Carbon Neutrality Makes Business and Climate Sense

A recent Climate Action webinar brought together Wayne Sharpe, Chairman and Founder of Carbon Trade Exchange, and Bianca Sylvester, Consultant on Climate and Carbon Finance at the World Bank to discuss how businesses can engage in both voluntary and mandatory carbon pricing to save money and build their brand.

How does engaging in carbon markets benefit business?
The number of companies’ worldwide using internal carbon pricing for investment decisions has reached 437 in the past year, and is expected to surpass 1000 by 2017. Many businesses are making these changes voluntarily, partly due to anticipating stronger rules on climate change and a sense of social responsibility, but primarily due to the business advantages that carbon neutrality can unlock.

One such way businesses can tap into this potential is using Carbon Trade Exchange (CTX). Chairman and Founder Wayne Sharpe explained the way in which CTX provides a global platform for buyers and sellers of carbon, acting as a regulated stock exchange for carbon credits. Crucially, CTX makes it easy for businesses to engage in carbon trading, as it does not require them to be experts in carbon trading in order to build a portfolio.

Sharpe went on to discuss the case study of Danske Bank, the largest bank in Denmark, to demonstrate how engagement in carbon markets can result in reduced costs. The bank became carbon neutral in 2007 at a cost of €500,000. Over the following two years, the bank continued to measure its carbon footprint and managed to isolate major cost centres to make direct reductions. By 2009 the bank had reduced its carbon output by 40 percent, thus reducing the cost of offsetting to €300,000, making €1.5 million in permanent annual savings. Danske Bank now aim to reach a further 60 percent reduction in carbon emissions by 2020.

Sharpe also addressed the experience of Qantas, Australia’s largest domestic and international airline, to demonstrate that consumer facing engagement in carbon markets can assist in building a strong brand profile and larger client base. Via CTX Qantas have offset their carbon use until 2020, according them the credibility to start and run the world’s most successful airline offset programme, Fly Carbon Neutral- an innovation that serves to bring value  to customers and build an committed following.

Such actions mean that these companies now have the edge over their competitors that remain entrenched in inefficient operational practices and unprepared to adapt their business models to mandatory carbon reduction policy.

How have policies impacted private sector decisions around carbon pricing?
Bianca Sylvester complemented Sharpe’s comments by discussing the way in which governmental policies on carbon trading have impacted the private sector.

Due to the failure of the Kyoto Protocol, there is no top-down directive to provide the international community with mandatory carbon reduction procedures. There exists, therefore, regulatory fragmentation across jurisdictions, as separate government authorities design their own carbon market and pricing structures. For the private sector this impedes investment and, for global companies such as Qantas, raises their costs of compliance as they are forced to comply with different regulations in every jurisdiction in which they operate.

To exemplify this, Sylvester discussed the price variability in trade markets, where a tonne of carbon can cost anything between US$1 and US$130. Other markets, such as that for coal, are able to work around such disparities and the World Bank is now exploring the possibility of linking markets to make carbon fungible across regions.

How will carbon markets be affected by COP21?
Carbon markets have received mixed mention in the flurry of INDCs produced in advance of the COP21 conference. Sharpe predicts that, as a result of COP21 outcomes, mandatory carbon policies will become more prevalent as we see more legislation surrounding the issue. He hopes that a coherent carbon market framework will emerge from this legislation, and that pressure from businesses to act will encourage further engagement in carbon markets.

Sylvester suggests that COP21 will increase momentum around carbon pricing systems, and hopes discussion over carbon pricing methods and cross-border trade will emerge from the conference.

A full recording of this webinar is available here, or hear more from Wayne Sharpe in his Climate Leader Interview.

This panel was brought to you ahead of the Sustainable Innovation Forum 2015, which will unite a panel of global experts to discuss this topic in greater depth. Register your place today.

*This article was produced together with Sophie Tollet*