Compensating our CO2 emissions: moving from carbon offsets to carbon removal
In 2003, Swiss Re committed to become greenhouse neutral with the intention to compensate any unavoided emissions through the purchase of CO2 reduction certificates, or carbon offsets. Greenhouse neutrality was a thought-leading concept at the time. Carbon offset markets as we know them today did not yet exist, so Swiss Re invested in a fund specifically set up to help develop CO2 reduction projects and issue the resulting offsets to its investors. We chose the Community Development Carbon Fund (CDCF) run by the World Bank, as it was the first fund designed not only to generate emission reductions, but also community benefits through the projects it finances: access to clean water, improved health conditions, creation of jobs, women empowerment and more.
By 2008, carbon offset markets had matured to the point where we were able to buy enough offsets to compensate all our outstanding emissions back to 2003. Over time, labels and standards had emerged that guaranteed the quality of offsets in terms of accountability, social and environmental safeguards etc. We have exclusively supported Gold Standard-certified projects, which means they have come with the same level of co-benefits as the CDCF projects. To fund our offsetting campaign according to the “polluter pays” principle, in 2014 we introduced a small levy on our employees’ business flights.
In 2019, Swiss Re committed to achieve net-zero emissions in our own operations by 2030 (for details, see Committing to reach net-zero emissions in our operations by 2030). This major new commitment requires us to move away from conventional carbon offsets, where we pay others to avoid their emissions in our place, as this type of compensation is not enough to reach net-zero emissions. Instead, unavoided emissions need to be compensated through carbon removal (see illustration below).
Net-zero emissions is the thought-leading concept of today. Yet the carbon removal industry, let alone a fully fledged market for removal certificates, is still to emerge. Hence, we find ourselves in a similar situation as in 2003. Through our early engagement we will help develop the carbon removal market by creating demand and by motivating clients and peers to join our commitment.
Living up to this ambition, we seized the opportunity to participate in the very first marketplace for sellers and buyers of carbon removal certificates – the Finnish start-up Puro (puro.earth/). In their inaugural auction held in May 2019, Swiss Re secured a first batch of 100 carbon removal certificates generated by a biochar project in Tampere. Biochar locks away the CO2 that plants have removed from the air to grow their biomass. Mixed with soil, biochar endures for hundreds of years and improves soil quality by retaining moisture and nutrients.