Lisa Ashford

Despite the somewhat doom-and-gloom outlook for the world's economy in 2009, EcoSecurities' recent Carbon Management and Offsetting Trends Survey showed that green issues have remained high on the agenda for both senior management and the board.

Many companies have calculated their carbon footprint and are taking action to reduce it, by implementing energy efficiency measures (85 per cent of respondents), recycling activities (79 per cent), and waste reduction (68 per cent). This makes sound economical sense and represents some of the easiest actions that companies can take.

Companies are also showing a strong interest in offsetting; with over two thirds claiming they had already bought offsets or would consider doing so before 2012. This is likely to increase as companies work hard to meet compulsory carbon neutrality targets. Of those that did buy offsets in the last two years, there seemed to be an equal split between those that were carbon neutral (14 per cent) and those that had offset flights (13 per cent) or specific services or products (11 per cent).

There was only a very small sample of companies that stopped offsetting despite the expectation at the start of the year that the voluntary market was facing a crisis of confidence with the economic downturn. Although, of those that had chosen not to offset yet, budget concerns (11 per cent) and consolidation of standards (47 per cent) were the main factors.

However, the fact that 30 per cent of respondents showed a lack of understanding of offsets, demonstrates that the industry clearly has more work to do and is a reminder that whilst offsetting firms may already see a clear movement to backing standards such as VCS, CDM and Gold Standard, the trickledown effect to consumers and corporates is perhaps yet to happen.

In addition, regulatory uncertainty was claimed to be a reason why companies chose not to offset yet, which could reflect a very strong "wait and see" policy with companies, mirroring some of the early days in Europe before the EU emissions trading scheme was created.

Alternatives to carbon offsetting were clearly represented. Companies chose both internal emission reductions and investing in community projects, followed by contributions to adaptation projects. Interestingly, when broken down by region, the Rest of World was clearly strongly in favour of adaptation where the effects of climate change are often felt most.

In all geographic samples, the majority (69 per cent) of respondents have positive attitudes towards offsetting. When considering whether companies have changed their views towards offsetting, the trend has shown that views have either remained the same or grown more positive, with less than 10 per cent per region stating that it has worsened. This is a good sign that the voluntary carbon market is gaining more credibility and that recent development with registries is having a positive effect.

Businesses' reasons for offsetting are clear - environmental benefits, with carbon neutrality and marketing, and CSR commitments also proving to be important motivating factors. This is in contrast to pressure from customers, which scored much lower. It is perhaps more important to think about how companies believe these green activities will result in increasing their brand strength rather than having a direct push from customers.

In terms of what buyers want, the voice is loud and clear. Over 50 per cent of buyers show a clear preference for renewable energy projects, specifically solar and wind. As outlined in our previous Forestry Offsetting survey, interest is growing in forestry projects, with Avoided Deforestation in particular being cited as highly desirable over other technologies.

The most desirable location for emission reduction projects in general was the US, followed by Africa and South America. These results obviously change significantly when looking at the results from individual regions as the preference for domestic based offsets or those "close to home" become prevalent. North American support was demonstrated for domestic offsets followed by those in Canada and Central America. This trend was mirrored in the Australasian responses that also look close to home and ties in with their strong interest in local community projects. Those in Europe bucked the trend with the majority of respondents finding India, Africa and South America the most desirable.

As previously noted there is greater recognition of some key standards, specifically VCS, GS and CDM. There were very few negative responses echoing the notion that standards are good for the sector. This sentiment is reiterated in the responses to the question - important factors considered when purchasing carbon offsets.

However, there were some regional preferences. In Europe, the responses showed a stronger preference for the Gold Standard, followed by the CDM and then the VCS. In terms of standard preferences by region, the North America responses favoured the VCS and Gold Standard, followed closely by CAR and interest in RECs. CDM also received strong support, which is interesting in the context of future regulations and the use of offsets within the US.

As carbon management strategies become must-haves for companies, we will continue to provide insights into the market trends to show what's in and what's out.

Lisa Ashford is the Global Head of Voluntary & New Markets at carbon offsetting specialist EcoSecurities

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