TLDR:

Google is changing its tack to environmental sustainability. It’s no longer claiming carbon neutrality through the purchase of inexpensive carbon offsets. Since 2007, the company balanced its emissions from buildings, data centers, and business travel by buying these offsets. However, starting in 2023, Google has opted to move away from this practice.

Instead, Google aims to achieve net-zero carbon emissions by 2030 through direct reductions in its emissions. Finally, the textbook credit trade we’ve learnt about all these years is showing its limitation, as technology leapfrogs. What next, then? Anyways, the company now focuses on purchasing carbon-removal credits, which are more expensive but contribute more substantively to reducing carbon dioxide from the atmosphere

Analysis

Are we departing from a wonky carbon offset markets? At risk of sounding like a PR mouthpiece.. Google’s move could really, potentially reshape the way companies handle ESG lol, promoting genuine emission cuts and leapfrogging carbon tech.

Long term risks and rewards:

Risk of Greenwashing: Companies relying solely on carbon offsets without achieving substantial emissions reductions face risks of being perceived as greenwashing. This practice could undermine social trust.

Financial Risks: Transitioning to more expensive carbon-removal credits may pose financial risks in the short term, as these credits are typically costlier than traditional offsets. However, there are potential rewards in terms of enhanced brand reputation, reduced regulatory risks, and resilience to evolving climate policies.

Innovation and Competitive Advantage: First mover advantage, so this is when the ones with the largest warchests, who can springboard investments, win. And then hopefully convert their wins into actual profit-making investments.

Future Expectations and Projections for the ESG Industry

Industry Standards: Google’s shift could influence broader industry standards and best practices in ESG reporting. As more companies prioritize direct emissions reductions/ verifiable carbon removal, industry standards may evolve to emphasize these approaches over traditional offsetting.