Why would a business voluntarily buy carbon offsets?

[terrordread]

Personally I believe carbon accounting and purchasing offsets while reducing CO2 emissions is the responsible thing for businesses to do.

But my question is, why would a company spend money on these technologies aside from ethical reasons?

What are the financial and commercial arguments to be made?

 

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[Fox]

Personally I believe carbon accounting and purchasing offsets while reducing CO2 emissions is the responsible thing for businesses to do.

But my question is, why would a company spend money on these technologies aside from ethical reasons?

What are the financial and commercial arguments to be made?

Just my guess but I would say a lot of this is "brand insurance".

You do X activity that somewhat impacts the environment - so you buy carbon offsets to try build back up your reputation.

So basically just PR.

 

[jdm667]

Personally I believe carbon accounting and purchasing offsets while reducing CO2 emissions is the responsible thing for businesses to do.

But my question is, why would a company spend money on these technologies aside from ethical reasons?

What are the financial and commercial arguments to be made?

If the credits are traded on an open/public market, then in theory you could buy and sell them to make a profit (just like stocks or futures) - with no intention of ever using them yourself. (Most of those Wall Street guys have no intention to ever take delivery of pork bellies.)

You could treat them like any other stock purchase - if the value goes up, sell for a gain and use the cash for business operations, reinvestment, etc. If the value goes down, sell at a loss for a tax deduction as needed (tax loss harvesting).

You could use them to hedge your bets too. If you are an oil/gas company, you buy both carbon credits and renewable energy company stocks. If renewables do well, the cost of carbon credits goes down (due to lower oil demand), but your renewable stocks do well. If renewables do poorly, demand for oil/gas stays high and thus demand for carbon credits goes up, raising their price.

As @Fox mentioned though, it helps for PR/brand insurance too. They can say on their website "we bought/traded $X in carbon offset credits this year" to gain credibility as a green company.

Maybe a public company could also use it to get on a list of "top green companies" and possibly get placed in a "green index fund" or something, who knows.

 

[Hong_Kong]

Personally I believe carbon accounting and purchasing offsets while reducing CO2 emissions is the responsible thing for businesses to do.

But my question is, why would a company spend money on these technologies aside from ethical reasons?

What are the financial and commercial arguments to be made?

In addition to PR, if ESG investing got more popular then shareholders would have a preference for more environmentally friendly companies. Some countries already have some form of a carbon tax, so the ability to offset emissions could potentially reduce tax.

 

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[Johnny boy]

Great question.

It makes no sense on the surface.

It is simply a 'foot in the door' to desensitize society to the idea of paying for 'carbon emissions'.

You see, 'the environment' is a wonderful tool for governments. It's the trifecta for them.

1. It has become a 'moral' issue, so you're a bad person if you don't support it.
2. They've convinced you money will help solve it
3. (major key) You can't see it, study it, or know if anything is being done. All information about it is from "scientists", a nifty word that means "don't ask about it".

Next is carbon taxes, another line item on the revenue account.

The best part for them is that it can be arbitrary. They can redefine whatever they want and make whoever they want pay whatever they want and it goes into the pile to be distributed to whoever they want.

It's just another knob of control the government can turn at any time to do what they want.

If you think for half a second that any bit of this has anything whatsoever to do with virtue, morality, ethics, the environment, saving the orcas or the polar bears or stopping the "rising" sea levels, then you have a room temperature IQ.