years without Government aid, grants or corporate funding. Our investors have been individuals, and a large percent of our resource inputs were provided pro bono.

Today we are confident to welcome Suneel Pandey, Vice President, Plantation and Raw Material, ITC, as our first corporate Knowledge Partner. A corporate of ITC’s scale is governed by the new CSR tax laws, which has created the framework for mutually beneficial partnerships between social entrepreneurship and corporate interests.

Suneel Pandey spent 18 years from 1990 to 2008 with the Indian Forest Service (IFS), which is in the forefront of the protection of India’s biodiversity. He is from the Tripura cadre of the IFS. He now heads ITC’s farm forestry and social forestry initiatives and has also set up the India Chapter of the PEFC (Programme for Endorsement of Forest Certification), the largest international forest certification scheme, under the aegis of NCCF (Network of Certification and Conservation of Forests).

Suneel steered and headed the National Mission on Bamboo Applications (NMBA), and will bring necessary expertise to further develop forest carbon sinks in India. His forestry background in Tripura along with our own North-East India interests will enable an urgently needed thrust in that ecologically threatened region. His inputs will help us decide whether to extend our reach to other corporate partnerships.

We will participate together in an ongoing consultative process with the International Gold Standard in their upcoming 3.0 version.

We also expect to work together in developing a joint collaboration with the Government of Maharashtra and the organization, IESECCI, the Indian Ex-Defence Service Employees Chamber of Commerce and Industries, who are involved in rolling out a conference on Social Innovation Technologies in Mumbai in the first week of April.

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The Tiger Standard Valuation

Since the last post on this subject where we had announced that The Tiger Standard Goes Public, two of our active stakeholders, Roabin and Rajanish, have been pro-actively working on the valuation of the entity. Here is the progress

Two key points:

  • Valuation of the Tiger Standard website
  • How to begin trading on the website.

Rajanish's summary:

Dear All,

The valuation of Tiger Standard website consists of the following elements:

  • what is the value derived from this website (in terms of dissemination of information on Tiger Standard)
  • what is the revenue from project sign-ups, and
  • what is the value derived from being the trading platform for voluntary carbon credits under the Tiger Standard.

Currently, we are at an evolutionary stage and therefore unable to fathom the full value realisable out of The Tiger Standard. It would be a futile Excel exercise to justify a large valuation. We must rather carry out a realistic valuation (say, the cost involved in building the entity) and the assets transferred to this entity (voluntary carbon credits transferred) to arrive at the current value.

After this, whatever the potential investors visualise as the revenue potential of this website can be discussed, analysed and evaluated for taking a stake in this entity.

The valuation of the Voluntary Carbon credits under the Tiger Standard is more realistic as we have already had some transactions.

So, one parameter here would be the price of such credits in international markets. But these are specific to Indian conditions and hence we need to keep the Indian perspective in mind too and evaluate the price of already concluded transactions on such credits.

I would like to point out that as of today, we have limited voluntary carbon credits for trading which are generating out of the Kerala project of Inheritance India.

But going forward, I can visualise that we have similar credits being generated from projects in the Himalayan ecosystem, Manipur, the Konkan, and many such projects.

I look forward to your thoughts on this.

Rajanish

Categories: Carbon Credits India, The Tiger Standard Goes Public!

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An exchange of views with the Chairperson of Greenpeace India

An open email to the Chairperson of Greenpeace India during COP 21 and his response.

To: Mr Ashish Kothari, Chairperson, Greenpeace India.

Dear Ashish,

I am writing to you in my capacity as a founder member of the Tiger Standard – tigerstandard.com. The Standard evolved out of a 16-year old grassroots initiative that originated in the Western Ghats region to combat man made climate change through integrating environmental protection with community concerns.

It is a serious attempt to equitably bridge the gap between environmental realities and development goals.

Amitav Ghosh, guest editor in the Times of India’s special climate change issue today, while mentioning you as one of the people he most respects for their work in climate change, also speaks of how some of the world’s billionaires who are driving the climate change debate are heavily invested in technologies which may not necessarily suit India.

The Tiger Standard has been clearly documented by the Government of India to be funded by ordinary individuals.

Our particular solution has been to battle man-made climate change and to reward those who have put in valuable resources to make this happen.

We have no other agenda than battling man-made climate change in a transparent for-profit way.

In this knowledge era the Tiger Standard aims to make this a process that is both fair and transparent to all sides.

It is for this reason that I am addressing you. It is possible that we can work together where you maintain your independent status and ensure that what we are doing is for the silenced communities that you have worked for all your life.

If you agree to engage with us we will post our communication on our site. We will also connect with our networks at COP 21 as we hope you will with yours.

We are part of an international thought process led by the University of Cambridge that believes that non state actors must now build on the basic roadmap created by the Governments of the world at COP 21. We believe that man made climate change has to be fought globally and while we are an Indian initiative we belong to the global community whose representatives are currently in Paris.

I am a founder member of an NGO working with street children which was started soon after the Mumbai riots of 1992.

Speaking from that experience, I feel that if as chairman of the board of Greenpeace India you took a proactive role here the engagement between us could become the catalyst towards a quick, friendly and constructive settlement in the current dispute between the Government of India and Greenpeace India.

The current Government does not tolerate dissent for the sake of dissent. I use the word ‘tolerate’ deliberately. The Tiger Standard does not necessarily agree with this view, but we can comprehend it and respect it. We believe that at a time when India is under severe pressure at COP 21 – I quote once again from the Times of India today – if the Board of Greenpeace India was seen to be publicly getting Greenpeace internationally on India’s side at COP 21, Indian civil society would have something real to show why dissent should be welcome in the world’s largest democracy.

Thanks and regards

Roabin Mazumdar



From: Ashish Kothari Date: 2 December 2015 at 19:54

Re: An open email to the Chairperson of Greenpeace India during COP 21.

Thanks for your mail, Roabin.

You have made a number of points below, and I will respond to each:

1. The climate crisis needs to be responded to with a number of actions both for halting further damaging emissions and activities and for facilitating the adaptation of people most vulnerable to the impacts already being felt (and only likely to intensify). Switching over to renewable sources of energy and design changes for the whole host of human activity is crucial, as is the protection of what natural ecosystems remain on earth, and the regeneration of those that have been degraded.

For all these, one of the most crucial fulcrums is the empowerment of communities, rural and urban, for the following (amongst others): to generate/control/have access to renewable energy (for which decentralised sources are best suited), have full tenurial security to territories and areas they live in, to have their knowledge recognised as being as valid as modern science, and to ensure their central participation in decision-making.

Another crucial fulcrum is the reconceptualisation of 'development' itself, away from the growth mania that has gripped all countries, away from putting so much power in the hands of the state or private corporations, and towards more meaningful well-being measures and actions that ensure basic needs to all of humanity while respecting also the space for other species.

I'm afraid our governments are rather far from these actions, though some have moved more meaningfully than others on some of these aspects. The Indian govt, at least in so far as one can make out from its INDC and from its domestic policies, appears to be very far removed from such fundamental course correction. But lots and lots of peoples' movements and other civil society groups, and even many individual officials, have shown a number of innovative ideas/practices for sustainability and equity and justice, which have been time and again offered to govts and can again be offered (indeed are being offered at COP21 even as we enter into this correspondence).

These and others have also been suggested to the Indian govt over the last couple of decades (see for instance the detailed reports produced under the National Biodiversity Strategy and Action Plan, which we coordinated for the Ministry of Environment and Forests of GOI for 4 years, only to have the final document rejected because the govt could not agree to such basic actions; these are all available on Kalpavriksh's website).

They have been suggested as part of the environment and related committee reports that were prepared in the last 2-3 5-Year Plan processes (again, most of what was in those official committee reports too has been ignored). Positive actions and suggestions of this kind are also part of the Vikalp Sangam process initiated by several groups. We are happy to provide the outcomes of these processes to whoever in govt is willing to listen.

But over three decades of such involvement with the govt has left me rather skeptical of the ability of the most powerful people in govt to really listen and absorb and learn and change (notwithstanding some incredibly committed individual officials and ministers that I have had the pleasure to work with or observe or learn from).

2. On the dispute between the GOI and Greenpeace India, we have always stated we are open to dialogue, and even as I write this we are seeking such a dialogue with GOI. But pl. note that the kind of actions the govt has taken against GP India, and the repeated way in which it has gone after us including the extreme step of cancelling registration on what are very flimsy and in fact wrong grounds (grounds that, if applied to any political party of the country today, should mean they all shut down for violations ... and in their case for violations that can actually be proven!). If the govt was wanting dialogue, it could have first asked for a meeting, but no, it went straight for the jugular. A number of court orders in these matters have shown up the govts actions for being arbitrary and improper. Still, we are always open for dialogue!

3. You mention that the GOI does "not tolerate dissent for the sake of dissent". This suggests that you think GP India is dissenting for the sake of dissent, which is rather a travesty of the truth. GP India and many many other organsiations that are challenging some policies and actions of the govt, through a variety of methods all peaceful, do so because they believe that such policies and actions are destructive of the environment, harmful to people, and unjust to the poor. In dissenting we are merely playing our constitutional role of defending the environment and the poor.

4. On being 'on the side of GOI during the climate talks, pl. note that GP India already issued a release re. India's INDC which appreciated the goal of 40% non-fossil fuel energy and some other intended actions, while also being critical of some other aspects. No organisation that is committed to ecological sustainability and social justice can fully support policies that are ambiguous about the directions to be taken, or that 'hide behind the poor' when talking about how Indians are frugal while in fact pursuing policies that allow a small % of Indians to be incredibly wastefully consumerist and own 50% of India's wealth.

Finally, as Chair of the Board of GP India, I do not have any executive position; we are a hands-off Board, getting involved only in policy issues, financial oversight, and oversight of the Exec. Director (ED). Some of what you are proposing is more in the domain of the ED, so I will be glad to send your mail below or any revised mail you want to send, to the relevant persons. For COP21 it is possibly too late to initiate this conversation. I understand there is already a contingent from the GP world at the climate talks, and I'm sure they are playing their usual role of being critical when required and being constructive when required.

Thanks and regards, Ashish

Ashish Kothari

Categories: Greenpeace India

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