A Corporate Eco-Credit System

Nature
Originally uploaded by Spatial Mongrel

The other day, I was thinking about the issue of sustainability and how a smart company could capitalize on the potential market on an in-house basis. It seems to me that there are lessons to be learned, and profit to be generated, from the eco-credit system that is currently being used to offset carbon emissions. When flying Air Canada, or participating in other activities, companies and individuals are now purchasing “carbon offset credits” to provide the funds to initiate green infrastructure projects, finance sustainable projects, plant trees and other carbon-reducing projects. Why are they doing this? In most cases, there is no connection between the money paid, and the actual project delivered. That is, when I fly Air Canada and purchase carbon offsets, I have no knowledge that these funds are really being used to plant trees.

In all of these, a third-party is collecting that revenue and dispersing it to projects of note (minus a handling fee). While worthy in vision, the issue is capital is being removed from one source, is held by another, and goes to yet another party again – and the initial pool of money is diminished at every stage. It seems to me that this is inefficient for the first party, provides uncertainty that the benefit is being realized, and removes considerable investment potential for meaningful projects.

I therefore propose that companies consider an in-house eco-credit system, as a corporate sustainability structure.

How the system would work is that the company in question (Spatial Mongrel Designs, let's say) would develop “classes” of projects that would result in CO2 emissions, or conduct an audit of current uses and activities (travel, building systems, administration), and factor these multipliers in to project accounting as part of our service delivery package. For example, a road design and transportation project may be assessed an additional 1% in fees as part of an “eco-fund carbon offset”. This 1% would be kept in house and would flow to the "Corporate Eco-Fund" which would be a separately administered and transparent fund with an oversight committee. This committee is there to ensure that the funds are used for meaningful and measurable projects that are of direct benefit to our corporate mandate of sustainability, and to (hopefully) prevent abuse. (More thought needed there, I think).

This in-house eco-fund would, from time to time, be used to help finance projects that are geared towards improving our own, corporate sustainability – in effect, we would use these funds to improve our own bottom-line, and reinvest in ourselves. For example, funds from the eco-fund could be used to convert office lighting fixtures to a low-energy system, or make administrative improvements that reduce paper use, or provide an office car-sharing system to encourage transit ridership among employees. Thinking large, it may even be possible to hire ourselves to look at bigger picture projects such as providing a seed investment and design for an alternate energy source, which would then be used to power the office. A precedent for this would be the Calgary LRT system investing in a wind farm project in southern Alberta and committing to purchasing “wind power” for the entire LRT system. Hypothetically, I could hire myself to design a tidal project in Atlantic Canada, and power my office from the Bay of Fundy.

In the long-term, once established and successful in-house, this eco-fund management service could be marketed to other corporations and provide assistance to them in greening their own operations.

The primary benefit of this in-house fund is that the company would retain direct control over the management and investment of these funds and could allocate them strategically both to improve their own bottom-line position, and as an investment platform for the long-term. Marketing wise, it helps position that company as a sustainability leader and demonstrates their willingness to move strongly ahead with the vision.

The primary risk is marketing – how can we sell this additional 1% surcharge? Is the climate right for this, and would it find acceptance? How about the visibility, of flowing money directly into our own pocket? Transparency, accountability and solid marketing is the key to this challenge. I believe that, with the growing respectability of the carbon offset trading program and the increasing political shift towards concern for the environment, that the time is right for such a manoeuvre – and with a strategic marketing job, a company investing in this strategy can show that they are adding value to clients, and that the funds used are providing a real benefit on a sustainable future.