Carbon neutrality is one of the major global initiatives being driven from need to take care of the environment. With several definitions in place carbon neutrality has been driven from the narrow perspective to the broad view. This is mostly from individuals, consumers, organization and governments at large. The concern is that as companies strive to achieve financial freedom they should on the other hand reduce the amount of carbon emissions to the environment. Several companies as shown in the following paragraphs have taken major steps hence succeeding in reducing carbon emission to the environment an initiative being labeled as "becoming carbon neutral".
Being carbon neutral or carbon neutrality refers to achieving net zero carbon emissions by balancing a measured amount of carbon released with an equivalent amount sequestered or offset (Francis, 2008). Best practice for organizations and individuals seeking carbon neutral status entails reducing and or avoiding carbon emissions first so that only unavoidable emissions are offset. Carbon neutral according Francis (2008) refers to the practice of balancing carbon dioxide released into the atmosphere from burning fossil fuels with renewable energy that creates a similar amount of useful energy so that carbon emissions are compensated or alternatively using only renewable energies that do not produce any carbon dioxide to the environment.
Francis established that carbon neutral also refers to the practice of carbon offsetting by paying others to remove or sequester 100% of the carbon dioxide emitted from the atmosphere for example by planting trees or by funding carbon projects that should lead to the prevention of future green house gas emissions or by buying carbon credits to remove them through carbon trading (2008). Organizations which intend to become carbon neutral can achieve these by combining the following three steps which include limiting energy usage and emissions, from transportation and obtaining electricity and other energy from a renewable energy source either directly generating it or by selecting an approved green energy provider and using low carbon alternative fuels such as sustainable (Francis, 2008). He further says that offsetting the remaining emissions that cannot for the moment be avoided or generated from renewable in a responsible carbon project or by buying carbon credits.
Why this aspect of sustainability is gaining so much attention and whether you think the priority given to this environmental issue is merited
Organizations which strive to become carbon neutral are seen as good corporate or state social responsibility and a growing list of corporations and states are announcing dates for when they intend to become fully carbon neutral (Francis, 2008). Some corporate examples of such organizations include Dell, Google, HSBC, ING Group, PepsiCo and Tesco. Francis (2008) says that "besides that events such as the G8 Summit and organizations like World Bank are also using offset schemes to become carbon neutral" (p. 214).
United Nations Environment Programme (2009) says that becoming carbon neutral that our emissions of greenhouse gases are balanced by the amount we reduce or offset globally. This implies that the principle of carbon neutrality underpins the ambitions of many countries and companies policies which in many occasions contribute to the total reduction of greenhouse gas emissions. United Nations Environment Programme (2009) thus says that the goal of carbon neutrality can effectively steer our transition to a low emission world. Some organizations have shown strong interest of reducing carbon emissions by 50-85 per cent from 2000 to 2050 and mostly likely as much as 85 per cent and peak no later than 2015 (United Nations Environment Programme, 2009).
Becoming carbon neutral companies should thus effect deep cuts in emissions in the short term and in practice almost zero emissions before the year 2030. United Nations Environment Programme (2009) says that greenhouse gases have the same effect on global warming regardless where carbon is emitted. It is important to note that early action is essential in order to have a peak in carbon emissions by 2015. Becoming carbon neutral requires that organizations cut its emissions and in the same sense the potential will be much greater when we look at the world at large.
How environmental regulation may be influencing the action being taken
Studies show that many environment friendly technologies already exist, but unfortunately they are too expensive for ordinary people or for investment decisions in industry. United Nations Environment Programme (2009) further says that prices for these technologies will not fall before demand raises hence market interventions are therefore needed to make to make climate friendly technology cheaper and emissions intensive technology and activities more expensive.
Efforts to become carbon neutral should include both domestic action to reduce emissions as well as financing emissions reductions elsewhere especially in developing countries. United Nations Environment Programme (2009) says that "companies should come up with cost effective ways of cutting carbon emissions and at the same time make major contributions to green economic growth in developing countries". Another major consideration is that developed countries like Japan must take the lead in carbon emissions reductions. According to United Nations Environment Programme (2009) this is because they have the economic resources and the technological expertise to undertake both substantial carbon emissions cuts at home and to fund emission reductions developing countries and emerging economies.
The key to becoming carbon neutral for all organizations and countries is to develop and implement new climate friendly technologies and practices that will make low emissions development possible (United Nations Environment Programme, 2009). All such technologies will become increasingly attractive as the price of emissions to rise. What can be done in the energy sector is to be decisive with respect to climate change. United Nations Environment Programme (2009) established that "use of fossil fuels for energy production dominates the world's emissions and access to energy is the key to increasing the welfare and standard of living for millions of poor people across the globe". In this context ensuring reliable supplies of affordable and climate friendly energy must be part of the solution.
In this context studies show that establishing global emissions trading system where a global carbon price will emerge should be a clear long term goal. Many organizations in developing countries lack the resources or incentives for introducing climate friendly technologies. United Nations Environment Programme (2009) says that developed countries must contribute in an efficient manner, to enable organizations in developing to follow a more environmentally friendly path of growth than the one they have followed since industrial revolution.
What is attractive to companies about 'carbon neutrality' as a business target
United Nations Environment Programme research shows that by paying for emissions reductions in dev eloping countries, developed countries not only improve the balance of their own climate accounts but they also facilitate transfers of technology and capital (2009). A good example is that Norway aims to become carbon neutral by 2030 and this will have major contributions from the companies and organizations in the country. A research by United Nations Environment Programme (2009) further indicates that by the year 2030 and towards 2050 the country hopes that a lot more countries as well as organizations in those countries will have become or will be at their final stages of striving to become carbon neutral.
This implies that in the long run many organizations will need to make transitions to low emissions world and at the same time there is a global cap on carbon gas emissions from all. United Nations Environment Programme (2009) noted that "broad participation in a global carbon market will give a basis for faster development and diffusion of the best technologies and solutions to become carbon neutral". It is crucial that the future climate regime creates a frame work that welcomes, promotes and provides incentives for research, innovation and implementation of all technologies that contribute to reducing carbon emissions (United Nations Environment Programme, 2009). This requires increased efforts on renewable energy and energy efficiency.
Research done by United Nations Environment Programme (2009) established that increased efficiency is not enough to become carbon neutral. This therefore implies that in the short and medium term fossil fuels will still be used to a large extent. To become carbon neutral we must meet the challenge of securing a sustainable future energy supply by reducing emissions from the continued production and use of fossil fuels.
Carbon capture and storage is one of the strategies that can be used by organizations to achieve a carbon neutral environment. United Nations Environment Programme (2009) indicated that carbon capture and storage technology will complement other climate change mitigation actions by reducing emissions from use of fossil fuels including coal during the transition to low carbon organizations. Organizations should be fast to note that carbon capture and storage is an integrated part of a strategy for carbon neutrality (United Nations Environment Programme, 2009).
Halting emissions from deforestation and forest degradation is particularly important because this can have significant effects on global emissions within a short period of time (United Nations Environment Programme, 2009). As investors open new organizations in different parts of the world they should note that emissions from deforestation and forest degradation in developing countries amount about 17 per cent of the global carbon emissions. As result organizations should increase efforts to reduce these emissions must be additional to and not replace efforts by developed countries to reduce their emissions.
Pinkse & Kolk (2009) in their research found out that with regard to becoming carbon neutral and emissions reducing technologies, companies that pursue compensatory approaches act as a passive arm's length actor because they do not participate in the innovation process themselves. Pinkse & Kolk (2009) further noted that the option to offset emissions is mainly the result of the fact carbon emissions trading has emerged as the main policy instrument towards a carbon neutral environment. Supply chain measures for compensation aim to avoid the need for emissions cuts within the company.
In addition, Pinkse & Kolk (2009) says that "a company should instead seek to find solutions to ensure that activities and sources of high carbon emissions are carried out elsewhere in the supply chain or that emissions are reduced further up the supply chain" (p. 103). In this context the most common supply chain measure is monitoring the carbon intensity of supplied materials or suppliers. For example Dell requires that its most important suppliers to disclose information on their carbon emissions because if they fail to do so Dell will no longer do business with them (Pinkse & Kolk, 2009).
Another supply chain measure is replacing inputs with a high potential for emissions by those with lower emissions. Pinkse & Kolk (2009) thus indicated that "one way of doing this is substituting fossil fuels with carbon free renewable energy sources" (p. 103). In non carbon intensive sectors such as telecommunications and service oriented sectors this requires procurement of electricity and heating generated from clean energy sources. One example of organizations pushing for carbon neutral environment is British Telecom which in 2004 showed its commitment by announcing that it will only purchase electricity that was generated by renewable sources and combined heat and power plants (Pinkse & Kolk, 2009). Google in the year 2007, put pressure on electricity in a similar way, requiring them to generate at least one fifth of electricity from renewable energy sources
Another major strategy towards becoming carbon neutral as indicated by Pinkse & Kolk (2009) is that "companies can also subcontract or outsource certain high emissions activities such as transportation and distribution to reduce carbon emissions internally while increasing those of business partners" (p. 103). Organizations can also move beyond the supply chain and achieve reductions by interacting with others either by buying emissions credits or by other forms of offsets for example Clean Development Mechanism (CDM). Pinkse & Kolk (2009) continues to say that by acting as a buyer on the carbon market a company can balance its excess emissions (p. 104).
It must be noted that alongside the regulatory driven carbon market, a voluntary carbon market has developed (Pinkse & Kolk, 2009). A recent trend that nicely illustrates the interaction between innovation and compensation as a means to reduce carbon emissions is the carbon neutral concept. Pinkse & Kolk (2009) established that carbon neutrality is achieved when emissions from a product activity or a whole organization are netted off either through the purchase of an equivalent number of offsets or through a combination of emissions reduction and offsetting.