The catering firm is the latest food corporate to back away from offset schemes in what has become a pivotal year for the voluntary carbon market. By David Burrows.
Sodexo has dropped its target to become carbon neutral by 2025. The funds originally put aside for any carbon offsets required are being diverted into its decarbonisation projects.
The catering firm told Footprint in June that the target was under review following a series of high profile criticisms of carbon offsetting schemes.
Fast food chain Leon has begun phasing out carbon neutral dishes on its menus, for example, while Nestlé has also withdrawn pledges to make some of its brands carbon neutral and invest instead in cutting greenhouse gas emissions. Sodexo is the latest to make a move, but it’s unlikely to be the last.
“We decided that we no longer want to maintain this [carbon neutral] commitment,” said Sodexo director of corporate responsibility Claire Atkins Morris. And “we would like to ring-fence money that we were going to use for offsetting into our own internal decarbonisation journey.” This is the best use of the funds “not just from Sodexo perspective, but from a society perspective”.
The company has a target to reach net-zero by 2040 and has already reduced total emissions against its baseline (928,160tCO2e) by 33%. Cutting food waste has had a much bigger impact than the team expected but Atkins Morris admitted that continued progress will be “tough”, even when it comes to direct (scope 1 and 2) emissions.
The carbon neutral target, announced in October 2021, covered its direct operations and was seen as a “more accessible” concept than net-zero at the time. However, it involves buying carbon offsets – which have been severely criticised in recent months and weeks.
“There are some organisations that have got this really amazing offset strategy and have put in a considerable amount of money – and yet they’re still being criticised for the offsets they’ve chosen,” Atkins Morris explained. “[For us] there is no real gain in doing that.” The intense scrutiny of carbon offsets and carbon neutral claims prompted discussions with the board and whether the target still “felt right”. “We were hoping for some guidance,” she added, but realised that is wasn’t going to come anytime soon.
Claims under the cosh
Campaigners have long argued that companies should focus on carbon reductions rather than offsetting. Research into Verra – the world’s leading carbon standard for the rapidly growing $2bn (£1.6bn) voluntary offsets market – by The Guardian, German weekly Die Zeit and investigative journalists at non-profit SourceMaterial, found that more than 90% of its rainforest offset credits (which are among the most commonly used by companies) are likely to be “phantom credits” and “do not represent genuine carbon reductions”.
Regulators have also begun scrutinising claims more closely. The Advertising Standards Authority (ASA) and the Competition and Markets Authority (CMA) in the UK are both taking an interest in companies that make carbon neutral claims.
“Time and time again we are seeing the ASA pulling up companies because of the wider context in which the green claim is being made; this has not yet focussed on carbon neutrality but it is just a matter of time,” said Dominic Watkins, partner at law firm DWF. He suggested the days of offsetting-supported carbon neutral claims are “numbered”.
Atkins Morris, too, suggested the voluntary carbon market (VCM) is in danger of losing its opportunity to make a difference. The market needs to “either step up and have some rigour or [it’s] going to start to see some of the funding routes that [it has] move away”.
Those in the market have begun to react: 2023 is seen as a pivotal year for carbon credit programmes. “Against a backdrop of recent criticism, we are now at a juncture where only consistent, well-considered global guidance can underpin a high-quality market and stimulate the rapid scaling of corporate use we need,” said Rachel Kyte, co-chair of the Voluntary Carbon Market Integrity Initiative (VCMI) steering committee, recently.
New standards and labels
The VCMI has just published a new code of practice detailing how companies should use carbon offsets. Companies making claims will need to publicly disclose their greenhouse gas emissions and set science-based near-term carbon reduction targets and demonstrate they are on track to meet them. They will also need to make credible commitments to net-zero.
“Integrity is what will make the VCM a powerful tool that gets us to a net-zero world and mobilises much-needed finance to low- and middle-income countries faster,” explained Tariye Gbadegesin, co-chair of VCMI’s steering committee.“Clear and transparent guidance about the voluntary use of carbon credits has been missing.”
There are now three different bands of claims – silver, gold and platinum – depending on the percentage of a company’s remaining emissions that are set against carbon credits. The VCMI also announced on Friday (August 4th) that it’s seeking a branding agency to help design new labels for making VCMI claims. Due to be released at the end of the year, the labels “have the potential to drive/encourage more ambitious climate action, support existing progress and commitments from companies, and deliver on other VCMI goals”, according to the request for proposals.
The Integrity Council for the Voluntary Carbon Market IC-VCM has also just released its full global benchmark for high-integrity carbon credits. This establishes a set of 10 core principles designed to ensure the threshold standard and label provides a “credible, rigorous, and readily accessible means of identifying high-quality carbon credits”. Again, there must be compatibility with net-zero. There will also be a CCP label.
Since June, VCMI and IC-VCM have been collaborating in a bid to “establish an integrated market integrity framework to ensure quality, transparency, credibility, and accountability for the voluntary carbon market across the value chain”.
Whether all this will be enough to assuage the fears of corporates remains to be seen.
“We don’t feel like the voluntary [carbon offsetting] market feels quite right for us at the moment,” Atkins Morris explained. “I hope us being brave allows others to make the step too,” but companies must “own their own net-zero journey”, she added.
Supporters of carbon offsets believe they remain an essential part of any credible corporate net-zero plan. “[…] the persistent chipping away serves only to undermine the credibility of offsetting per se, and cause those businesses looking to make a net-zero commitment to question whether it will just expose them – like so many others – to accusations of greenwashing,” argued Simon Heppner, founder and executive director of Net Zero Now, in a piece for Footprint recently.
Indeed, the heat around offsetting and carbon neutrality could help drive change – through both a focus on emission reductions and credible offsets when they are needed. However, it could also result in more companies not only creeping away from carbon offsets and associated claims but other communications – and in turn actions – related to sustainability too.
