PEP Review 2007-5
Sellers Beware: Voluntary Carbon Offsets, Carbon Labels and the Chemical Industry
Published: October 2007
Voluntary carbon offsets are booming. Invented only about a decade ago, their annual market now tips the scales at perhaps $200 million, and this is reckoned to soar to several billion dollars by 2010. Chemical companies already are involved with offsets, and their involvement certainly will grow, both directly as sellers and buyers as well as indirectly, through their customers and suppliers. This offers chemical makers a new revenue stream, but it also poses two risks: loss of sales due to supplier switching and loss of reputation. On the heels of offsets are carbon labels. These are declarations of the ‘carbon content’, presumably the cumulative greenhouse-gas emissions throughout the supply chain – of a given product. Tesco, the biggest retailer in the UK and 15th biggest in the world, recently announced it will, in time, put carbon labels on every one of its 70,000 products so that shoppers can compare carbon content in the same way they already compare salt, vitamins, calories and unit prices. Where Tesco leads, other retailers are sure to follow, and 70,000 products will include more than a few chemical ingredients. The chemical industry, which will mainly be a seller of offsets and labels, should approach both with caution. This report aims to help them do that, by explaining what is going on and highlighting the opportunities and threats.