Decarbonization Best Practices for Your Business
- A solid decarbonization initiative will help businesses achieve regulatory compliance, supply chain resilience, and a trustworthy brand reputation.
- The top common mistakes of carbon initiatives today include unverified sources, double counting, inaccurate carbon accounting, and mistakes of non-compliance.
- Choosing a solid carbon initiative partnership can help you make strides toward your decarbonization goals while protecting people, planet, and your business.
Top three business benefits of carbon initiatives
There are many business benefits to pursuing carbon initiatives, in addition to the good for people and the planet. The top three business benefits of a strong carbon initiative are regulatory compliance, supply chain resilience, and brand reputation.
1. Regulatory compliance.
Worldwide regulations, particularly in the EU (ex: deforestation-free supply chain regulations), are beginning to require data-driven proof to back sustainability and carbon-related claims. Advertising laws are beginning to ban buzzwords like “environmentally-friendly,” “eco-friendly,” and other vague claims without sufficient evidence. Many business models currently rely on aggregated or satellite data, but regulations are requiring carbon initiatives to be proven by exact geo-location data down to the source. For example, brands must identify the farm location of sourced raw materials to prove deforestation-free. Thus, a solid carbon initiative program will be able to help you achieve and maintain regulatory compliance, saving you millions in fines and bad press.
2. Supply chain resilience.
Experts cite supply chain traceability as the next supply chain revolution, due to its ability to protect your sourcing and multi-solve business pain points. Using proper and accurate carbon accounting across your value chain (i.e., tracking Scope 3 emissions) will provide insights into where carbon reductions could occur and where opportunities for carbon offset initiatives exist, such as regenerative agriculture or conservation. This level of traceability is an enormous benefit, backing up your claims with reputable, real-time data. So you can quickly see what’s working, and what’s not, and take action.
3. Brand reputation.
As conscious consumerism, ESG investing, and greenwashing lawsuits rise, brands can no longer afford to delay sustainability. In light of recent carbon controversies, companies with carbon initiatives can also no longer afford to continue their programs without serious traceability and transparency down to the source. Thus, a third major benefit to your business of a thorough carbon initiative is a stellar brand reputation that builds trust with stakeholders and protects your business from the repercussions of bad PR.
Top four common mistakes of carbon initiatives
Just as there are major benefits to proper carbon initiatives, there are also some typical mistakes to be aware of. Knowing the common pitfalls of a poorly run carbon initiative will help you know what to avoid as you begin or grow your company’s carbon program. The top four risks in improper carbon initiatives are unverified sources, double counting, inaccurate carbon accounting, and mistakes of non-compliance.
1. Unverified sources.
If any carbon initiative is not tied or traceable all the way down to the related asset (i.e. plot of land, tree, etc.), then any related sustainability or carbon reduction claims are unsupported. Unverified sources lead to miscalculations and overestimations of a company’s carbon impact. We see evidence of this in the recent controversy surrounding South Pole’s carbon credits and the growing prevalence of carbon credit insurance schemes. Ensuring your carbon credits and offsets are tied directly to a source is essential to backing up your claims, building stakeholder trust, and avoiding costly non-compliance.
2. Double counting.
A related issue, but equally as important to avoid, is double counting. Double counting in a carbon initiative is when third parties that sell carbon credits sell the same carbon credit multiple times to different organizations. This may not have been intended, but if there is no traceability to a plot of land or forest of trees, who is to say that two carbon credits do not include the same land plot? When a program lacks full visibility down to the plot of land, there is no guarantee that a tree planted or patch of regenerated soil isn’t sold twice to two different groups.
3. Inaccurate carbon accounting.
Carbon initiatives and net-zero goals will be fundamentally flawed if companies don’t accurately account for carbon (and greenhouse gas) emissions more broadly across their supply chain. Currently, most companies calculate Scope 1 and Scope 2 emissions from facilities they own and operate, but can only estimate their carbon footprint in Scope 3, or rely on suppliers to accurately report on it. As such, Scope 3 emissions are typically drastically underestimated (or overestimated). Implementing a supply chain traceability solution that will capture carbon emissions more accurately down to the source can inform carbon initiatives that are impactful and adequate to fully offset those emissions.
The majority of carbon accounting business models today rely on data aggregation. Meaning, they look at their carbon offset/credit data as a whole, and not granularly at where each carbon credit or offset originated. This crutch of aggregation makes it difficult to know the legitimacy of each credit. Was a tree actually planted? Or is regenerative agriculture used on a proveable plot of land in the Amazon? Additionally, regulations such as the EU deforestation-free law are beginning to require exact location data. So starting off your program by moving away from aggregated data is key as you build out your carbon initiatives.
4. Mistakes of non-compliance.
Last, but certainly not least, is the risk of non-compliance that comes with poorly operated carbon initiatives. With due diligence and compliance laws on the rise, brands are already being exposed for non-compliance and unfounded claims. Non-compliance can be both financially and reputationally damaging. Thus, a spotty carbon program - regardless of how well-intended - can cost your company millions in fines and reputational trust.
How to choose the perfect partner to support your decarbonization initiatives
In light of recent exposés in the seemingly complex world of carbon accounts, choosing a trustworthy partner to support your carbon initiatives is key to your success. Regardless of what partner and/or solution you choose to work with, the following attributes should be non-negotiable as you evaluate the right fit.
A solid carbon initiative partner can provide you with:
1. Verification of the geolocation.
Meaning, verified proof of the exact geolocation of the plot of land where your carbon credit or offset originates.
2. Monitoring of carbon offsets.
In addition, your offset projects should include close monitoring to ensure that your carbon accounting remains accurate. The right decarbonization partner will be able to accurately capture and report on regenerative agriculture practices, tree reforestation, and other carbon sequestration projects.
3. Auditable, timestamped data.
Truly auditable data will be timestamped (and, ideally, provided to you in real-time!). This level of data accuracy will enable you to regularly monitor and maintain the efficacy of your carbon reduction calculations.
4. Supply chain linkage to end product.
Your carbon initiative partner should be able to provide you with visibility and data tied throughout your entire supply chain, from source to end product, for offset initiatives. This level of visibility will enable you preventative and detective control to ensure compliance.
BanQu is a traceability software that powers decarbonization programs with end-to-end, real-time data to back their sustainability claims.
With BanQu as your carbon partner, you can digitize your end-to-end traceability and tie each step in the chain of custody to the underlying asset. Thus, lowering your risk of fraud and increasing the credibility and efficiency of your decarbonization program.
Whether you’re hoping to track the carbon emissions in your coffee supply chain, monitor the effectiveness of your alien species removal project in the Amazon, or prove the results of your reforestation and regenerative agriculture investments, BanQu can help. Schedule a free call today!