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Five years ago I was working with social entrepreneurs crowdfunding their start-up ventures. One reason for crowdfunding’s success is how it reduces barriers to participation. Backers who put in four-figure sums might get different rewards, but they are counted as a backer and communicated to just the same as someone putting in £1. The £1 contributors might not be sufficient to make or break the project financially, but they are necessary because in sharing their contribution with their network they bring others in, who might go on to make huge contributions. Similarly, when it comes to climate action, though some actions might not be sufficient, the momentum they create is necessary.
With businesses increasingly stepping up, now is the time to embrace all the ways we can reach our common North Star – keeping temperature rise to 1.5 degrees. We must avoid creating false dichotomies that are unhelpful – pitting one solution, pledge, approach, against another when we need everyone and everything to make real change possible.
I think we can all agree that any credible climate pledge from a business should include a plan for reducing its internal emissions. And if that trajectory is ‘science-informed’, i.e. in line with what is required to keep temperature rise within the global goal, then it is appropriately ambitious. The Science-Based Targets Initiative has established a highly regarded platform for these internal reduction pledges.
But we need to get to net zero emissions globally by 2050 to have a chance of reducing the rapidly rising temperature. So, science-based targets need to combine with pledges and actions to go further. Our analysis of the Fortune Global 500 found that companies with a carbon neutral commitment are three times more likely to have a Science-Based Target.
It is for this reason that the Science-Based Targets initiative has acknowledged the role of offsetting in its latest net zero guidance. Of course, offsets should not be used to dodge the requirement for abatement in line with a science-informed pathway of 1.5 degrees of warming. But offsetting can, in the words of the Science-Based Targets initiative, “play a critical role in accelerating the transition to net-zero emissions at the global level” and “at net-zero: play a role in science-based net-zero strategies… for companies with residual emissions within their value chain… neutralise those emissions with an equivalent amount of carbon dioxide removals”.
Offsetting programmes that deliver carbon finance to projects play a vital role in ensuring that the transformation to a low carbon economy is a global one. Carbon offsetting delivers finance to projects in countries where that transition will not be easy: if large multi-nationals and developed economies are finding it hard to identify how to meet net zero targets while still delivering healthy growth, imagine how much more difficult that is for less developed economies trying to meet the net zero challenge?
It is no accident that offsetting is rising in tandem with net zero. It is because the opportunities to reduce emissions are unevenly spread across the globe. And many of the countries who will struggle to finance this transition are those that are most impacted but least responsible for the changing climate. Offsetting enables the private sector to, voluntarily, move finance where it will have maximum impact, closing the gap so that everyone can benefit from the transition. And in this critical decade, surely that’s a positive.