3 Reasons Why Carbon Neutral is a Distraction
Article featured in CXO Outlook
In the fight against climate change, "carbon neutral" and "net zero" have become rallying cries for governments and corporations all over the world. They conjure images of balancing the scales—of neatly offsetting emissions and making our environmental impact disappear. But appealing as they are, the drive for carbon neutrality risks becoming a distraction from the urgent and complex systemic transformations needed to tackle the climate and biodiversity crisis effectively.
To assume that the sustainable future we all want is simply a matter of balancing out the bad stuff we’re doing is, to use Albert Einstein’s phrase, to try and solve the problem with the same level of thinking which got us into this mess in the first place.
Below are three reasons why carbon neutrality is not the silver bullet it’s presented as:
1. Carbon is Not the Only Metric That Matters
The global focus on carbon as the primary metric for environmental impact has led us to grossly undervalue nature. Nature delivers so many benefits far beyond carbon sequestration such as preserving biodiversity, stabilizing ecosystems, supporting local communities. Conversely, deforestation disrupts water cycles, increases the risk of wildfires and creates cascading effects that are difficult to quantify or reverse.
All these roles which nature plays, sometimes called “ecosystem services” are undervalued or overlooked entirely in carbon markets. Even where attempts are made to tack these on as “co-benefits” these higher quality offsets still have to compete on the market with low quality technology-based offsets such as Direct Air Capture (DAC) where the credit really is just a tonne of carbon. Even the term “co-benefits” suggest that these crucial roles that nature plays are a nice bonus to carbon sequestration rather than something we all depend on to survive.
Furthermore, net zero demands that carbon projects demonstrate additionality; proving that any carbon that has been sequestered is “additional” to that which would have been sequestered in the absence of project finance. On the face of it this seems like common sense, but it also tends to penalise nature-based projects where additionality is hard and complex to prove compared to technology-based reductions where it's easier and simpler. For example, recent work done by World Resources Institute in Brazil on Assisted Natural Regeneration has been hugely impactful and yet struggles to demonstrate additionality since it is impossible to separate the intervention from natural regeneration.
These factors combine to create an absurd situation where credits from DAC are actually preferred to nature-based credits and attract higher prices since they offer clear-cut additionality and low risk of leakage therefore making net zero claims more straightforward.
By obsessing over carbon as the singular goal, we undervalue nature and risk ignoring broader ecological crises, such as biodiversity loss and soil degradation, which are just as critical as carbon emissions.
2. The Myth of Precision Hinders Real Progress
Carbon neutral claims demand a level of precision which diverts resources away from direct impact. A quick back-of-the-envelope calculation suggests that large corporates spend significantly more on measuring and disclosing their emissions than doing anything about them. The global ESG/Sustainability consultancy industry was worth $11.5 billion in 2022, while the voluntary carbon market was estimated at around $2bn. Meanwhile, the UN estimates that nature needs $384 billion annually by 2025.
Instead of closing this gap, new regulations often exacerbate it. The TNFD (Taskforce on Nature-related Financial Disclosures) and TCFD (Task Force on Climate-related Financial Disclosures) mandate that companies disclose their environmental impact in a particular way, requiring significant expertise and expensive consultants, but does not require that companies do anything about them.
This is not to say that measuring emissions isn’t important, nor that transparency is a useful step in the right direction. It’s just that the balance between these interventions and meaningful direct action is skewed. We don’t need more data to know that rainforests need protecting. Protecting rainforest can cost as little as $3, and this amount is comfortably enough to outbid a logging company for the same area - the cost and difficulty is all in the measuring and reporting.
The relentless pursuit of precise carbon accounting fosters a rigid, transactional mindset that waste precious resources on prioritizing measurable outcomes over meaningful impact. Companies that could learn to operate with information that is “good enough” could achieve more impact and better reputations if they direct these resources to where it’s needed most - the ecosystems and communities on the frontline, as well as effective campaigns which communicate their impact to their clients, employees and investors.
3. It Fails to Embrace the Complexity of Natural Systems
The appeal of carbon neutrality lies in its simplicity: it’s easy to imagine emissions as a linear bar that can be shifted left or right to achieve balance. However, the reality of climate systems is far more complex. Climate impacts are governed by nonlinear feedback loops, time delays, and interconnected systems, and if we don’t get to grips with this then we’re doomed to counter-productive interventions and unintended consequences.
For example, stringent additionality requirements tend to discriminate against communities and jurisdictions which have done an admirable job of protecting their natural assets by putting in place legal protections. These projects have an even harder time proving additionality and are sometimes barred from entering the market. Ironically this actually incentivises jurisdictions to engage with logging and mining companies in areas around a project both before and after selling credits since it allows them to point to any remaining forest and show that it's "additional".
As I have written elsewhere, climate change requires us to get better at modelling and understanding complex systems and feedback loops, but the “net zero” narrative does the exact opposite - it presents climate impact as a simple two-dimensional problem. It perpetuates a mindset that encourages short-term fixes over systemic change or addressing root causes. And it perpetuates the illusion that we can continue with business as usual as long as we balance the carbon books.
The natural world is not a ledger where inputs and outputs can be perfectly balanced. It’s a dynamic, evolving system characterized by ambiguity and uncertainty. Efforts to reduce nature’s value to a single metric are fundamentally flawed. Instead, we need to adopt a more holistic approach that recognizes and values the full range of ecosystem services and acknowledges the intrinsic worth of nature beyond its utility to humans.
A Path Forward: Contribution vs Compensation
The climate crisis demands urgent action, but it also requires us to think deeply and act wisely. My intention here is not to trash much of the valuable work and progress and consensus building that the “net zero” movement has garnered. Net zero targets have played a role in galvanizing action on climate change. It has prompted corporations to measure their emissions, set targets, and invest in solutions. But these first steps must not be confused with the deeper transformations that need to take place. It’s time to move beyond the narrow focus on carbon toward a broader, more holistic vision of sustainability.
Organizations like Native and Pinwheel are leading the way by offering holistic solutions for companies to invest in nature which recognize that nature’s value cannot be reduced to a single metric. By moving beyond carbon, we can shift the focus from a compensation mindset which seeks to balance out negative impacts, to a contribution mindset which prioritizes meaningful action without the need to make misleading or problematic claims of neutrality.
Companies who do so will be more effective in their impact campaigns but will also have more resources to communicate that impact in an engaging way to their stakeholders.
Sources:
https://www.verdantix.com/insights/blogs/the-esg-and-sustainability-consulting-market-will-quadruple-and-reach-48-billion-dollars-by-2028
https://carboncredits.com/what-is-the-voluntary-carbon-market/#:~:text=As%20of%202022%2C%20the%20real,valued%20at%20around%20$2%20billion