Credible Climate Protection - How does it work?
Climate-neutral, CO₂-neutral, Net Zero – an increasing number of companies are trying to distinguish themselves from the competition with such buzzwords. However, behind these terms, there is often nothing more than greenwashing – without any changes in the company itself and the financing of activities elsewhere, whose positive impact on the climate is potentially minimal.
This is increasingly being critically questioned, not only by consumers and environmental organizations. Renowned newspapers and magazines, such as FAZ, Vogue, or Der Spiegel, report on greenwashing. Recently, the Wettbewerbszentrale (German Antitrust Authority) has issued warnings to several companies and initiated cease-and-desist proceedings because the use of the term ‘climate neutrality’ creates the impression that climate neutrality has been achieved solely through emission-avoidance or emission-reduction measures and not with the help of CO₂ certificates.
So, credible climate protection involves much more than just a nice slogan and a small investment in climate protection projects. But how can credible climate protection be achieved?”
First Reduce, Then Offset
Marketing around ‘Climate Neutrality’ is often misleading and does not ensure that a company is ambitiously committed to climate protection. More meaningful – and reliable – are realistic yet ambitious reduction goals and measures, as well as the quality of the financed climate protection activities.
Credible climate protection means, first and foremost, avoiding and reducing emissions – in line with the atmosfair motto ‘Avoid before Reduce before Compensate.’ Emission reductions make sense for companies for several reasons.
- CLIMATE: In order to limit global warming to 1.5 or 2 degrees, industrialized countries must significantly reduce emissions – not in 10 years, but immediately.
- STAKEHOLDERS, INVESTORS: Investments in sustainable funds have multiplied in recent years. The EU-Taxonomy aims to further promote investments in sustainable economic activities.
- LAWS: In addition, there are increasingly more regulations that could ensure emissions reductions also lead to lower costs, for example, in logistics and procurement. These include, for example, the CO₂ tax in Germany and the currently discussed ‘Fit for 55’ regulations of the EU.
- CUSTOMERS, EMPLOYEES, BUSINESS CASE: Lastly, sustainability and climate protection are becoming increasingly important for customers and employees.
To achieve significant reductions, an analysis of the status quo and a clear reduction strategy are relevant. Goals for emission reductions serve as both internal guides and external signals for credible climate protection ambitions. There are different approaches to setting reduction goals, ranging from self-developed goals to pledges without specific reduction targets, to science-based methods with specific reduction goals. Science-based methods ensure that a company’s reduction goals make a measurable contribution to achieving the 1.5-degree target. The Science Based Targets Initiative (SBTi) is one of the most well-known organizations that provides calculation approaches for reduction goals for free and validates the goals set by companies.
Unavoidable residual emissions can be compensated. With high-quality compensation projects as a complement to emission reductions, companies can make a direct and uncomplicated contribution to the energy transition from North to South and signal active climate protection to their customers.
Information on when compensation can be meaningful from a climate perspective can be found here.
Communication: Transparency is important
The most important aspect of communicating climate protection activities is transparency. This allows climate protection ambitions, even if they are still in the early stages, to be credibly presented while avoiding communication risks.
Offsetting or Project Funding: Which Claims Are Appropriate?
With the replacement of the Kyoto Protocol by the Paris Agreement, the conditions for compensation on the Voluntary Carbon Market change. This raises the important question for companies of how they can communicate compensation – with Corresponding Adjustments – or project funding – according to the Contribution Claim Model – effectively and legally securely. It should be noted at this point that compensation can only be spoken of in the presence of Corresponding Adjustments. Contribution Claims, on the other hand, should not be confused with the compensation of emissions.
Background information on the differences between compensation with Corresponding Adjustments and project funding according to the Contribution Claim Model can be found here.
Possible Claims with Offsetting
On the path to climate neutrality, offsetting can be used to save unavoidable or residual emissions elsewhere in the same amount. This results in more realistic claims such as “CO₂ Neutrality” or “Net Zero Emissions” (Pineda et al., 2020). However, these goals should ultimately be achieved without offsetting but through emission reductions. For emissions that cannot be avoided, emissions must be withdrawn from the atmosphere in the same amount (neutralization). Offsetting can be used in the transitional phase until the goal is achieved to contribute to CO2 neutralization. If a company describes itself as “CO₂-neutral through offsetting” the addition makes it clear that residual emissions occur that are not neutralized, and the final climate goal has not yet been reached.
Possible Claims with the Contribution Claim Model
Since the emission reductions achieved by a project are not transferred to the donor in the Contribution Claim Model, companies cannot use offsetting or neutrality claims in this case. Just like with offsetting, the company takes on climate responsibility and makes an important contribution to technology development in the host country and global climate protection. Slogans that illustrate the (financial) support of project countries in achieving their climate protection goals include: ‘CO₂-friendly through climate investment in the host country’ or ‘climate-friendly through technology investment in the host country.’ It is important that the chosen slogans do not create the impression that the company is offsetting emissions from its own value chain through emission reductions from the project.
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