CO2 compensation: This is how climate neutrality works in companies

Protecting our planet concerns us all. That is why climate protection is becoming increasingly important – and more urgent – ​​not only in private life but, above all, in business. Until companies can only produce in a climate-neutral manner, CO2 compensation is a valuable instrument for achieving climate neutrality.

But how can climate compensation work in companies? Why is it so important, and which climate protection projects suit it? To understand the extensive topic, we want to go into more detail about CO2 compensation and also explain what to look for when buying a sustainable, climate-neutral or even climate-positive product.

Carbon neutrality and climate positivity: definition and differences

The topic of climate neutrality and climate positivity is becoming more and more important these days. But when does one start talking about climate neutrality, and when does it turn into climate positivity? And how is a climate-neutral or climate-positive company defined?

For a basic understanding of climate protection in companies, it is helpful to clarify various terms first.

Climate neutrality means that a company offsets its CO2 emissions with the help of purchased emission certificates, which can be invested in certified offsetting projects - this offsets the amount of CO2 emitted in the form of climate protection projects. A climate-neutral company, therefore, causes neither adverse effects on the climate nor does it contribute to improving the quality of the environment.

We speak of climate positivity when a company no longer compensates for its CO2 savings but offsets more greenhouse gas emissions than it causes. With the help of a climate-positive economy, for example, the goals of the Paris Climate Agreement, such as limiting global warming to 1.5°C about the pre-industrial era), can be supported.

Climate compensation in companies: That's why it makes sense

The clock is now five past twelve. Our daily actions continuously cause new greenhouse gas emissions, from high power consumption to our eating habits to the various means of transport such as cars and planes. In addition, economic production processes for consumer goods are also a factor in daily CO2 emissions that cannot be ignored.

Since the topic of sustainability and climate protection is becoming more and more present, companies are faced with the challenge of not only making their shopping experience attractive for their customers but also having a positive effect on the environment and thus leaving a small ecological footprint. We at Recozy take on this task and also design beautiful and at the same time sustainable products.

CO2 compensation is an essential step towards environmental protection in business. With more and more companies compensating for the greenhouse gases they emit by financing climate protection projects, forests can be reforested or clean energy promoted, for example. It is important to note that CO2 compensation is compensation. This means that when a company offsets its CO2 emissions, it still emits greenhouse gases into the atmosphere. To counteract the negative environmental effect and not increase global warming, support for climate protection projects results in mathematical neutralisation and a company is considered climate-neutral.

CO2 compensation can thus support environmental protection but should be understood as something other than a panacea. More greenhouse gases must be offset than emitted to make a significant difference. In addition to compensation, companies can also contribute to additional commitment. In private, buyers can also make a decisive contribution to their purchasing behaviour by paying attention to which companies support climate protection projects and how transparently they communicate their promises.

This graphic shows the ecological footprint of a company, which in this case uses 11.63 t of CO equivalents on average. By acting in a climate-conscious manner, this company only manages to emit 4 t of CO equivalents. Finally, CO2 compensation makes it possible to balance total greenhouse gas emissions to zero.

Sustainability strategies: How can companies become climate neutral?

Avoiding and reducing greenhouse gases takes precedence over compensation. Therefore, on the way to climate neutrality, companies should primarily rely on a holistic sustainability strategy with innovative avoidance or reduction measures and consider CO2 compensation for emissions that cannot yet be avoided.

These include, among others:

- Production that is as local as possible and short supply chains

- The use of recycled and innovative materials

- An energy and resource-efficient manufacturing process

- Focus on the circular economy and the associated recycling of our products

- Climate-neutral shipping and use of recycled packaging materials

How does CO2 compensation work in companies?

For a company to achieve climate neutrality with the help of CO2 compensation, its emissions, which are caused by all internal company processes, must first be calculated. This is where the Greenhouse Gas Protocol comes into play, defined as a standardised accounting that calculates greenhouse gases for the first time. In this way, the different gases such as carbon dioxide (CO2), nitrous oxide (N2O; also laughing gas), methane (CH4) and water vapour (H20) can all be taken into account, converted and summarised in a CO2 equivalent. This standardisation is essential because the calculated, measured value reveals the extent to which the emitted greenhouse gases affect global warming (in a fixed period of 100 years).

The graphic shows the greenhouse gas emissions emitted by a company along the value chain. These emissions are divided into three different scopes: Scope 1 identifies the greenhouse gas emissions that a company emits directly, while Scope 2 and Scope 3 summarize the indirect emissions.

In the accounting, the direct emissions ( Scope 1 ) – i.e. the greenhouse gases that a company emits directly – and the indirect emissions ( Scope 2 ) – i.e. the greenhouse gases that are imported into the company through electricity and heat generation, for example – calculated. Scope 3 also includes indirect emissions along the value chain - these can be offset optionally but also make up the lion's share of the GHGs companies generate since business trips, transport and much more are included.

After the balance sheet has been prepared, which can be viewed internally and externally, the precise definition of the measures and goals to what extent the company can save and reduce emissions. This is followed by compensation using offsetting standards - more on that later.

So-called emission certificates are then purchased on an international trading market or directly from climate protection projects in which CO2 is bound or saved. These can be, for example, reforestation or compost projects, but also renewable energy projects such as solar power or hydropower. One certificate corresponds to the amount of one ton of CO2 equivalent. Where this project is located is irrelevant - for the climate, it is not decisive where emissions are emitted or saved since greenhouse gases are distributed worldwide in the atmosphere.

The picture could show a climate protection project that was implemented in the Global South and in the course of which solar energy and wind power were promoted.

Numerous climate protection projects, which positively affect the environment and society, can only be supported and realised due to the compensation payments made by companies. There is a wide variety of projects that companies can help, including:

- Renewable energy projects include solar, hydropower, wind, biomass, biogas, and geothermal energy.
- Social or community projects include access to clean water or the construction of cooking stoves.
- Forestry and nature conservation projects aimed at reforestation, preventing deforestation, or restoring moors.

Many of these climate protection projects are implemented in countries of the global South and make a relevant contribution to sustainable development on-site. Furthermore, supporting these projects has positive effects on the global climate and promotes social development in the respective countries. In this way, companies from industrialised countries are committed to protecting our environment and contributing significantly to developing countries' social and economic development.

How can the impact of compensation projects be ensured?

International rules specify how climate protection projects are to be carried out to create a standard of transparency and credibility for the respective projects. Based on these quality standards, climate effectiveness is documented and guaranteed, and companies can use these so-called offsetting standards (derived from carbon offsetting = CO2 compensation) to recognise the specific benefit of a particular project. These include, for example, the disclosure of annual reports or whether the providers of the climate protection projects were involved in the project development.

Necessary offsetting standards are, for example, the official standard for emission certificates, the Gold Standard for the Global Goals, the Fairtrade climate standard and the Verified Carbon Standard.

Of course, many small climate protection projects and non-profit organisations still need international emission certificates and make a significant contribution worth supporting. Seals such as the GuideStar seal for transparency can indicate that the investment in climate protection is in the right place.

CO2 compensation at Recozy - This is how we make our contribution

Companies that are committed to climate neutrality and positivity and promote climate protection take responsibility for their internal management and support sustainable development. We at Recozy also contribute to promoting environmental protection and would like to go beyond climate neutrality and become a climate-positive company.

Our products are made from innovative and recycled materials - we rely on a circular economy. We only use residues that are no longer used. In addition, we reduce the resulting CO2 emissions by ensuring short supply chains and manufacturing our goods in additive manufacturing processes in our own digital manufactory on-site in Germany. Production using 3D printing ensures high energy and resource efficiency - in addition, all products are only produced on demand. This means that they are only made when our customers order them. At the end of their lifecycle, they can be returned to us free of charge and recycled to complete the circular economy. Our goods are packaged sustainably and shipped climate-neutrally with DHL GoGreen.

Recozy is already considered climate-neutral, which is why we work with Climate Partner, with whose help we offset all emissions through certified climate protection projects. So you can shop with a clear conscience: For every designer piece sold, we finance a small part of an environmental protection project.

But we're still in progress. We aim to reduce our emitted greenhouse gases further and keep our ecological footprint as small as possible. To this end, we and our partners are researching methods to process and recycle other waste materials, such as marine waste. Our mission: We want to compensate for our CO2 emissions, avoid them as much as possible, and actively contribute to climate protection by becoming a climate-positive company.