Carbon footprints represent the amount of carbon an entity releases into the environment, resulting from deforestation, industrialization, etcetera. These emissions accumulate in carbon sinks, such as oceans and the atmosphere, causing long-term environmental degradation, including climate change. Climate change is existential crisis of our time, affecting global conditions like coral reef biodiversity and heat waves and snow degradation in regions that aren’t associated with such unpredictable and extreme weather events. Despite African states having a smaller carbon footprint than industrialized states, the sustained intensity of climate change has massively damaging implications, especially in regions reliant on weather and natural factors for sustenance. Conflict and climate change are linked, as individuals face resource scarcity and resort to aggression/violence, making it difficult to build and maintain peace, posing a threat to human security and future generations’ survival.
Businesses worldwide admit responsibility for addressing climate change and are adapting to public pressure. Some businesses have vowed to decrease their emissions while others who find this tough, may turn to trading carbon credits. African businesses must adopt sustainable practices to reduce carbon emissions, as manufacturing contributes 30-40% of the continent’s carbon emissions. If this trend continues, it could double within 20-30 years, posing monetary risks and deteriorating living conditions.
Killing two birds with a no-carbon future: Trading Carbon to Boost Sustainability
Commercialization of carbon involves creating a global market for buying and selling carbon credits to compensate for a company’s carbon footprint. Carbon Credits are the certificates that show the amount of GHGs that have been sequestered or removed from the air. There are two markets, one of which is voluntary where the secondary goal is satisfying ESG goals, brand management, differentiation, etcetraa. Mandatory or compliance  markets are markets where trade complies with some form of regulation, e.g.; Cap and Trade markets with a specific carbon budget which keeps decreasing to meet a Net Zero goal. To participate, merchants and buyers must maintain offset accounts for sustainable credit purchases and sales strategies.
Carbon credits can be a lucrative venture for businesses. Excluding the benefits brought by additionality, and based on how a business sequesters its carbon, per metric ton, African companies can earn up to 40-80 USD. These credits can be used to finance climate-oriented projects, contributing to conservation, waste management, public health, and employment. They also aid in the development of less costly climate management technology, allowing more organizations to manage their carbon footprints. Carbon offset projects help achieve the global net zero goal by adjusting businesses’ activities, such as avoidance, removal, and adaptation. The Singita Kwitonda Lodge Orchid Project in Rwanda recovered 5,000+ indigenous orchids within the region- acting as a good example of a carbon-offset initiative.
In advance of investing in offsetting projects, an entity must have a clear vision of what it wishes to achieve (if it wants to offset all or a percentage of its emissions for instance) and if its goals align with its sustainability strategy. Carbon Verification is when a third party evaluates an offset program against its metrics. When the program has met the standards, the credits are verified which means that it is safe for use in managing carbon footprints. One of the instruments that can be used in the verification process is, the Verified Carbon Standard.
Offset credits must be verified by third-party NGOs, as no central body can do so. Businesses must do their due diligence and research on the validity of third-party offset claims before certifying them. Organizations like The Gold Standard, CDM, and Green e-Climate Standards, verify credits. Businesses can use the revenues to meet sustainability objectives, such as investing in solar panels, blue-carbon, and biochar options. Offsetting carbon is a continuous process, and organizations must continuously evaluate and monitor their progress to provide accurate reports to their stakeholders. Reporting uses standards like IFRS to build trust, demonstrate global compliance, support business growth, and attract impact investors.
READ: Implications of IFRS S1 and S2
Conversely, before looking into offsetting its carbon, an organization can keep track of their carbon budget by carrying out scheduled assessments such as air-quality index and carbon accounting procedures in comparison to its base-year conditions. For one, this will help an organization track its progress in reducing emissions, emission factors and their impacts on the environment (every 100 years).
Carbon management is complex and requires businesses to seek guidance from sustainability consultants. These specialists can conduct carbon footprint assessments, calculate air quality index, and provide advisory services on managing carbon offsets according to a firm’s sustainability strategy. They can also identify underutilized partnerships and CSI opportunities.
The Carbon Neutrality Journey: Finding the right weights to balance the scales.
Neutrality is the area between expenditure and mitigation, achieved through carbon offsets, adaptation, and trading to achieve net zero emissions. Firms can manage their footprint without obtaining credits, using alternative methods like capturing carbon and injecting it into underground saline aquifers for storage. This involves optimization and adaptation for achieving net zero emissions.
Stakeholder engagement is crucial for optimizing sustainability goals and managing carbon footprint. It helps organizations identify important topics for their strategy and fosters cooperation, resulting in greater chances of success in meeting targets.
Carbon footprints contribute to climate change, prompting urgency among industry players and policymakers. Technological resolutions are near, but existing solutions already exist. Consistency and compromise are necessary for initial footprint management steps. Sustainability specialists can help businesses achieve maximum efficiency in carbon management, focusing on market and impact-oriented thinking
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