Author: Stephanie Harris

Stephanie Harris is a director on the Carbon Markets team, where her primary focus is managing the company's voluntary carbon offset portfolio.

COVID-19’s Impact on Shipping Emissions — and What Companies Can Do About It

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It has been nearly six months since COVID-19 upended nearly everything across the globe – disrupting lives, businesses, and industries in ways that will forever change the world. Many state and federal governments enacted shelter-in-place orders earlier this year that shuttered brick-and-mortar businesses or drastically limited the number of customers allowed through their doors. In an effort to contain the spread of the virus, residents in many countries are still being encouraged to limit their activities to those that are absolutely essential. One result of these lifestyle adjustments is an unprecedented number of consumers going online for their shopping needs.

According to a recent study by Adobe, online shopping sales in June of this year were up 76% compared to the same time last year.

These trends are likely to stick around even after the pandemic is behind us, with an expected 160% growth in online shopping from consumers who rarely or never shopped online before COVID hit. While there are obvious benefits of being able to shop from the safety of your home, the almost constant stream of delivery trucks in neighborhoods around the world has increased shipping-related carbon emissions. 

Even before the pandemic, transportation emissions posed an increasing challenge in the fight against climate change. In 2016, the transportation sector surpassed the power sector as the largest emitter of greenhouse gas (GHG) emissions in the United States, responsible for over 29%1 of total emissions in the U.S., and 24%2 globally. In response, many businesses, particularly consumer goods and e-commerce companies, have been focused on better understanding their indirect (Scope 3) emissions and taking steps to address them. 

One of the most significant demonstrations of this commitment was in early 2019 when Etsy became the first major online shopping destination to offset 100% of carbon emissions from shipping. As a global online marketplace, 98% of the company’s total carbon footprint falls within its Scope 3 emissions, driven by sellers shipping goods to buyers. The company took action to mitigate this carbon impact by investing in four unique emission reduction projects to offset the emissions from its global supply chain — and it cost them less than a penny per package. 

With the current rise in online shopping and uncertainty about when or if consumer shopping behavior will return to a ‘pre-COVID normal’, many more companies have an opportunity to follow Etsy’s lead and take action to address the impact of their increased shipping-related emissions.

To take action on their shipping emissions, companies must first understand the scale of their footprint. While some companies calculate their shipping emissions on their own, many organizations opt to outsource this step. Advisors like 3Degrees can inform customers about the data required to perform these calculations, such as the, weight, distance, and mode of transportation of the goods being shipped. We then take these inputs and use emissions factors from WRI’s GHG Protocol to create a complete shipping emissions report with total metric tons of CO2 that result from goods shipped.

With a shipping footprint calculation completed, organizations can then work with a trusted firm to develop a portfolio of verified emission reductions (VERs) from existing projects, or support the development of new emissions reduction projects that tie directly to their business, industry, or supply chain. By matching verified emission reduction credits to their total shipping footprint, companies can make carbon neutrality shipping claims, reduce the environmental impact of their business, and play an important role in helping to decarbonize transportation.  

COVID-19 has been a stark reminder that we are all connected citizens of this planet. With the long list of negative impacts brought on by this global pandemic, let’s not let this change in consumer shopping behavior add to that list by further accelerating climate change.

Companies can and should step up and take action to mitigate that impact and ensure that the environment doesn’t continue to suffer in a post-COVID world.


For more information on how 3Degrees can help your organization calculate its shipping emissions or take steps to address them, please contact us.

1.  Bloomberg Sustainable Energy in America Factbook: https://www.bcse.org/factbook/
2. IEA Tracking Transport Report: https://www.iea.org/reports/tracking-transport-2019

 

The Role of Carbon Offsets in Corporate Sustainability (part II)

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Part II – Carbon Offset Best Practices

In our first article in this series, The Role of Offsets in Corporate Sustainability, we explored common carbon offset project categories, and how offsets can play an important near-term role in companies’ broader sustainability efforts. We also highlighted why offsets sometimes are sometimes criticized, and discussed why or why not those critiques are valid.

In this second article in the series, we take a closer look at best practices for organizations that utilize carbon offsets as one of many tools in their sustainability toolbox.

First, reduce your emissions wherever possible

The first step in any company’s climate action plan should be to reduce all emissions that are within its direct control, including its own operations and supply chain. This action may take many different forms depending on the nature of the organization, but all organizations should develop and implement a carbon reduction strategy. Typically, this begins with an audit of operations, an internal evaluation, coordinating with suppliers in the supply chain, or any other process to identify sources of emissions and calculate the company’s total greenhouse gas (GHG) emissions footprint. After the sources have been identified, companies can set emission reduction targets and develop plans to specifically address the impacts associated with those sources and activities. 

Use offsets as a bridge to long-term, industry-specific solutions for decarbonization

It is nearly impossible for even the most efficient and sustainable organizations to completely avoid activities that result in GHG emissions. Some industries are already subject to GHG regulations, such as the oil and gas industry in California. However, in other industries that aren’t yet regulated, many organizations are stepping up to take voluntary action. Until the largest industries – such as transportation and agriculture – are fully decarbonized, it will not be possible for organizations to address the entirety of their climate impacts through internal changes. Lack of viable technologies, resource constraints, and other obstacles can make the path challenging. This is where carbon offsets play an important role. Offsets can be an instrument that allows corporations to add onto baseline activities that are already working toward sustainable operations. By investing in emission reduction projects, organizations can take immediate action on their Scope 1 (direct) and Scope 3 (indirect) GHG emissions that are otherwise difficult to address.

Ensure you support high-quality emission reduction projects

It is critical to remember that not all offsets are equal in their impact. Organizations need to be thoughtful when sourcing carbon offsets, ensuring they are from projects that are third-party verified using internationally recognized standards that are managed and maintained by independent, not-for-profit organizations. The ultimate goal is to support emission reduction projects that align with the company’s industry or supply chain, or its geographic, social, and economic impacts. 

Is there a role for carbon offsets to play in corporate sustainability? Yes, absolutely. But it’s important to remember that carbon offsets are just one tool available to companies seeking to build a comprehensive sustainability strategy. And while offsets are not a singular solution to climate action, they can offer an important mechanism for corporations to achieve near-term climate goals and address hard-to-reduce emissions sources.

The Role of Carbon Offsets in Corporate Sustainability (part I)

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Part I

Exploring how, when, and why carbon offsets are important – as well as their limitations

As more organizations around the globe heed an urgent call for climate action, carbon offsets are one tool they can use for near-term emission reductions. While the impact of investing in carbon offset projects is sometimes debated, these instruments can play an important role in bridging the transition to net-zero emissions. 

In this first article of a two-part series, we’ll explore how, when, and why offsets can play a vital role in companies’ broader sustainability efforts, as well as examine some limitations.

As defined by virtually all market participants, including the Climate Action Reserve, a carbon offset is a third-party verified, greenhouse gas (GHG) emission reduction, removal, or avoidance equivalent to one metric ton of carbon dioxide equivalent (CO2e). Carbon offsets are a funding mechanism to support emission reduction projects within non-regulated sectors, including within an organization’s supply chain. From an environmental integrity standpoint, all verified emission reduction projects must meet the notion of “additionality” – meaning, these reductions would not have been achieved without funding from the sales of carbon offsets. 

There is a rigorous and conservative quantification of the actual emission reductions achieved through a verification process that includes detailed due diligence by third-party verifiers. These verifiers operate under approved methodologies detailing these processes, and must maintain accreditation under relevant standards bodies in order to maintain their status as verifiers. These entities ensure that the carbon offsets generated do, in fact, represent the emissions reductions or removals that are being claimed. 

While there are many different project types, carbon offset projects are often categorized as follows:

  • Carbon removal: Carbon removal projects include nature-based solutions that actually remove carbon from the atmosphere, such as certain types of forestry projects, as well as carbon capture and storage (CCS) projects.
  • Carbon reductions: These projects focus on avoiding greenhouse gas emissions (such as capturing the methane that normally would be released from a dairy farm). While these projects don’t actually sequester existing carbon, they reduce the amount being released into the atmosphere.   

So what is the role of carbon offsets in corporate sustainability initiatives? And why are some detractors concerned?

An offset is not a long-term, singular solution for decarbonization. Yet, some critiques of offsets anchor on an “either/or” premise – i.e., organizations are either going to purchase carbon offsets or pursue longer-term solutions to reduce their emissions footprint. In reality, it’s more nuanced, as explained below….

Do offsets provide permission to “pay-to-pollute”? 

Detractors of carbon offsets often claim that offsets provide permission to “pay-to-pollute” — so businesses purchase offsets but do not actually change their behavior. These critics say that since offsets reflect emission reductions, companies can continue to postpone the systemic change that is required to address climate change and continue to buy offsets instead. 

It’s important to note that most supporters of offsets (3Degrees included) do not believe they are the ultimate tool to address climate change. First and foremost, organizations need to reduce their direct emissions wherever they can. However, it is nearly impossible for an organization to completely avoid Scope 1 and Scope 3 emissions (e.g., emissions from transportation and/or supply chain), which are also difficult to address. In these instances, carbon offsets are an appropriate tool to employ and provide a funding mechanism to support emission reduction projects — including projects that directly address those transportation or supply chain emissions. For many organizations, carbon offsets can also serve as a bridge while they work on developing the necessary long-term solutions, which can be complex and take time to come to fruition. Case in point: Etsy was able to immediately offset their shipping emissions for less than a penny per package using carbon offsets while simultaneously working on a broader strategy that includes collaboration with industry leaders, shippers, and policymakers to lead the shipping industry toward decarbonization. The company is supporting immediate emission reductions and galvanizing action for more systemic, long-term solutions.

But carbon offsets don’t address societal inequities.

Climate change magnifies deep societal inequities: the most vulnerable populations disproportionately experience the negative impacts of climate change. Some groups criticize carbon offsets because the impacts of the offset projects are often not linked geographically, socially, or economically to the environmental impact of the offset-purchaser’s operations. However, by definition, carbon offsets are not mechanisms for addressing all environmental impacts, only climate-related (e.g, greenhouse gas) emissions.  

Even though carbon offsets themselves are not designed to address local impacts, companies can link the selection of emission reduction projects to the major geographical, social impact, and/or economic impacts of their GHG footprint or overall operations. They can also select specific offset projects that provide environmental or social benefits (e.g., local air pollutant reduction, water quality improvement, women’s empowerment, job creation, biodiversity, poverty reduction, etc.) that align with their overall sustainability goals. The impact of these projects extends beyond the carbon benefits. And it’s a step – though many more steps are still needed – to ensure a just transition to a low-carbon economy.

The process around carbon offsets is too complex. 

Carbon offset projects often require complex accounting and in-depth verification to uphold the environmental integrity of the GHG reductions. Critics sometimes point to possible margins of error in carbon offset accounting as a justification for discounting their overall value as an instrument for carbon reduction. This rationale, however, forgets that carbon offset methodologies always err on the conservative side of greenhouse gas accounting, and it also misses the intent of offsets as a tool in a larger sustainability strategy. 

Offset funding acts as an incentive for implementing carbon beneficial changes in industry practices. When an organization selects projects directly related to its industry or supply chain, this impact directly connects to the source of the emissions. For example, when Lyft sought to make all its rides carbon neutral, it invested in projects that offered reductions in transportation sector emissions, like automotive manufacturing and waste oil recycling. Projects like these have a direct connection to the automotive supply chain (and Lyft’s Scope 3 emissions).    

Carbon offsets exist in a complex and intertwined world of corporate sustainability goals, and offset methodologies are inherently complex as they require analysis from technical, policy, and economic perspectives. While critics may highlight shortcomings of carbon offsets as a comprehensive solution, these mechanisms play an important role for organizations who want to take immediate climate action, while also pursuing the long-term work needed for more systemic decarbonization solutions.

Next up: In part two of this series, we explore carbon offset best practices.