Companies planning to buy business-software provider ServiceNow and airline-parts company AAR Carbon Offset include
Carbon offsets are investments in projects with goals such as forest conservation that aim to remove carbon dioxide from the atmosphere. Companies can purchase such offsets, either directly or through an intermediary, and use them to progress towards emissions reduction goals. Project developers raise funds by selling offsets.
Aniket Shah, global head of environment, social and governance and sustainable finance, said, “The pressure is coming from everywhere – it is coming from investors, it is coming from customers, it is coming from regulators – the climate for companies. To show our commitment to change mitigation.” Research at the financial firm Jefferies Financial Group Inc.
Regarding corporate spending on carbon offsets.
The Ecosystem Marketplace recently began asking respondents for data in real time rather than annually, and expects its figures for both years to increase as it receives more responses from vendors. In addition, some of the responses included incomplete details about Offset’s end buyers, which affected the results, the nonprofit said.
Offsets can provide a short-term solution for companies that need to make long-term changes to reduce their carbon footprint that are not immediately feasible, such as scaling back on employee air travel, Mr Shah said. But there are also drawbacks, including regulatory uncertainty over what counts as an offset, and some sustainability officials question whether such measures are effective in tackling global warming, he said.
business-software company ServiceNow Inc.
The plan is to buy carbon offsets to meet its goal of achieving net-zero greenhouse-gas emissions by 2030.
The Santa Clara, Calif., cloud company makes software that companies use to manage information technology, human resources, and other business processes. According to Chief Financial Officer Gina Mastantuono, 93 percent of the company’s emissions stem from its supply chain, including data centers. The rest stems from the company’s own actions.
To achieve its net-zero emissions target, which it announced last month, Service Now plans to pressure its suppliers to decarbonise, Ms. Mastantuono said. The company is currently working on what it describes as a supplier-engagement plan, which it hopes to finalize next year. The plan involves implementing sustainability initiatives across the company’s data centers.
ServiceNow will buy carbon offsets to reduce emissions by using more renewable energy and its net-zero goal, Ms Mastantuono said.
The company has not determined how much it will have to spend on carbon offsets, she said, noting that spending will vary with the company’s carbon footprint.
“It depends over time how much carbon we’re actually able to reduce, that’s what’s left, and so it’s certainly variable. It’s something we’re committed to doing regardless, “He said.
ServiceNow posted a profit of $59 million during the three months ended June 30, up 44% from a year ago. Ms. Mastantuono said the company will only purchase offsets that include third-party certification, such as a verified carbon standard from nonprofit Vera.
Other companies are also buying offsets and offering them to customers as incentives or discounts.
, a Wood Dell, Ill.-based aviation-parts-and-services company, said last week that it would begin providing carbon offsets to customers who purchase certain CFM56-5B or CFM56-7B engine parts.
CFO Sean Gillan said this initiative is “another way to differentiate the customer in that we’re not only giving you the part that you want, but we’re going to deliver this carbon offset, and you’ve got to take that point of view.” attach importance.”
AAR is providing carbon offsets to customers who purchase used parts through its partnership with Fortress Transportation & Infrastructure Investors LLC, a New York-based equipment lessor. AAR manages services including removal, repair and sale of used parts from Fort’s owned engines during regular repair cycles.
AAR and Fortress will contribute 1% of the sales generated under the partnership for the purchase of carbon offsets. Mr. Gillan declined to comment on how much AAR plans to spend on offsets. AAR does not disclose what percentage of its total sales come from the Fortress partnership.
Total sales of both products and services increased 14% year-over-year to $455.1 million during the quarter ended August 31.
The company will buy offsets directly through the Carbon Offsetting and Reduction Plan for International Aviation, a United Nations-affiliated initiative, Mr. Gillan said.
He said the offset would not count towards the company’s own sustainability objectives.
Kristin Broughton at [email protected]