When Tim Petrou opened B. Wells Marketplace in Unionville, Ont. last April, he took steps to minimize its environmental impact. The organic grocer doesn’t carry plastic bags, its shelves are stocked with locally grown produce and the carbon emissions created by the importing of food are addressed by purchasing up to $700 worth of carbon offsets each month from Toronto-based Zerofootprint, a not-for-profit that invests in air-friendly initiatives such as reforestation and renewable energy production. Eventually, Petrou’s cash registers will calculate emissions totals on receipts, giving customers the option to pay their own offsets tab.
Petrou is one of a growing number of entrepreneurs embracing carbon offsets, which are intended to counterbalance the greenhouse-gas emissions of an activity by financing projects that reduce future emissions or current greenhouse-gas levels. In principle, the idea is simple: calculate the emissions your business creates, then purchase the equivalent offset — which can be good for PR and for your conscience. In practice, however, carbon offsetting is not always good for the environment.
Because the industry is unregulated, some offset programs are poorly run or even corrupt. In 2002, rock band Coldplay funded the planting of 10,000 mango trees in southern India, giving villagers a cash crop while offsetting emissions from the production of its second album. But it took four years to discover that only a small fraction of the saplings had survived, as villagers lacked the manpower, insecticide, spraying equipment and even water to maintain the trees. Further, some offset schemes exaggerate their impact, sell the same offset credits multiple times or gouge buyers (one tonne of CO2 offsets can cost anywhere from a few dollars to more than $45.)
Reforestation is one of the most disputed offsets, deemed by critics as unreliable because trees are vulnerable to fire, drought and mismanagement, making offset calculations a guessing game. That didn’t stop Ottawa-based Monterey Inn and Resort from buying enough offsets in 2004 to be named “Canada’s first carbon-neutral company” by the Ottawa-based TREE Canada Foundation. “For me, the methodology is sound, and it makes sense from a business perspective,” says Jason Kelly, Monterey’s general manager. He picked TREE Canada because it plants only domestically, allowing Kelly to visit the plantations annually and not worry that his offsetting initiative of choice will falter due to political or economic instability.
As carbon offsetting becomes more popular and its flaws more visible, certification standards are emerging, such as the Voluntary Carbon Standard, whose backers include the World Economic Forum. The best offsetting options will become clearer as the industry evolves, giving more companies a chance to measure and counteract their environmental impact. But Petrou doesn’t want to wait. “This comes from a sincere belief in what I’m doing,” he says, “but it doesn’t hurt me to be going in the same direction that people are heading, if not leading the pack.”