More on carbon neutral business

In a previous post, I pointed to a some articles by Joel Makower on the “green-rush” – companies scrambling to become “green”.

I just came across another post by Joel: Is ‘Carbon Neutral’ Good Enough?. This passage in particular (actually taken from an earlier post) caught my eye:

buying offsets for an energy-wasteful home or business and calling it environmentally responsible is akin to buying a Diet Coke to go with your double bacon cheeseburger — and calling it a weight-loss program. Efficiency (and calorie reduction!) comes first.

This is what was so interesting about the announcement from Yahoo! – they are actively distancing themselves from this position.

It’s a concern I’ve heard from quite a few people. Australian carbon credits provider, Climate Friendly re-inforce the “Reduce, Renew, Offset” ‘hierarchy’ that I’ve mentioned before (also promoted by WWF).

And it is also reflected in Energetics’ paper The Reality of Carbon Neutrality (PDF 52 KB) paper.

If ever there was a business case for an agreed framework or guideline for reporting on carbon neutrality, so that consumers, analysts and investors can determine with absolute clarity the genuine aspiration from the green wash – this is it.

The Energetics paper suggests that “carbon neutral” as a claim is problematic, unless backed up with life cycle analysis, verified and audited by a third party, and accreditation under a variety of standards (including the Australian and International Standard AS ISO 14064 used by the Australian Government’s Greenhouse Friendly program).

Energetics’ position leans a bit on risk management – that companies that claim “carbon neutral” status without going through such processes open the company up to reputation and financial risks:

Companies should be aware when they consider proclaiming their carbon neutrality, based on a less rigorous approach than the one outlined above, that there is a real reputation risk for Boards and Executives of accusations from civil society of “green wash”.

At present the ASX Corporate Governance Council is deciding to what extent they will require or recommend that ASX listed companies should voluntarily report on non-financial risk with regard to environment, social and governance risk and to what extent they will define reporting frameworks. Issues around carbon neutrality will fall within such guidelines or frameworks should they emerge.

It’s a useful approach, if only because risk is one of the key drivers leading businesses down the path of carbon neutrality. The other, of course, is marketing – perhaps one of the drivers of green wash?