Publication / 12 Dec 2007

Carbon Neutrality and Carbon Offsetting in the FTSE All-share

Trucost study into the role and relative efficacy of carbon neutrality compared to other carbon management strategies.

Standard Life Investments and the Environment Agency asked Trucost to look at the latest developments in the use of carbon offsetting and carbon neutrality by FTSE companies, in the hope that as the financial materiality of climate change is becoming more and more evident this report will stimulate continued discussion of carbon management by the business and investment community.

The report shows that more companies are seeking carbon neutrality, although these are still a minority. The number of companies that claim to have achieved carbon neutrality or aim to offset their emissions has nearly doubled from 15 to 28 since last year, although this still represents just 5% of 557 FTSE All-Share companies. Offsetting is predominantly a strategy pursued by companies that are not particularly carbon intensive and only 1% of the emissions of the FTSE All-Share were offset last year.

The nature and scope of offsetting varies significantly. Only 11 of the 28 companies aim to be, or currently claim to be, carbon neutral for their entire operations. The remainder have investigated carbon neutrality for part of their operations or offer offsets to their customers. Offsetting standards are developing but there is no universally recognised standard as yet.

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