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Defining Carbon Neutrality from an organization stand point


Pollution and climate change is a major threat for the continued existence of the world and civilization. The major form of climate change that is being witnessed is known as global warming and it is the result of human activity (Clarke, Johnstone, Kelly, Strachan and Tuohy, 2008). Carbon dioxide is the major and largest form of emissions and the main source is fossil fuels. Fossils fuels cause the regeneration of carbon dioxide either directly or indirectly through everyday activities using this type of fuel and therefore contributing to climate change. Business and persons in every part of the globe are currently becoming sensitive on climate change and are now seeking ways to continuation to action. For business organizations, this action includes but not limited to new industrial revolution, which is a rather quiet one that involves creation of a low-carbon economy (Crawley, Pless and Torcellini, 2009). The concept of carbon neutrality is currently a key part of this revolution.


What carbon neutrality for an organization

Carbon neutrality can be the entire activities or part of the activities of an organization. These actions and activities would be its head office, a product, their fleet of vehicles, air travel, or an event. An organization can therefore claim carbon neutrality if it can demonstrate first that it has calculated and accounted for its greenhouse gas (GHG) emissions and has effectively offset all of these such that the resulting is a net zero emission from the total of its activities. An organization that is carbon neutral reduces its carbon dioxide emissions to the lowest level possible and offsets the remaining emissions (Net neutrality…, n.d). In addition, the organization has a clear understanding of the level of reduction to be achieved and against what amount to be offset. In addition to reduction of carbon emissions to the lowest level possible, a credible organization on matters carbon neutrality should have a real and practical commitment towards reduction of its carbon emissions at source (Commonwealth of Australia, 2011; Dept. of Climate Change, 2011).

In theory, carbon neutrality is a simple concept but in actual practice, which is the implementation of the theoretical part, the details are complex and for some, they are outright controversial. According to Crawley et al. (2009) the reason for these controversies are uncertainty on what is carbon neutrality, worries that exists on the project quality for carbon neutrality, and boundary issues. For the majority, carbon neutrality and carbon offsetting is simply a way f buying ones way out of trouble, there are no clear boundaries of the activities to be considered. To the realization of real change, there is need to adoption of carbon cap and trade legislation for organizations (Dept. of Climate Change, 2011).

Currently, carbon neutrality is a voluntary undertaking and there are no drivers in the form of inceptives or law for organization to undertake low-carbon emission activities (Dimoudi and Tompa, 2008; Environment Agency, 2010). On its own, carbon neutrality won’t be able to realize the desired outcomes and stabilize the climate. For a more tangible effect, there is need for national and international drivers among them trade legislation and caps for organizations to remain within acceptable carbon emissions on a period basis, e.g. annually. A similar and applicable alternative would e a policy structure that imposes high taxes on carbon with rebates being given in other areas of the tax system.

For an organization that commits to carbon neutrality, its raises the carbon literacy level of its staff members, associates, business partners, and customers and adds up to making a contribution to the wider carbon emissions, climate change, and carbon neutrality debates (Eriksson and Nilsson, 2008; Glass, Dainty and Gibb, 2008). It is therefore important that organization take up the mantle and stand up for carbon neutrality given there are currently no standards and boundaries that have been agreed upon. For an organization that is carbon neutral, it has to be fully engaged in driving the development of low-carbon economy, develop their own methodologies and standards, and shape its own business model to ensure its services and products contribute to reduction of carbon emissions and support low-carbon technologies (Eriksson and Nilsson, 2008; Glass et al., 2008).


Costs and benefits of achieving carbon neutrality

For BT Group, achieving carbon neutrality would require investment of the appropriate technology and machinery, operational standards, and policies. The costs involved include both financial costs and investment of expertise and effort especially for setting up the right operational standards and policies (Innovation & Growth Team, 2010). These costs may not be significant as they are part of capital investments and they are only additional in cases where a complete replacement is being done. Nevertheless, to reduce the economic burden, it would be advisable for BT Group to adopt a slow and gradual phase-out of the high carbon emitting machinery and energy sources overtime while replacing the worn-out and depreciating machinery with the low-carbon emitting alternatives until there is 100% shift to low-carbon technology and machinery (Fujimoto, Poland & Matsumoto, 2009).

According to Intergovernmental Panel on Climate Change (IPCC) (2014), there are economic model used t estimate the costs burden for achieving carbon neutrality. These models assess the costs involved but they are not effective in capturing the full range of costs involved. Given the ICT industry in which BT Group operates is a service industry, there are some of the operational costs that cannot be effective quantified through the economic models. The costing process is also hindered as a result of some of the bureaucracy that may still exist in organizations.

For organization in the Information and Communication Technology Industry like BT Group, the cost and benefits if proper adoption of carbon neutrality would result to a net increment in the value and need for its ICT services (Innovation & Growth Team, 2010; Glass et al., 2008). Increased value and need for its services is a good motivation for building on the existing carbon neutrality policy and record of low-carbon innovations and lobby for reduced carbon emissions through legislation and engage in leadership through action. BT Group has already reduced its own carbon emissions through adoption of energy efficiency and purchase of renewable energy sources, and it is the process of acquiring renewable energy on its operation sites through biodiesel and small scale wind turbine (Innovation & Growth Team, 2010).

A carbon neutral BT would benefit through aggressive construction of its own renewable energy portfolio and this would therefore lead to acquisition of a range of technology among them large-scale wind turbine, solar PV, small scale wind, biomass, biodiesel, and others as so appropriate (Clarke et al., 2008; Innovation & Growth Team, 2010; Gartner, 2009). Through carbon neutrality, BT would better manage its energy consumption and while the absolute energy usage would depend on the usage per customer per unit of data transferred the organization would be able to benchmark its utility measures e.g. energy use for each unit of data transferred and ability to manage all its systems for improved and more efficient energy consumption. To realize these benefits, it is important that the energy boundaries for the organization be clearly defined. It is suggested that for maximum benefit, the organization’s carbon boundary should includes its own direct emissions from its corporate offices, transport, and electricity used for running network to were services are provided through customers and probably exclusion of the network that has been sold under wholesale terms to other telecom providers (Jiang and Tovey, 2009; Jones and Glachant, 2010).

Carbon neutrality has been shown to be beneficial for brands as it improves on brand visibility in the market. Given the increasing problem of climate change, organizations that seek to reduce their carbon emissions have the benefit of their brand riding on the climate change awareness. Research (Jones and Glachant, 2010; Lomas, 2010) shows that the positive impact on brand has a huge potential for both brand enhancement and customer engagement hence both B2B and B2C. An organization that is demonstrating clear commitment to carbon neutrality initiatives has an advantage to gain.

Emissions under the three scopes

Scope 1 Scope 2 Scope 3
1)      Electricity used in the company

2)      Energy used by its employees in-office

3)      Stationery power used in its offices

4)      Energy used to power its network

5)      E-waste

6)      Electricity used in data centers

i. Energy used for network provided through customers

ii. Waste disposal in their offices

a.       Network sold to other providers under wholesale terms

b.      Energy used off their site/offices

c.       Transportation outside their offices

d.      Waste disposal


Boundaries for accounting emissions

In the effort towards carbon neutrality, the most interesting question is how fast, how far, and how much money the organization should spend and the appropriate combination of strategies to adopt (Jones and Glachant, 2010; Li, 2008; Lomas, 2010). Just like every other organization in the telecommunication industry, BT is already considered to be carbon light given its relative contribution to UK GDP with respect to its turnover and other FTSE 100 organizations. But BT remains to be one of the highest consumers of electricity in the UK. This high consumption is however considered to be replaced by the low transport and the fact that its services don’t require transportation which is one of the major sources of carbon to the atmosphere (Pullen, 2010). Research has shown that widespread use of teleconferencing to reduce travel and related emissions resulted to an average of about 32 kgCO2 per teleconference (Innovation & Growth Team, 2010; Murray and Dey, 2009; Gartner, 2009).

To determine the carbon neutrality of BT, it is import to first establish its levels of judgement then make the boundary for emissions determination. While it is important what an organization does and the sources of carbon emissions, one level is the carbon produced directly from the company operations. In BT, these include the electricity used to run its databases, and networks, e-waste produced from the company, and transportation, even through very limited because of teleconferencing (ITU, 2009). These result to scope 1 emissions. For BT, the other level, which included scope 2 emissions also known as embodied emissions, is important for determination of their carbon footprint (ITU, 2009).

According to Jiang and Tovey (2009), an organization like BT has a huge responsibility in managing its carbon emissions, regardless of the fact that its services contribute to carbon emissions insignificantly. In other words, even though the direct carbon emissions by BT are very low, there is still a duty by the organization to further cut down its direct emissions. However, the responsibility for carbon reduction is not limited to its direct emissions, but also emissions by its customers, which are scope 2 carbon emissions.

To measure the carbon footprint of an organization requires that all sources of fossil fuels be included. However, the key issues in determining this is which to include and which not to – where to set the boundary. According to Environment Agency (2010) and Zuo and Zillante (2006) some regions and nations have set by law, carbon boundaries. These include system boundary 1 which considered only scope 1 emissions for calculation of carbon footprint, system boundary 2, which considers scope 1 and scope 2 emissions, system boundary 3 which considers scope 1 and scope 2 emissions, and system boundary 4 which considers scope 2 and scope 3 emissions. The UK, the nation in which BT operates don’t have a set system boundary therefore, a system boundary for calculation of BT’s carbon footprint would be proposed. For ICT companies, scope 3 emissions are limited or are entire under a third party carbon footprint therefore, the appropriate system boundary for BT would be system boundary 2, which takes into consideration scope 1 and scope 2 emissions.

Under system boundary 2, measurement of BT carbon footprint would require starting in all the offices and where applicable, inclusion of core manufacturing functions that are relatively easy to track in the organizations. Given the fact that there is no standard guideline on what to or not include in calculation of the organization footprint, the emissions included are those which lie under the mandate of the company.


Significant barriers to measuring, apportioning and justifying emissions

The measurement, apportioning and justification of emissions by BT are hindered by a number of barriers. The first is the fact that there are no predetermined indicators for measurement of energy performance. For the ICT industry in UK, there is no a set system boundary for the determination of which carbon emissions should be included in calculation of carbon footprint (Zuo and Zillante, 2006; Yin, 1994). The lack of such a guideline disrupts the entire industry as there isn’t a uniform method for determination of carbon footprint. The lack of a preset guideline means there isn’t a centralised point of reference which adds to the confusion in the calculation of carbon emissions of an organization. Additionally, lack of a central reference for matters carbon emissions means there is no clear information on emissions and their management.

The lack of a measurement indicators means there is not a verifiable and clear system of determining the amount of emissions and even through the various organizations can determine their carbon footprint independently; these cannot be compared for holding each respective company responsible for reducing its carbon emissions. According to the IPCC (2014), clear carbon measurement indicators are one of the main requirements for successful mitigation efforts giants GHG at a global scale.

The second barrier is low awareness and if any, very little. For the average consumer of ICT services, he/she doesn’t understand what carbon emissions are in the industry, how to cut down on emissions, or how to put pressure to cut down on emissions. The only persons who might be aware of emissions in the industry are the experts only and these do not in any way associate with the consumers of ICT services in any services. For example, a network engineer sets up the system, sales are the duty of a sale team who don’t understand the technicality of the system, the organization is owned by business tycoons who are concerned with profits only. This makes it very hard for coordination of carbon reduction initiatives not only for BT, but also the entire ICT industry.

The third barrier is the lack of a legal system and policy guideline on carbon neutrality. According to Salazar and Meil (2009), carbon neutrality is a rather new concept and thus, government and other authorities are still in the process of understanding it. As a result, there are not yet clearly set laws and policies for regulation of carbon neutrality at national level. With specificity to the UK, there still is not a policy that regulates carbon neutrality, and this makes it hard for national coordination, not to mention a clear and authentic central voice of reason on carbon neutrality matters.


Carbon offsetting: role and what constitutes a valid offset option

Carbon offsetting in achieved by buying Emission Reductions that have been achieved by another party, or will be achieved by another party (Fujimoto et al., 2009) by investing in the project that is to or has achieved the reduction. The concept behind carbon offsetting is promoting green initiatives, if you are involved in a carbon emitting project. However, this has been seen by critics as simply buying one’s way out of trouble. The role of carbon offsetting is to promote carbon neutrality by purchasing credits for carbon emissions with the objective of achieving net carbon neutrality. The organization with excess carbon emissions has to compensate for the same by purchasing an equivalent of credits (Alsford, 2000).

However, the concept behind carbon offsetting has been challenged based on the time it takes for carbon released into the atmosphere to ‘dissolve’ and be removed from the atmosphere. According to Zuo and Zillante (2006) and Yin (1994), the amount of carbon released into the atmosphere from fossil fuels remains in the atmosphere considerably longer therefore, for an organization that releases carbon to the atmosphere, even if it purchases offsetting credits, and continues engaging in such activities, the amount of carbon in the atmosphere increases with time due to the slow degradation.

Nevertheless, there are valid offsetting options. According to Jones and Glachant (2010), carbon offsetting should be part of a complete carbon neutrality, and such option that are valid and have a sustainable solution regarding carbon emissions include; renewable energy, energy efficiency, and business process.

Energy efficiency – this is an annual target that aims to reduce energy usage, even though for BT, the organizations 21st network is projected to increase energy use. Another example that is applicable to BT is using fresh air cooling in equipments, use of more efficient cooling fans, and use of liquid pressure amplification for building cooling systems.

Business process – there are a number of opportunities for BT to improve on their carbon neutrality. One of these is the use of teleconferencing to cut down on carbon emissions through transport. The other is use of paperless billing to cut down on emissions from paper manufacturer and disposal. Business processes involve strategizing to do away with unnecessary emissions (Ruth, 2011).

Renewable energy – as earlier stated, BT is one of the largest consumers of electricity in the UK. The organization has an option to cut on carbon emission by purchasing green electricity. This option is however faced with challenges among them is the fact that green electricity in the UK is limited, and considerably high and increasing price for green electricity (Ruth, 2011; Alsford, 2000).


Applicability of recommended approach

The place of ICT in global economy is expected to grow even as the constraints related to carbon increase, most likely through supply limitations or legislation on carbon offsetting. In a world where carbon is constrained, access to ICT will be important not only for economic activities, but also as part of daily living for social cultural exchange and improved quality of life (Garcia, 2009). It is therefore imperative that effective, valid, and workable carbon offsetting options that offer carbon reduction be adopted for the ICT sector.

The options provided for BT to offset its carbon emissions are reliable, valid, and applicable across board because they are not only applicable for offsetting carbon emissions, but also for reducing carbon emissions. Energy efficiency is an offsetting option that can be adopted by every organization because it is not only for carbon reduction, but is offers financial benefits through decreased overhead costs hence increased profits. This benefit is a major driver for organizations to pursue efficiency energy use not because of the carbon reduction advantage, but the opportunity to increase profits. The business processes option is also applicable in other organization, even through the strategies available will depend on the nature of the organization and operations it is involved in. The use of renewable energy is the last option and even through it isn’t very popular among organization mainly because of the costs involved in green electricity compared to the conventional electricity, it is a valid and applicable option once sufficient green energy is available (IPCC, 2014; ITU, 2009).



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