WHEN HSBC, Europe’s biggest bank, flies its executives around the world, it pays for the carbon dioxide emissions of every flight in the form of offsets, or investments in nonpolluting energy projects. The busy London-Hong Kong route, for example, produces 2.76 metric tons of carbon dioxide per passenger, which the company offsets for roughly $4.45 a ton, adding around $25 to the ticket price. (The amount varies with the price per ton of emissions.) Of the bank’s total carbon emissions this year, 10 percent will come from business travel, resulting in a fee of $310,000 in offsets. HSBC will pay $3 million more in offsets to achieve carbon neutrality, the first major bank to do so.

Offsetting has its critics, who say that emissions must be reduced rather than offset, and that some companies have adopted the practice to make a show of their green credentials. Nevertheless, offsetting is becoming increasingly popular. Over all, business travel can account for less than 5 percent to more than 40 percent of a company’s carbon dioxide emissions. A manufacturer with a local operation will travel less, while a global operation in the services sector will travel more. Going green has its price, and so far more European than American companies have been willing to pay it.

“In terms of businesses actually taking the initiative without regulatory requirement or beyond compliance of regulation, the European Union is in the lead,” said Jonathan Shopley, chief executive of the London-based CarbonNeutral Company, specializing in carbon management strategies for businesses. “The U.S. is starting to catch up, but the companies that are building the costs of carbon into their bottom line now will be more competitive as the cost of carbon rises because of regulation.”

In Europe, carbon emissions are regulated by the Greenhouse Gas Emission Trading Scheme, a mandatory cap-and-trade system that applies to major emitters. The plan is meant to meet Europe’s obligations under the Kyoto Protocol, which the United States did not sign. Compared with the emissions of a power station, those produced by corporate business travel are relatively small, and efforts to offset emissions are voluntary. In the future, however, the European plan will include more sectors of the economy.

Mr. Shopley thinks that voluntary offsets related to business travel will grow. They reached 5 to 10 million tons of carbon dioxide last year, and he thinks they may reach 50 million tons this year and 100 million the next. But they are a drop in the bucket of world emissions, which will exceed 25 billion tons this year alone. Air travel accounts for 4 to 7 percent of that total, he estimates. “But given that there is a fair amount of travel within the service sector, which represents a significant proportion of the economy, I think CO2 reductions and offsets in business travel can have a material impact,” Mr. Shopley added.

CarbonNeutral measures a company’s “carbon footprint,” buys the right amount of offsets in renewable energy projects and verifies the reliability of those projects. It charges a fee for its services, and revenues have grown to $4.7 million since the company was founded in 1997. But businesses stress that buying offsets without reducing the amount of travel will bring little net relief to the problem of climate change. At the same time, travel is often essential, particularly for service companies, many of whom anticipate more travel as they expand globally.

“Business travel is one of the hardest aspects of environmental management,” said Francis Sullivan, HSBC’s environmental adviser. “We do what we can, like not having more than one person at a meeting, and doing online training to limit traveling, but it’s a tough nut to crack,” he said. At the reinsurance company Swiss Re, business travel accounts for about 50,000 tons of carbon emissions a year, or 45 percent of its total.

“We’ve gone from 2.2 tons to 2.8 tons per employee,” said Andreas Schlaepfer, head of internal environmental management. “And it’s going up, especially in short haul.” Besides requiring employees to consider telephone and videoconferencing before flying, Swiss Re recently decided to extend the length of short-haul flights that require economy-class tickets by 25 percent, making flying less appealing.

Despite a slow start in the early 1990’s, videoconferencing holds the greatest potential for reducing business travel. British Sky Broadcasting has invested in videoconferencing suites. At Ikea in Sweden, 1 of 10 meetings are being replaced by a videoconference. And Credit Suisse has increased it by 14 percent.
(By Braden Phillips, NYT , 18/09/2006)