Personal, voluntary carbon offsets are a drop in the bucket compared to what companies can achieve. As we’ve learned earlier from Carbon Concierge, streamlining processes, opting for cleaner power, and making employees aware are some important first steps to take before offsetting. For the full interview, see Carbon Concierge Balances Business and Carbon Offsets With Eight Steps.

Today we speak with John Laumer. Most popularly known for his writing on TreeHugger.com, in his day job John’s a corporate and products advisor for all things lifecycle and environment related.

Getting down to the nuts and bolts of things, John gives an insider’s take on what pitfalls companies can avoid while on the road to carbon neutrality. While carbon offsetting is a bold and noble step for your company to take, there are risks to consider to make sure the road taken is a straight and steady one.

How should a company get started with carbon management? Start with difficult, strategic and administrative questions. Let the tactical choices come second as they are relatively easy to tend to once the strategic and administrative questions are answered. (See the end of this post for an important checklist of questions.)

In your view, what should/not be included in a carbon inventory? Large companies may have thousands of products. Each full lifecycle inventory could cost $20 to 50 thousand dollars and take half a year or more to complete. That’s a complete non-starter for small businesses and a very unlikely approach to get management support in big business especially given today’s economic downturn.

It’s far easier, useful, and practical to produce estimates for entire facilities over which your organization has majority control. This includes joint ventures. The numbers will change year to year anyway, as product lines are added or closed out. The public, governments, and competitors do not need to see the details of plant operations. And, you pay the electric bill for a whole facility, not for each product line. To do otherwise is just asking for frustration. And it will fragment small businesses from larger ones.

It’s more important to be able to make a reasonable estimate of how much reduction of emissions can be achieved year-by-year, decade-by-decade, than it is to estimate the baseline emissions of a company or business. Outside consultants are in no position to know how much efficiency can be wrung out of a process or business model. You are always better off to start with inside experts, guided by outside consultants rather than the other way around.

For many firms, it’s going to be tough choice whether to go it alone or hire outsiders for estimating emissions and setting cutback goals. For state controlled firms with political stakes, it’s going to be particularly dicey.

You absolutely have to engage your first tier suppliers for flagship products and services (HP just did that and has reported the results). If first tier suppliers are unwilling to release third party certified emissions estimates in a timely manner you have a big problem: both with your customers and government stakeholders and with your business model. Making this happen is particularly hard for small firms.

Are there any tools (e.g. software) that you can recommend? A good writer can write with a pen. Picking a software package does not a good writer make. People who focus on software tools first will suffer the consequences later. You need supply chain relationships and great relationship with fuel and energy suppliers more than you need software.

I’d suggest working with a good carbon registry and use the tools they suggest so that all registrants use common methods and report similarly. The bigger the registry the better. World Business Council For Sustainable Development is the big kid on the block. Use theirs.

Are there good examples of companies receiving information on carbon emissions from their suppliers? Any standards emerging? Yes, but the signal to noise ratio is not good yet. The details are proprietary in many cases and will likely remain so. Think about it. If you had a long-term contract with a supplier who had a process that enabled them to deliver goods to you with less carbon emissions per kilogram of product than any other firm, you would want to take that credit for your customers right? But you would not want your competitors to know all the details and have them outbid you on price for the next contract with that supplier.

How can companies manage the conflict between environmental goals and shareholder interests? With third-party verification of emissions estimates and accountability by an appointed business unit that is charged with meeting cutback goals.

Are there legal implications of going carbon neutral? It’s been argued by others that a firm that has a track record of manipulating information and/or encouraging others to reduce the likelihood of the public believing that there is a risk of climate catastrophe, and which also has an energy intensive business model, stands a chance of being accused of contributing to disaster.

The contra-positive behavior serves as a prospective legal defense: For example, you saw the risk, and took affordable precautions, looking out for both stockholder interest and the larger worlds’ interests. I frankly doubt any business can achieve full carbon neutrality over the long haul. But they sure can try. This is a lot better defense than sitting around waiting for accountability.

What’s the right way to get maximum PR about going carbon neutral, while avoiding greenwash and bamboozling technical details? Ask your employees where they think emissions cutbacks can be made. Take the long view and spend money wisely. Focus public relations on how you plan to make progress. Focusing on how you plan to measure carbon emissions is boring. If you want to be taken at your word, third party verification will be necessary.

Does it make sense for facilities to generate their own renewable electricity (solar/wind), rather than buy green power from the grid? In some unusual cases, yes. The answer is going to be driven by location and the need for reliable power backup as much as cost or government incentives. It also depends on how long a company wants to hold onto a facility. If they’re milking profit from a facility that’s largely paid off and plan to spin off the business unit soon, there’s no way they’ll invest hard capital for renewable energy production.

If owners want to cut the carbon footprint of a product line to gain market advantage, on the other hand, they may invest in on-site green energy production or ultra-efficient, capital intensive processes.

GM recently decided to build Volt engines in the USA. It’ll be interesting to see how “green” that operating site is designed to be, and whether they buy much renewable energy to run it (not many options for that in Michigan at present).

If a company wants to buy renewable energy direct from projects, how to get started? If a firm has a culture that encourages innovation and wants to invest in the future, that should be a no-brainer. If not, they better start talking to their energy distributors and fuel suppliers to get their arms around the possibilities (which are highly dependent, like all real estate is, on location).

Can you give us some examples of companies who are getting carbon management right? Firms that have been doing well by doing the right thing for some time, investing in R&D for a new low carbon future; shedding carbon intensive operations by selling or closure, etc. They already have first in advantage and are going to hold onto it. Most small and midsize businesses are ‘followers,’ not green leaders, as are many large ‘second tier’ businesses. I put most state controlled businesses in that second tier category.

Second tier businesses have management cultures that are by nature ‘reactive’ rather than ‘proactive.’ They might call themselves ‘fast followers’ which generally means they do what the law requires as a bare minimum. Most second tier firms and small businesses will act when market conditions, resource scarcity, or a climatic emergency driven regulation requires they take action. Those that act quite late will be losers. If there are not a large number of corporate losers, climate action will not be successful.

John’s strategic and practical questions checklist while initiating a carbon offset plan for your business

Strategic questions:
√ Suppose we make carbon emissions estimates, what will we do with the information?’
√ Should we conduct an internal quality review of the estimation methods?
√ Should investors have a say?
√ Must we review this with the legal department?
√ Is there concerns for liability?
√ When should we speak with third party verification?
√ Do we report findings in the annual report?
√ What happens if we divest or purchase a business?
√ Who will respond to public inquiries about the findings?
√ Who determines improvement goals and who is accountable for achieving them?
√ How would we respond to a regulatory mandate for emission reductions by government?
√ Will our measurements be used for lobbying?

Practical questions:
√ Are we doing this to satisfy obligations to society or trade organizations; or are we doing this because we think it is the right thing to do, knowing that it may lead to challenges to current ways of doing business?
√ Who has the budget for travel and outside services needed to perform the carbon emissions estimations on a recurring basis?
√ Do you or the team have the full support of executive management and buy-in from operating site managers?
√ Are you able to document your supply chain 1, 2, 3 or even 4 tiers upstream? If not, what does this mean in terms of methodology for emissions estimates?
√ Do we have the technical know-how to estimate emissions and defend the methods if challenged?
√ Should corporate purchasing and/or the energy expert be approached first?
√ Do we involve first tier supply chain partners in the first year estimates and who has the relationship and contract knowledge to engage them?
√ Do we know what our competitors have done for emissions estimates? Do we know their intent?

John Laumer’s biography:
John Laumer’s professional history spans environmental field research, corporate regulatory compliance management, over sight of management systems, new product introduction management, life cycle assessment studies, scenario planning, and documentary writing for an on-line magazine.

John’s recent projects include advising an enterprise software developer on needed upgrades to support regulatory compliance, preparing security guidance for a US chemical industry trade organization, helping upgrade corporate product stewardship programs in preparation for third party audit, and interviewing representatives of electronic device makers to determine best practices for documenting the environmental profiles of products.

John’s most recent full time position was Manager Health, Environmental, & Safety Business Integration for an international specialty chemical manufacturer. This was a corporate position, requiring support of business managers, product managers, strategic planners, researchers, customer service, sales, marketing, manufacturing experts, executives, trade organizations, and public stakeholders.

John has also held positions with Federal, State, and local governmental entities as well as with multi-client consulting organizations. He recently completed a term as Chair of a local planning commission.

:: Contact John on Linked In here

Follow more useful and fascinating discourse on corporate carbon offsetting on Carbon Catalog. See our 3 part series:
The Chicken Charity: If Free Range Eggs Were Sold Like Offsets
A Feeble Pitch: So Why Exactly Are Consumer Offsets Failing?
Nobody’s Buying It: Rethinking Consumer Carbon Offsets