Q&A on Carbon Credits with ENGIE Impact’s Joseph Sarvary

Joseph Sarvary, Senior Manager in Sustainability Solutions at ENGIE Impact
Joseph Sarvary, Senior Manager in Sustainability Solutions at ENGIE Impact, sits down with Energy Digital to discuss the subject of carbon offsetting

Carbon credits — where entities such as governments or businesses compensate for their greenhouse gas emissions —  has become a polarising topic due to the misunderstanding of how they should be used. ENGIE Impact’s Joseph Sarvary firmly advocates that simply purchasing carbon credits and continuing to pollute cannot be at the core of any legitimate emissions reduction strategy.

Rather, the Senior Manager in Sustainability Solutions says they should be used to offset final residual emissions which cannot be reduced currently by other methods.

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Joseph’s real expertise lies in the voluntary carbon market, where he offers insights into nature-based solutions’ strengths and weaknesses. 

An arm of French multinational utility ENGIE, ENGIE Impact is dedicated to delivering sustainability solutions and services to corporations, cities and governments to help them reach their decarbonisation goals. This is delivered through first-hand strategic expertise across sectors and regions, holistic carbon data management support and numerous digital, financial and executional resources.

In this exclusive sit down with Energy Digital, Joseph talks through the steps that companies can take to implement a coherent carbon offsetting plan and the benefits this will bring — not only on net-zero ambitions, but also on a company’s reputation and bottom line.

Q. In light of the challenges faced by the voluntary carbon market in 2023, what do you see as the primary factors contributing to its faltering, and how can companies navigate these challenges effectively?

I think the issues of 2023 stemmed from a decline in confidence, mostly due to some high-profile scandals. Driven by subsequent public criticism and concerns of the credibility of carbon credits in general, the overall value of the voluntary carbon market (VCM) declined, with some companies even walking away from carbon offsetting practices altogether. 

However, much of this centred around low-quality, high-volume carbon projects. If we take a closer look at the market, we actually saw the demand and price points for demonstrably high-quality credits grow. While some companies walked away, others chose to lean into the maturing market to support its growth and improve its processes and this is something we think that more companies should take notice of. We recommend facing the uncertainty of the market head-on and leverage early opportunities to hedge risks, provide learnings and benefit from cost-savings versus spot market prices. 

Those companies that wait on the sidelines to see how the market will shape up risk being exposed to significant financial risks when the price of high-quality offsets surge, as we would expect, when guidelines kick in. Additionally, companies could suffer reputational damage if their progress on meeting net-zero targets wanes. 

Q. Could you outline some key steps or best practices that organisations can take to ensure the effective implementation of carbon offsetting plans considering both short-term goals and long-term sustainability objectives?

Carbon credits are polarising but much of this is down to a misunderstanding of how they should be incorporated into overall decarbonisation strategies. When deployed correctly it is an impactful and necessary strategic tool for companies committed to achieving climate neutrality or net-zero targets and should be part of every company’s arsenal to combat climate change.

Understood correctly, purchasing carbon credits should not be considered as the core of an organisation’s emission reduction strategy, leaving them free to continue their polluting ways. Carbon credits are intended to complement rather than replace direct emission reduction efforts and play a vital role in compensating for residual emissions. The effectiveness of carbon credits, therefore, is judged by how well they are integrated into a broader decarbonisation strategy. That being said, there are a few key things companies should look out for:

  • Comprehensive emission assessment: Examine your carbon emissions across Scope 1, Scope 2 and Scope 3 to identify challenges in reduction, measure residual emissions and plot offset needs
  • Integrity-aligned credit guidelines: Use reputable verification standards, follow guidance on corporate climate claims and ensure credit types align with the business’ stakeholder priorities
  • Diversified procurement options: Leverage a mix of contracting structures and market channels to hedge price risk and secure discounts on longer-term offtakes
  • In-depth due diligence process: Conduct thorough due diligence on carbon projects and their developers, ensuring independent evaluation by accredited bodies
  • Integrated corporate climate communications: Promote offsetting activities — both the carbon and community impacts — alongside progress made on internal decarbonisation objectives. Contracting strong carbon credit projects will not make up for a lack of ambition for internal decarbonisation.

Q. Beyond achieving net-zero ambitions, how do you believe a well-executed carbon offsetting strategy can positively impact a company's reputation and bottom line?

Two notable examples of well-executed carbon offsetting strategies can be found in Microsoft and GSK. Microsoft has pledged to remove enough carbon from the atmosphere to compensate for all historic emissions by the company by 2050. They are taking a very diversified approach, sourcing credits from a range of the world’s most innovative carbon market companies to fill its future pipeline. Their embrace of new technologies alongside their unique ‘carbon negative’ target has set them apart from the rest on the race to Net Zero.

GSK, on the other hand, has enacted a focused nature investment strategy, capitalising on the synergies between nature-based carbon removal projects and the biodiversity and environmental co-benefits that stem from them. This works for them as an organisation that benefits directly from virgin nature for the supply of raw materials needed for manufacturing of their medicines and vaccines. They have developed a compelling and integrated sustainability narrative around their investment in nature that strengthens the resilience of their future business in the light of climate risks.

In both cases, the companies are demonstrating innovation and leadership in their sector, attracting the attention of their clients, their employees and their investors.

As we inch closer to key milestones in our net-zero targets, such as the Paris Agreement’s 2030 pledge to reduce emissions by 45%, the pressure on companies to prove they are on the right track is intensifying. As a result, many corporations around the world are setting increasingly ambitious carbon reduction targets in the short-term to prove that they are fully committed to the cause, thus opening them up to reputational damage if they do not meet them.

This is where a robust carbon offset strategy can play a central role to address those emissions that are hard to abate or cannot be reduced easily in the short term. There is an understanding that our road to net zero will be a long one, but it is also critical to prove that progress is being made in the short term - those companies that can’t show concrete progress on this front risk being accused of not doing enough and being a target for criticism. 


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