Carbon offsetting

Our commitment to managing our carbon footprint focuses primarily on minimising the direct impact of our operations on the environment through our Group-wide environmental management systems. In addition, we offset the emissions remaining through the purchase of carbon credits.

The carbon credits we purchase are, as a minimum, certified to the Voluntary Carbon Standard, which shows the projects genuinely help to reduce C02 emissions and are both auditable and traceable.

Through offsetting, we are able to help fund projects that deliver equivalent CO2 savings, either by improving energy efficiency or generating renewable energy. Some projects also have environmental and social benefits that occur through their implementation. For example, we purchased 15,000 carbon credits for a reforestation project in Brazil. While capturing and storing CO2 is the project’s primary goal, it is also helping to create employment opportunities as well as building the knowledge and skills required by local communities to manage forests sustainably.

In 2010, we purchased 1,191,956 carbon credits from projects in Brazil, China, India, South Korea, Tanzania, Kenya and Thailand. This purchase offset global carbon emissions from energy use and travel totalling 1,138,830 tonnes of CO2 in 2009 and an additional 133,000 tonnes of CO2 for 2008, which was captured as part of our improved data management and estimation methods.

What is carbon offsetting?

Carbon offsetting takes place when an individual or organisation voluntarily purchases carbon credits to match or ‘offset’ the emissions created from its activity (its carbon footprint). According to guidance from the UK’s Department of Energy and Climate Change, an organisation can be ‘carbon neutral’ when – through a transparent process of calculating emissions and offsetting residual emissions – net carbon emissions equal zero. A ‘carbon credit’ is a financial instrument aimed at reducing greenhouse gas emissions. One carbon credit represents the reduction of one metric tonne of carbon dioxide, or its equivalent in other greenhouse gases.

Credits are generated from projects that reduce global greenhouse gas emissions, such as renewable energy installations. The carbon savings made must be in addition to the savings that would have happened without the funding from the sale of carbon credits. For example, a biomass plant saves carbon dioxide by producing electricity from a renewable source which would otherwise have been generated from fossil fuels such as coal. If the plant saves 10,000 tonnes of CO2 each year, it can sell 10,000 credits.

This creates an additional income stream for the seller of credits and makes investment in clean energy more attractive to investors. Carbon credits are sold in the marketplace and purchased by individuals or organisations wishing to offset their own emissions. These credits are then cancelled or ‘retired’, permanently removing them from circulation to prevent them being sold again. Carbon offsetting projects provide a mechanism for investment in clean technology in developing countries where it is needed most. Such investment can help encourage the spread of low-carbon development across entire regions, further reducing the impact of climate change.