The ESG Review: Is carbon offsetting offski?

An airline announcing that it is scrapping its carbon offsetting scheme in favour of the harder net zero path of cutting its own emissions was always going to create headlines.

easyJet only unveiled its offsetting programme three years ago, when it trumpeted its pledge to offset emissions by buying credits as a landmark approach in its sector.

Yet its new decision will see it call time on that at the end of this year, and instead invest in new technologies such as fuel-efficient aircraft, green fuels and even the prospect of hydrogen-powered planes has also prompted criticism over greenwashing.

In its piece on the story, The Guardian lent back on a joint investigation it ran into several major airlines apparently using flimsy offsetting schemes that involved “phantom” credits. The article’s inference was that if airlines had gone all out to commit to offsetting mechanisms rather than tackling their own emissions, they were not so much firmly on the road to net zero but spinning their wheels in a lay-by, and so easyJet’s news could be more about drawing a line under a flawed approach rather than a commitment to accelerate progress.

A more pragmatic perspective is that the corporate world has come a long way on emissions and the ‘quick fix’ of offsetting since 2019. The notion of cancelling out emissions you have caused by creating the reverse, positive impact by other means was always going to be a potentially thin sticking plaster, open to claims of schemes being poorly run, hard to understand or even fundamentally flawed.

Most companies that announced commitments framed them as a necessary step on the journey, but one that would help to lead to more meaningful and impactful measures as momentum gathered.

As the FT put it in its coverage of the story, “Critics say offsets often do not deliver the environmental benefits they promise, and that purchasing the credits, many of which are available for under $5, can be a cheap way to maintain business as usual.”

Airlines have the added factor of having been under, and continuing to be subject to, increased public scrutiny given the drastic impact of severe travel restrictions during the peaks of the pandemic. Quiet skies saw media reports of enormous reductions in emissions and much cleaner air - spotlighting the issue for the world by its very absence and prompting further research into the impact.

easyJet’s news has landed (pun intended) well though. The commitment to cut emissions by 78% by 2050 was backed by clear detail about the path to achieving that. It is tied to certain Government action, as would be expected, but the airline’s claim that its granularity went further and deeper than other commitments in aviation certainly throws down a marker for others.

In a new World Economic Forum podcast, offsetting is outlined as something that “can help channel funds to conservation and sustainable development projects that will reduce emissions, giving companies time to work towards zero emissions”, but acknowledges that if done badly it can be wholly counterproductive.

easyJet’s move begs the question of who will follow suit, not just in the flying business but in other emissions-intensive industries where offsetting has become relatively standard practice. Offsetting was always going to be a way to get the ball rolling on achieving net zero goals and complement direct action to reduce emissions at home - but if companies begin to phase out their schemes just a few years after introducing them, it could be offski much sooner than was envisaged.

The ESG News Review is written by Steve Earl, a Partner at BOLDT


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