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Carbon Offset Programs Show How Companies Can Operate More Sustainably

Scott Graham

The best way to lower your carbon footprint is to reduce your emissions or eliminate them. Many companies turn to carbon offsets when not feasible or not practical. Carbon offsets involve neutralizing emissions in one place by reducing them in another. This might include planting trees to absorb carbon dioxide or paying another entity to lower emissions.

Carbon offsets represent a rapidly growing segment of the global sustainability movement.

The Wall Street Journal reported that worldwide demand for voluntary carbon credits more than doubled during the four years ending in 2020 to a level that offsets the equivalent of 95 million metric tons of carbon dioxide a year. Through the first eight months of 2021, carbon credit deals totaled $748 million, up 58% from the previous year.

Carbon offset programs can take many different forms – as evidenced by recent initiatives unveiled by a trio of financial firms: Apex Group, Kimmeridge Energy Management, and Interactive Brokers.

Apex, a financial services provider headquartered in Bermuda, announced on March 17 that it had offset its entire lifetime of carbon emissions through a partnership with Carbon Footprint Limited, a carbon management consultancy. Under terms of the deal, Carbon Footprint Limited will offset Apex’s emissions through domestic energy projects, ecosystem conservation and renewable energy systems in numerous places across the world.

Photo Courtesy Raphael Nogueira

Apex Group claims to be the first financial company to offset its lifetime emissions, but that’s only one step in an overall Environmental, Sustainability and Governance (ESG) program. Apex also plans to increase its reliance on renewable energy sources and limit its international travel, among other things.

“[We] will continue to improve our ESG credentials across our operations and in the way we do business,” Apex Group Founder and CEO Peter Hughes said in a statement.

Kimmeridge, a New York-based private equity firm, announced on March 18 that it has pledged up to $200 million to back Chestnut Carbon Solutions. This startup generates carbon offset credits from forests.

Chestnut, also based in New York, plans to use the funding to develop new forests, including planting trees on 500,000 acres in the United States. Kimmeridge estimates that Chestnut will generate greenhouse gas emissions offsets equivalent to 3 million metric tons of carbon dioxide over the next two years and 10 million a year within a decade.

“It is becoming more and more accepted that carbon credits are going to be part of the solution, that you can never get to net-zero simply by reducing your [carbon] footprint,” Kimmeridge Managing Partner and Co-Founder Ben Dell told the Wall Street Journal. “The big question out there is the quality of those offsets…[With] carbon credits, we have the opportunity to make conservation a source of income generation.”

Interactive Brokers, a Connecticut-based automated electronic broker is taking a slightly different tack. On March 28, the company announced the launch of Carbon Offsets, a new carbon offsetting tool for investors that will be available through its IMPACT mobile trading app.

Photo Courtesy Adeolu Eletu

The tool lets users choose offsets in a couple of different ways: reduce GHG-emitting home, transportation, or food activities or enter specific amounts of carbon to offset in either dollars or tons. For example, users planning air travel can use the app to select the flight time in hours and then purchase the appropriate offsets.

Interactive Brokers sources and retires the carbon credits at the appropriate agencies, allowing investors to either partially or completely reduce their carbon footprints while also hitting broader sustainability targets. Additionally, the tool records the number of tons of carbon neutralized, which lets clients track their carbon reduction progress.

“Sustainability and environmental consciousness are not isolated aspects – they speak to a collective culture,” Will Peterffy, Interactive Brokers’ ESG Director, said. “We continue to develop products that are in service to this collective culture. Carbon Offsets makes it easy for our clients to participate in the emerging collective culture dedicated to stewarding our planet while investing in companies that further align with their values through the IMPACT app.”

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