Business PickupEver since they were first developed in the late 1990s, there’s been confusion surrounding carbon credits. Recently, the term has become a sort of buzzword in the business world, especially as companies have increased their environmental, social, and corporate governance (ESG) efforts. What do carbon credits actually represent, and how are they related to IT asset disposition? Here, we clear up some common myths.
What Is a Carbon Credit?
First, let’s clear up what carbon credits actually represent. Also sometimes referred to as carbon offsets or carbon allowances, they act as a sort of permission slip for emissions. When a company purchases one (usually from the government), they are allowed to generate one tonne of CO2 emissions.
There is no single, standard price for carbon credits, however. As in the stock market, a carbon credit can be sold, traded, or retired. These transactions can take place in formal cap-and-trade systems, or in voluntary systems. With that in mind, companies are not supposed to simply purchase carbon credits to continue generating emissions. The purpose is to also reduce their carbon footprint, which is why third-party validators assess their projects to ensure the proper efforts are being made. They check to make sure carbon reductions have clear boundaries and documentation, and to ensure the additionality requirement is met. This means that the emission-reducing activities must go beyond activities that would take place normally; in other words, the company is taking additional steps to reduce their environmental impact.
How the Additionality Requirement Introduces Complexity
In many cases, the confusion about carbon credits lies in misunderstandings about the additionality requirement. There is no test to prove additionality — a concern which many critics have raised, and one that leaves grey areas about qualifying efforts. So, when companies ask what they must do to prove that they’re making efforts to reduce emissions, there’s no simple answer.
Having clear additionality requirements would help to ensure companies are truly attempting to reduce emissions before offsetting them through the purchase of carbon credits. Moreover, enforceable additionality requirement standards could also prevent the double dipping of emissions reductions, so only one company could claim reductions.
Does ITAD Fit into the Additionality Requirement?
Another myth surrounding carbon credits is the belief that ITAD can help companies reduce emissions and therefore satisfy the additionality requirement. Yet, while some companies have tried to link ITAD to carbon credits, ITAD practices simply don’t align with the additionality requirement.
Since the additionality calls for practices that wouldn’t have happened anyway, or practices that go above and beyond usual activities, ITAD doesn’t fit. ITAD practices would happen even without carbon credits, so from this perspective, ITAD and e-waste overall should not be considered for the additionality requirement. As such, ITAD companies should not be selling carbon credits.
It’s true that reusing and recycling electronics delivers environmental benefits, and companies that implement these practices are reducing their overall carbon footprint. Yet, ITAD companies that offer carbon credits are loosely interpreting the additionality requirement — and, they’re profiting twice by making money on the ITAD service itself and the carbon credits.
While it may seem confusing that ITAD and electronics recycling activities don’t align with a company’s strategy for using carbon credits, from an ethical standpoint, Quantum remains firm in our stance against selling and profiting from carbon credits as an ITAD provider. We believe ITAD and electronics recycling activities should be pursued by companies anyhow, which is why we focus on education and verifiable, data-driven approaches to carbon reductions. For example, we offer tools such as sustainability reporting with estimates for emissions reductions, as well as a greenhouse gas (GHG) reduction calculator with data businesses can use and share to stay transparent and accountable.
Quantum offers ITAD and electronics recycling options to help companies of every size meet their ESG goals equitably and responsibly. Find out more about our available services here.