Today there is a booming business for forest-carbon offsets. Corporate America is paying forest farmers and ranchers not to cut down trees. Though this seems, at first, a positive idea, it is likely corporate America’s attempt at “greenwashing.”
In light of Pope Francis’s oft-cited encyclical letter Laudato Si’ against environmental degradation, Catholics must be watchful of corporate America’s glossing over their responsibility to reduce carbon emissions. After all, the practice of “offsetting” carbon emissions has reminded some writers of the 16th-century sale of indulgences in the Catholic Church, whereby people could purchase forgiveness of past sins by paying a certain amount of money.
The glamour of carbon credits
According to the Yale School of Environment, carbon credits are permissions that, when purchased, allow a company to emit a set amount of pollution per year. One credit can equal a mass of 1 metric ton of carbon dioxide. In exchange for the purchase of carbon credits, projects are enacted elsewhere in the world that are beneficial to the climate. Carbon credits pay for these projects, while the purchasing corporation retains the right to emit the pollution they have—theoretically, at least—“offset” through credits.
In one example, carbon-credit trading lets corporations fund farmers, communities, or even countries to stop cutting and logging their timber forests. On paper, the argument says that as prices for carbon credits rise, farmers and communities will receive more and thus preserve forests that absorb climate-warming carbon from the atmosphere.
These types of transactions are now gaining momentum in America. For example, Salesforce.com chief executive Marc Benioff and other investors are pumping up their stake in a firm that matches companies wanting to offset emissions with timber owners willing to defer harvests for a fee. Last year, the oil and gas giant BP—a major polluter—did the same, buying a controlling stake in the carbon offset developer Finite Carbon.
On paper this seems like a win-win for all involved: farmers get paid to let forests live, regulators are kept at bay, and corporate America gets that coveted “green credibility” badge. However, Catholic climate activists, especially young millennials, should maintain a vigilant eye.
Cheap fix for climate change?
Carbon credits for forest preservation are noble—at least in theory—but one possible motive of corporations in trading such credits is to reduce their tax bill. In wealthy Western countries like Australia, companies could reduce tax bills by financing the planting of forests or subsidizing farmers who do so. Though a bit complex, in the Canadian state of Quebec and in California, corporate buyers and sellers can recover back sales taxes incurred during the purchase of carbon credits. Catholic climate activists, therefore, must be mindful of whether corporations are genuinely invested in carbon trade programs that preserve forests or simply as a means to hedge against tax liabilities.
Additionally, it can be argued that corporate America wagering on carbon offsets is a ploy to deflect pressure from shareholders, consumers, and regulators to reduce corporate emissions directly. Corporate shareholders in America are getting aggressive and demanding that companies include climate provisions in business activities. According to the Sustainable Investments Institute, in the United States, shareholders filed 79 climate-related demands and resolutions in the first two months of this year, compared to 72 filed in all of 2020. In May 2021 the American oil and gas giant Exxon lost board seats to a tiny climate-activist hedge fund.
The Exxon case should be a template for Catholic climate activists. It should motivate young Catholics to advocate for environmental clauses in future church investments, which would have a direct influence on global climate policy. After all, the church owns substantial farmland around the world, from Brazil to Italy to Africa.
When it comes to corporate America, consumers are beginning to demand that corporations reveal their sustainability component on every product, be it T-shirts, cellphones, Bitcoin, or soft drinks. Without maintaining a vigilant eye on corporate America, carbon offsets will look exciting on paper. But behind the scenes, companies could simply buy carbon credits in one place and pollute or cut down forests in another. Accounting schemes are no substitute for reducing carbon emissions at the source—a necessary step if we are to safeguard our “common home” for future generations.
Ray Mwareya is a journalist and past winner of the UN Correspondents Association Media Prize. Nyasha Bhobo is a reporter and rights advocate. Their work has been published in Newsweek, the Guardian, and the Africa Report.