The Value of Going Carbon Neutral
Carbon offsetting makes ethical and commercial sense, say B2B sellers and certifying bodies.
When Garth Mulholland, environmental programs adviser at the Carbon Reduction Institute in Sydney, returned to work in January 2020 after the summer break, he discovered a remarkable backlog of phone and email messages, all from businesses wanting to go carbon neutral.
“We had several hundred enquiries from businesses about carbon-neutral certification,” he says. “That’s more than we had received in the previous 12 months.”
According to Mulholland, the deadly bushfires that swept the Australian east coast in December and January had prompted many companies to contact the institute.
“Those events really focused minds,” he says. “In general, Australian business owners accept climate change and don’t want to be adding to the problem.”
But the fires weren’t the only reason enquiries had increased.
“New research is showing a substantial number of consumers are willing to put their money where their mouth is and buy sustainable products,” says Mulholland.
“That means, for savvy businesses, carbon-neutral certification represents a significant commercial opportunity right now.”
A flurry of recent data suggests companies that manufacture and distribute their products sustainably could reap financial benefits in the long run.
A study of 20,000 adults in five countries by FMCG giant Unilever found a third of consumers are now buying from brands based on their social and environmental impact. And US research from Nielsen predicts ‘green’ products will account for a quarter of all domestic FMCG sales by 2021.
Meanwhile, in Australia, a nationally representative survey of 1,002 Australians by Couriers Please found 87 per cent of respondents would be more likely to purchase products that were ethically and sustainably produced – and 41 per cent would pay more for them.
However, only a small fraction of Australian manufacturers are currently certified carbon neutral by a body such as the Climate Reduction Institute.
“There’s still an opportunity for businesses to attain ‘early adopter’ status and receive the commercial rewards that flow from that,” says Mulholland.
Ahead of the Pack
One such business is Arcadian Organic & Natural Meat Co., which announced in September 2019 that its entire operation – which includes 180,000 grass-fed organic livestock at approximately 120 farms across the country – had been certified carbon neutral by the Climate Reduction Institute.
“Ethically, we thought it was the right thing to do, but it also seemed to make sense from a commercial point of view,” says Arcadian marketing director Paul da Silva.
“Our feeling was that there was significant demand from both retailers and consumers for carbon-neutral products, and we’ve found that hunch was vindicated. We got very positive feedback from both those groups [when we switched] and continue to do so. It’s been a very positive thing for us commercially.”
Da Silva reckons his isn’t the only company that could benefit financially from carbon-neutral certification. “I believe there would be many other market segments where the same thing would be true, because the consumers who are buying our product are the same consumers who are shopping all of these other categories,” he says.
“Meat is not an obscure product,” he adds. “The people who are wanting a carbon-neutral option when it comes to buying meat are probably going to be looking for carbon-neutral options in a whole lot of other categories, too.”
The Hard Yards
So what exactly does carbon-neutral certification entail? According to da Silva, it’s a serious process that involves significant paperwork.
“We have to produce data for auditors every single quarter about our operations,” he says. Arcadian must then buy carbon offsets to cancel out its emissions for that quarter.
But Arcadian says the process is becoming more streamlined – and cheaper – as time goes on.
“Just over 12 months down the track from when we became carbon neutral, we’ve now completed a lot more work that allows us to understand how to reduce our carbon footprint,” da Silva says.
“As well as always having to offset, we are much more aware of what causes the emissions across our supply chain. Our undertaking, over time, is to reduce those emissions progressively.”
Mulholland believes carbon-neutral certification will soon become the norm for Australian brands hoping to attract progressive consumers. “Now, more than ever, climate change is driving consumer behaviour,” he says.
He believes certification could help fortify Australian businesses during these uncertain economic times.
“In a tough economic climate, there’s no better way to protect yourself from a ‘race to the bottom’ price war and to maintain market share than to stand for something,” he says. “Arcadian’s success proves it.”
Australian businesses looking to get certified have two main options: Mulholland’s Carbon Reduction Institute, which specialises in certifying SMEs and export-focused businesses, or the Australian Government’s Climate Active program, which generally works with larger domestic organisations.