The first step in containing the climate emergency — the warming of the Earth’s temperature that endangers our survival — was recognizing it. But now comes the hard part: reaching the goals set out in the 2015 Paris Agreement to keep the temperature below 1.5º C in a collective effort involving companies from the most diverse sectors.
It is not by chance that there has been an increase in the number of companies claiming to be “carbon neutral,” that is, offsetting all emissions of greenhouse gases, such as carbon dioxide, from their operations. And not just those whose operations are explicitly polluting. Digital companies are at the forefront of neutralizing the carbon footprint.
Since 2020, companies like Nubank, C6 Bank, PicPay, and Hash, just to mention some of the largest Brazilian fintechs, have reached the neutrality of emissions and other complementary goals.
“The goals [of the companies] are ambitious, but it is because we are reaching our global warming ‘deadline,’” says João Valente, asset director at Ambipar, a Brazilian company that operates in environmental and waste management, in addition to responses to emergencies.
João leads Ambify, an application that allows people to calculate and offset their emissions. Because, although it doesn’t seem like it, almost everything impacts the environment, from our food to our means of transport.
Even so, the weight of individuals is minuscule compared to companies’ emissions. “If there were no companies within the environment or the platform, we, as people, would have the carbon neutralized by the amount of forest that exists,” acknowledges João.
Ambify, adds the executive, is an education and awareness initiative to increase pressure on big polluters.
While the conversation about carbon credits and offsetting emissions have been going on since the early 1990s, the matter is still dubious. What is it trying to communicate when a company calls itself “carbon neutral” exactly?
Offsetting and carbon neutralization: how it works
“When [a company] says it is carbon neutral, it means that it has inventoried its greenhouse gas emissions — from its direct operations (factories, industrial processes, energy consumption) — and bought carbon credits equivalent to these emissions,” explains Carla Leal, director of growth at WayCarbon, a company that has been dedicated to climate change for 15 years, working on different fronts related to the theme.
The carbon credits market helps to mitigate the damage that companies cause. (One credit is equivalent to one ton of carbon dioxide and other polluting gases not emitted into the atmosphere.) However, according to Carla, this market is a complementary strategy and should never be the main one when discussing climate change.
João, from Ambipar, says that “the purpose of this mitigation is for large emitters to invest in technology to emit less,” a change that is sometimes too laborious or costly to be carried out quickly or that is not even possible with the technology available at the moment.
To think that a company will be 100% zero-carbon through its own operations still seems like a utopia.
João Valente, asset director at Ambipar
The primary purpose, says the executive, should always be that “issuers, companies, industries, invest in technology to reduce this impact. The difference, which cannot be reduced, is then compensated, through the large sequesters of CO2 equivalent from the atmosphere, from the environment.”
For Carla, the ideal ‘roadmap’ involves understanding the emissions that the company makes, a work carried out through the so-called inventory, developing mitigation projects, that is, reducing its emissions, and only then offsetting the residual emissions that “ have not yet been possible to reduce with the application of all relevant technologies and projects.”
In other words, compensation must be used as a complementary strategy.
This ideal path is not always followed, however. For Carla, the approach is related to the company’s maturity: “Sometimes, when the company does not yet have a level of maturity, understanding the agenda, it primarily uses a compensation strategy.”
But understanding the problem leads to an evolution of the strategy, which becomes coherent with the demands pointed out by scientific studies.
There is an entire ecosystem around the carbon credits market, with certifying and certified companies that provide essential services. Ambipar, for example, has a specific department for the elaboration of carbon footprint inventories and certifies the non-Ambify commercialized credit by VCS, from Verra, the largest certifier in the voluntary carbon credits market.
In September 2020, Nubank became carbon neutral. “We were born 100% digital almost nine years ago to impact people’s lives in a positive, significant, and lasting way. Therefore, being a carbon-neutral company is the first step of our environmental commitment to society,” says Christianne Canavero, global ESG director at Nubank.
Nubank inventoried its emissions following the Brazilian GHG Protocol program. “Our last inventory, from 2020, was audited and published in the Public Emissions Registry and received the Gold seal by the GHG Protocol, conferring the highest level of quality and comprehensiveness of the reported information,” explains Christianne.
Another Brazilian fintech, C6 Bank, has also neutralized its emissions since 2020. In 2021, the companies of Carbon Holding, a group of which the bank is a part, emitted 1,115 tons of CO2 and offset all of them with the acquisition of carbon credits generated for the preservation of areas of the Amazon Forest.
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C6 Bank’s environmental commitment reaches different fronts of its operation, from its headquarters in Sao Paulo, which has the LEED (Leadership in Energy & Environmental Design) certification (which recognizes good practices in the use of natural resources in corporate buildings), to the material used in the manufacture of its Acqua cards (which is biodegradable and made from corn).
The neobank also offers carbon credits directly on its marketplace so that customers have the opportunity to reduce their carbon footprints. Also, in C6 Store, it is possible to donate to environmental preservation institutions, such as Instituto Terra, created by Lélia Wanick (author and activist) and her husband, Sebastião Salgado (photographer and activist). Both of them work actively to restore the Atlantic Forest in Brazil.
All of this seems complex and even exaggerated, but they are essential measures to avoid fraud and, above all, the taint of “greenwashing.”
Greenwashing versus blockchain
“Does [greenwashing] exist? It does,” says Fernanda Castilho, COO at Moss, a company born in 2020 in Brazil to digitize the voluntary carbon market. One of Moss’ first moves was acquiring carbon credits, placing them on a blockchain — ‘tokenize’ them — and selling the tokens, called MCO2, on exchanges such as Mercado Bitcoin, Coinbase, and Gemini.
Moss also sells carbon credits directly to companies interested in offsetting their emissions. In March, after completing two years of existence, Moss celebrated the milestone of BRL 150 million transacted for Amazon conservation projects, based on the projects it develops with around 300 partner companies.
“By placing the credits on the blockchain, you create a completely auditable, traceable asset; you can be sure that no type of fraud has occurred,” explains Fernanda. In addition, it allows splitting the credit to neutralize more minor emissions, such as the one from the coffee break. The airline Gol, for example, has a partnership with Moss to enable passengers to offset their emissions during flights.
Greenwashing (using marketing actions to “make up” an operation that, deep down, is not so concerned with the environment) is not exactly new. “This discussion started in 2003,” recalls Carla Leal of WayCarbon.
“When carbon markets appeared, many people said that the carbon credit was the purchase of the right to pollute. But this understanding is not correct,” she guarantees.
For Carla, the carbon credits market is a cost-effective way to reduce global greenhouse gas emissions. “There are technologies and types of business that are easier to reduce emissions, and while other sectors have more difficulty in reducing emissions,” she explains.
A common occurrence of greenwashing is the non-retirement of commercialized credit (a credit sold twice or more). At Ambify, explains João, the solution found was to resort to the blockchain, specifically BNB Chain, which uses the ‘proof-of-stake’ validation method, which consumes less energy than ‘proof-of-work’ blockchains, like bitcoin and ethereum.
“We provide the retirement of the carbon credit and the transparency of the blockchain itself, which makes this retirement. It is the blockchain that validates this transaction and ensures that we are not in a position to trade the carbon credit more than once.”
The Ambipar executive also says that it is essential to have independent and recognized audits attesting to the carbon offsetting work “because otherwise, you will have the same person who certifies, it is the same person who retires, it is the same person who measures it, or the same company, or NGO, and then it opens up margins for you to have doubts.”
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Fernanda, from Moss, attributes the growing attention to carbon neutrality in companies to pressure from stakeholders, including the younger generations of consumers who demand a more active role of the enterprises from which they consume in issues related to the climate emergency.
Pressure is now so common that it has gained a name, ESG, which stands for environment, social, and governance.
“Because of these pressures and the commitments that companies — I think the ESG issue is no longer a fad, as it has been called in the past. I think that there is a real concern of companies, both internally and with stakeholders, to have a more positive impact on society in general,” she says.
That’s the case of Nubank, which, says Christianne, has carbon neutralization as an essential pillar of its ESG strategy.
Other possible ways to conserve the environment
It is not only with carbon offsetting that the business world can collaborate in conserving the environment.
In March, Moss launched an Amazon NFT. There are 450 hectares of partners, farmers with preserved areas in the Amazon rainforest, divided into parts of 1 hectare each and sold in the form of NFTs, or non-fungible tokens, on platforms such as OpenSea.
The acquisition of the NFT grants the owner economic rights over that piece of land. A fund comprising 25% of the amount raised in the initial sale of NFTs is used to protect the forest with satellite monitoring and field personnel, taking care of the forest, and acting immediately in disasters, such as fires.
Fernanda says that the NFTs project emerged in 2021 when small farm owners in the Amazon region approached Moss to develop projects related to carbon credits. Unfortunately, certification costs are still high, making this path unfeasible for small properties. That’s where the idea of NFTs comes in.
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She points out that the project — still a pilot — has been selling well. By the beginning of April, the three series, with 50 hectares/NFTs each, had sold quickly as soon as they were placed on the market and had already seen their value increase.
“We sold the first series at $2,000 each NFT, the second at$2,500, the third at$3,000. We are testing pricing, market, demand, etc.,” says Fernanda.
So far, though, although it has a similar mission to the carbon credits market, Moss’s Amazon NFT has nothing to do with it. “These areas, due to their size, are not yet viable for developing carbon projects,” justifies the executive. “By acquiring the NFT, you are only sending resources to guarantee the conservation of that area.”
“If these areas generate carbon credits, either because we manage to make a condominium with the areas, which has a relevant size, or that we come to work with a new certification protocol and these assets are actually generated, in some way, way the NFT owner will be rewarding these generated assets.”
(Translated by Fabiane Ziolla Menezes)
