“Decarbonization” is an odd word but for a very important – though chaotic – process now being employed across the globe to fight Climate Change.
Chaotic, in my use of the word, does not apply to the technologies, the verification, or the goal of reducing CO2 in the atmosphere. It applies to the many different programs used by leading nations; it applies to the faulty deployments that were done with the best intentions; it applies to the long list of unknowns and unstandardized units of CO2 removed by all the many Emissions Trading Schemes and Carbon Offset programs around the world.
Moreover, chaotic could be applied to the corporate world’s efforts to do what they can to save the climate. This group is in need of structure, clarity, and standards.
Managing The Portfolios
This is where I see my usefulness. I have been in carbon trading and offset development since 2004 in Europe when the European Union Emissions Trading Scheme was rolled out. More on that on this page my climate history.
Currently many corporate entities understand the need to pursue the activities and norms of an entity that considers a Sustainable approach to business, an all encompassing review of products that think about future generations, or reusable materials, simply because it a) makes sense to make better, environmentally conscious products, but also b) the peer pressure of other B2B interests is certainly a moral imperative that influences business relationships (and one I fully support).
But how is this activity managed within the corporate world?
The C-Suite officer in charge of Sustainability
Increasingly we see more people appointed to the role that oversees the activities of sustainability, such as the Circular Economy, and Carbon Offseting. It is an important role that must be managed well. The following is what I offer when approaching a corporation in need of a Carbon Portfolio manager.
Taking on a role like the “Senior Carbon Management & Climate Change Consultant”
When I approach a role in this realm of activity, it might have a slightly different title and perhaps a larger or smaller, more defined scope of activity. *These titles are found below.
What is important to note is that while Sustainability can imply the internal processes of reducing waste and/or the external, more altruist goals of not overusing resources to benefit the later generations, the Carbon management will almost always imply the activity of purchasing carbon offsets.
And for this I have written the following and very brief guide of how I would approach such a task, based on my more than ten years of activity in the largely unregulated and recently developed carbon market. From a deep experience in finance, energy, and later, carbon trading and offset development, sustainable practices, and technologies, I also believe I bring an outgoing demeanor of team leadership and international and multicultural experience to the organization. I hope my resume gives that sense of global experience and particular achievements in environmental financial roles.
*But on to my guidance.
While it is sensible and admirable to undertake a corporate activity to responsibly tackle the carbon, energy, and sustainability responsibilities of a major corporation, in the potentially numerous and vast asset locations in developed and emerging economies, it is a task that comes with many hurdles and the occasional misstep. Carbon project management has proven to be an unreliable and unknown liability for many concerns around the world. This is not because of doubts and debates regarding the science behind the ravages of global climatic change, but mostly because of the influences of modern-day policy makers, financial interests, service providers, and market moving impacts.
Failures of the market design and regulations caused widespread havoc in the period of 2008 to 2010 where 5 to 9 billion EUR was lost to corruption due to the Value Added Tax (Carousel) fraud in the European Union, Emissions Trading Scheme. If this number seems large and unfamiliar, it can be conspiratorially blamed on the efforts to suppress this information lest the reputation of the market management will weaken the goals of fighting climate change.
The point is that carbon exposure management is unlike the hedging of oil, foodstuffs, and interest rates, and more like the volatility and change which those large insurers are facing with the growth of disasters of flooding and fire due to climate change. Inscrutable, unknowable, and simply a more recent addition to the litany of risks facing any corporate entity.
From the point of view of an early mover in carbon markets and offset development, I strongly advise a more protective approach to carbon management, as regards financial management as well as the maintenance of reputation strength.
In the role, as a manager concerned with the reduction of the corporation’s carbon exposure, I lead with a few simple paragraphs of advice (though some of the sub-processes are time-consuming and expensive). Bur rest assured, I will take a very realistic and pragmatic approach to accomplishing the goals set out in the mission as required. This means, I would focus on the following:
ESTABLISHING CLEAR GOALS FROM THE OUTSET:
From day one, I will endeavor to provide a clear estimation of the amount of carbon that needs to be offset/mitigated and provide a straightforward method or roadmap to accomplish these goals, while identifying those changes to increase sustainable operations. This means the interpretation of much data specific to the many locations under my brief, but a clear way to begin.
PROJECT TYPES, LOCATIONS:
Different asset locations require a range of different considerations, such as local service providers, and regulatory regimes, quality of carbon credits and audits. These must be managed so that the best quality per location can be achieved while managing costs and accomplishing adequate offset volume (per location, especially). This is highly valued when dealing with emerging market conditions; and oftentimes difficult to monitor.
COUNTERPARTY, SERVICE PROVIDER VETTING:
There is a plethora of carbon service providers, with reputations ranging from elite quality, to competent, down to barely serviceable. Reputation is a fickle variable, and the perception of a weak project can damage the project goal for the location, but also the overall program of the incorporated entity. It is important that service providers (consultants, auditors, project managers), and financial intermediaries (banks, brokers, insurers), are well vetted and employed sparingly so that the information of services does not inundate the process (too much engineering) and the financial concerns (market trading) do not overwhelm the activity
When designed from the outset, a limited range of diversification can be managed well to limit the risk of low yielding projects. Dependency on one type of carbon reduction/mitigation, could conceivably return significant harm. On the other hand, employing less popular project methodologies, or too-large project types, can deliver volatile results. Joining syndicated projects, with well-established names is one method that is sound, although a little more difficult to cost as a minor partner. But overall, where possible, it is useful to diversify, even if it requires two projects for a medium sized location/installation.
MAINTAIN A GLOBAL VIEW:
Keeping an eye on the larger picture, the global trends in carbon, is not easy. Large financial forces tend to decide targets, values, and qualifications, for projects and the overall global price of carbon. Constant monitoring and maintaining some flexibility, are important, especially in light of the potential for global economic meltdown. This was a major setback for the carbon market in 2007 as the Subprime mortgage crisis took hold. Many carbon exposures, projects underway, caused significant losses for major industrial clients, while the risks to the financing banks was largely hedged to the disadvantage of the client.
Clear reporting of the efforts to management, in terms that are functionally transparent, where costs and benefits are laid out plainly, where risks are present and how they might be mitigated (financial risks as well as those to the corporate reputation). For members of the organization to fully comprehend the organization of the carbon management it is of paramount importance that involving an outside process should be as minimal as an impact to production. Local management participation and approval is key. Dissemination of concise and realistic information is the first step to this process.
In conclusion, I am offering my abilities, knowledge, and network reach to tackle the goals set out by the corporation, to the end that a sound approach is undertaken, with conservative methods of diversification, realistic goals designed, inclusive of all the industrial locations, but with a global view of the influences impacting carbon around the world. I have unique experiences in global emerging economies, managing teams with disparate timelines of tasks, and possess wide ranging knowledge and experience of sustainable operations and mitigation methodologies.
Please contact me if you would like more information.
Daniel R ButlerA very good overview that every sustainability officer needs to understand. From Matt Sprague at South Pole https://www.linkedin.com/in/mattjsprague/