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NEW REPORT: Offsetting in the FTSE100

Carbon Retirement's new report covers the state of offsetting in the FTSE 100. Click here to download it.

Twenty one FTSE 100 companies offset; six of these claim to be carbon neutral. 

Voluntary offsetting is confined to only three sectors: Financials, Consumer Discretionary and Consumer Staples.

Ninety percent of companies offsetting are non-carbon intensive, that is, have low carbon emissions per unit of revenue. This is perhaps because these companies can offset a significant proportion of their emissions at relatively low cost. They are also less likely to be covered by emissions regulation, so are more prone to ‘self-regulating’.

Outliers are Unilever and Reckitt Benckiser, both of medium carbon intensity. However, both only offset a part of their operations.

Financials are leading the way with offsetting. Over 61% of FTSE 100 companies in this sector offset at least a portion of their emissions. In all but one year from 2005-2010 one FTSE 100 financial company has gone carbon neutral.

No offsetting is reported in the IT, Healthcare or Telecommunications sectors, all of which have low-carbon intensity. Lack of voluntary action from these companies, plus sectors with medium/high carbon intensity, means that only 0.1% of FTSE 100 carbon emissions are being voluntarily offset. High intensity firms are covered by regulation; medium intensity firms that are not could do more voluntarily.

If all non-carbon intensive companies went carbon neutral, offset volumes would increase by 39m tonnes. This represents only 1.4% of FTSE 100 emissions, but it would almost double the size of the global voluntary market.

Around half of companies report using third-party standards, and just under two thirds of credits are reported as verified. This is low given that 90% of all voluntary offsets transacted globally in 2009 were third-party verified, and indicates that the low figure may be due to non-disclosure rather than companies not purchasing verified offsets.

Motivations for voluntary offsetting are: enhancing corporate reputation, plugging the gap until new low carbon technologies become available, taking responsibility, and engaging stakeholders.

With this in mind, it seems odd that FTSE 100 companies are disclosing low levels of information about their offsetting, as information about offset standards and methods are important to the credibility of offset claims.

If the FTSE 100 companies are to make meaningful steps towards reducing their collective environmental impact, then:

  • Non-carbon intensive sectors that do not currently use voluntary offsets (IT, Telecoms, Healthcare) need to follow the lead of the sectors that do (Financials, Consumer Discretionary, Consumer Staples).
  • Voluntary offsetting, as well as ambitious emission reduction strategies, must begin to play a more substantial role amongst medium-high intensity companies.
  • Offsets must be verified by a high quality third-party standard.
  • Methods and standards must be clearly disclosed so claims can be assessed by stakeholders.

Click here to download the full report.

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