Businesses, financial institutions, and organisations have powerful roles in global climate action. They have the resources to support decarbonization projects such as offsetting. And, they can help reduce carbon emissions around the world. Reduction, Reuse and Offsets are three key parts of the solution, with importance in that order.
“Many people misunderstand offsets as a way to avoid having to reduce emissions at home, by offsetting instead of reducing emissions. In fact, the intention is just the opposite.
“Once you have identified your (or your business) climate footprint and reduced it as much as possible, offsetting puts a price on the remaining emissions and offers a way to work with the global community to reduce emissions globally.”
Niclas Svenningsen, Manager of Global Climate Action at the UN Climate Change Secretariat.
Brands Can Step Up
Brands are increasingly taking part in decarbonization projects. International environmental organisation Stand.earth has provided businesses with a guide to “fossil-free fashion” to get a grip on its pollution in the supply chain or the industry’s fast growing carbon footprint.
The formula: renewable energy, better materials, and green shipping.
Sources have pointed to the fashion industry as one of the biggest contributors to global warming. However, most brands have yet to slash their carbon footprints and be less dependent on fossil fuels in the supply chain, said the organisation Stand.Earth in a report.
“Despite commitments to slash their emissions, the fashion industry’s supply chain saw more dirty coal, more fossil fuel-based fabrics, and more delivery by highly polluting cargo ships prior to the COVID-19 outbreak.
As brands look to restart after the pandemic, the industry must implement concrete, collaborative efforts to tackle its pollution problem through a combination of rapidly transitioning factories to renewables, eliminating fracked fabrics like polyester, and greening up shipping.”
Gary Cook, Global Climate Campaigns Director at Stand.earth
Recommendations for fashion brands include:
- Lasting materials: Brands must source lower carbon and lasting materials, while steadily phasing out fossil fuel-based plastic fabrics.
- Greener shipping: Brands must support short-term solutions like slowing ships and eliminating dirty fuels, while advocating for a long-term decarbonization strategy by the end of the decade.
- Renewables: Brands must eliminate coal in the supply chain and transition to a renewable-powered supply chain by 2030. Partner with suppliers to share capital costs. Advocate with suppliers to block new investment in coal, with new coal power plants being planned in Bangladesh, Vietnam, China, and Turkey — major supply chain countries for the fashion industry.
UN Carbon Offset Platform
Imagine an app or a platform that can cancel carbon footprints.
The UN Climate Change has developed a platform for anyone interested in decarbonization projects.
Since 2015, the UN Carbon Offset Platform has purchased and cancelled two million “Certified Emission Reductions” (CERs), or emission reduction units from projects in developing countries. One CER represents a ton of greenhouse gas emission that has been reduced, avoided, or captured.
With initiatives such as this, the United Nations has been working to reduce greenhouse gas emissions and support sustainability projects in many developing countries.
Carbon Pricing, Fiscal Policy
How about the finance world?
The United States, which houses the world’s biggest financial markets, should establish a price on carbon and consider integrating climate risk into fiscal policy, the U.S. Commodity Futures Trading Commission recently recommended.
Financial regulators need to know that climate change has serious risks to the financial system in the U.S., the Commision said in a report. And more importantly, the financial community should provide solutions, instead of just reactions.
Highlights of the Commission’s report included points on:
- Risks. Climate change could pose systemic risks to the U.S. financial system.
- Pricing. An economy-wide price on carbon will allow financial markets to efficiently channel resources to GHG reduction activities.
- Timeline. Regulators and market participants around the world are generally in the early stages of understanding and experimenting with monitoring and managing climate risk.
- Data. A critical constraint remains to be insufficient data and analytical tools to measure and manage climate-related financial risks.
- Vocabulary. The lack of common definitions and standards for climate-related data and financial products hinders the market and regulators to manage climate risk.
- Tool. Climate-related scenario analysis can be a useful tool to enable regulators and market participants to understand and manage climate-related risks.
- Disclosures. Corporations’ disclosure of information on material, climate-related financial risks is important in measuring and managing climate risks. In fact, demand for disclosure of information on material, climate-relevant financial risks continues to grow.
Aside from the absence of an economy-wide carbon pricing in the U.S., other factors hold back capital from flowing to low-carbon activities, according to the Commission. For instance, the market for “green” or “sustainable” products remains small relative to the needs of institutional investors.
And in relation to this, there is a lack of trust in the market with regard to “greenwashing” or misleading claims on the real climate-friendliness or environmental sustainability of a financial product or service.
If stakeholders are to be serious about solid, measurable climate action, these are some of the issues that beg attention in the world of finance amid global decarbonization projects.
