I am reading a book about CSR and it touched on trading of Carbon Credits. I don't know much about them at all and so I did some research. On this website:
I found out what carbon credits were. What I got from the website was that they were certificates given out to companies, governments and other entities that are reducing greenhouse gas pollution.
Examples of how they do this are:
-They are using renewable energy like wind and solar instead of fossil fuels.
-They could be becoming more energy efficient by using less electricity and fuel in general.
They are sold in carbon offset markets which are regulated by regional, national and international organizations. Who buys these credits are usually companies that need to keep up with regulations on how much carbon dioxide they are allowed to produce. Buying these credits allows them to produce more pollution and still follow the regulations. This keeps the companies brand name looking good. It is always a good way to have a competitive advantage over other companies who are not keeping up with regulations. Customers care about these things and are more likely to buy from a company who cares about how much pollution they are creating. These carbon credits are extremely helpful to companies who can't help the amount of emissions that they create. The revenue earned from the sales of the carbon credits are put back into emission reduction projects.
I wanted to learn more about the regulations of this carbon emissions. On the following website:
I found there are three groups used when calculating companies emission footprint. One is direct emissions. These are emissions coming from activities that are under the businesses controls. Examples of this are manufacturing and emissions coming from company owned vehicles. The second group is indirect emissions. This means the buying and use of things like electricity. The last group is also indirect emissions. This group includes things like business travel, employees commute and waste emissions. Group one and two are requirements in calculating carbon footprint. Group three is sometimes included. I think companies include group three because it is good CSR practice. Gives them a competitive advantage and great brand image.
Why companies calculate their carbon footprint can be for several reasons. It may be mandatory. The company can see better ways to reduce and manage their emission creations. This leads to reducing costs in most cases. It demonstrates better corporate social responsibility practices. It may be in response to requests from customers, shareholders, employees and trading partners.
I understand why we want to reduce the emissions. I agree with the group idea and even how they calculate carbon footprints. I'm not sure if I agree with carbon credit trading though. I think companies are falsely stating that they have good CSR practices by just purchasing other peoples or companies carbon credits. These companies are putting the effort and changing their business processes to reduce their impact. I don’t think its fair if other businesses can take credit for the hard work put into the change by throwing money at it. Customers shouldn't be fouled so easily by a company saying they are reducing their carbon footprint, it may just mean they are buying carbon credits. To me they are different things.