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Square Peg is carbon neutral. Here’s how we did it.

Climate change is happening, and we believe we have an obligation to reduce our impact as an organisation.

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September 8, 2020

Square Peg is carbon neutral. Here’s how we did it.

Climate change is happening, and we believe we have an obligation to reduce our impact as an organisation.

Kate Stannett

Climate change is happening, and we believe we have an obligation to reduce our impact as an organisation.

In early 2020 we made a commitment to calculate, reduce and offset our carbon emissions. We’ve worked with the South Pole Group to do just that, and so Square Peg operations (offices, flights, energy usage etc) are now carbon neutral.

This is a small step, with more to come.

If you’re considering offsetting your company, here are the steps we took, and the lessons learned along the way:

  • Learn how carbon offsetting works
  • Define our goals
  • Select a partner
  • Audit our emissions
  • Select projects

1. Learn how carbon offsetting works

“A carbon credit is a tradeable certificate that represents the avoidance or removal of one tonne of carbon dioxide emissions. Buying carbon credits means investing in emission reduction projects around the world – projects that require financing in order to take place.” – South Pole Group.

Here are three great explainers on how the system works:

2. Define our goals

Goal one: Set the bar. Get to zero emissions. Figure out how to lower future emissions. Start the conversation for more ambitious, internal projects.

Goal two: Make it economic. We wanted to support the development of a carbon economy in the Southeast Asian region (one of our investment focus areas)

Goal three: Make it legitimate. We wanted to build a solid understanding of where our emissions come from by working with a global leader in emissions calculations and offsets, using the best development standards.

3. Select a partner

South Pole Group fit our definition of a global leader. I’d also worked with them in the past at Sendle so they were an easy choice.

South Pole develop projects and specialise in auditing governments and businesses. They’ve developed over 700 emission reduction projects, saved over 170 million tonnes of CO2, enabled the production of more than 140,000 GWh of renewable energy, protected or restored over 55,000 km2 of land and helped create nearly 100,000 jobs in developing countries.

4. Audit our emissions

In measuring the carbon footprint (or GHG emissions) for a company, you need to define which sources of GHG emissions should be accounted for. The 'system boundary' drawn around a company's operations defines which activities are accounted for in the carbon footprint. To do this you need to consider three different “scopes”:

  • Scope 1 - Direct GHG emissions – these occur from sources that are owned or controlled by the company. For example, the use of natural gas for heating, the use of fuel for company fleet.
  • Scope 2 - Electricity indirect GHG emissions – these occur at the site of electricity generation but are attributable to the electricity purchased or consumed by the company.
  • Scope 3 - Other indirect GHG emissions - these occur from sources not owned or controlled by the company but are a consequence of the activities of the company. For example, the use of commercial aircraft for business travel, the use of third-party couriers, commuting etc.

The GHG Protocol requires companies to account for Scope 1 and Scope 2 emissions as a minimum. South Pole recommends companies go beyond this minimum requirement and also include Scope 3 emissions from cars, freight, flights, paper use and waste within their system boundary.

We included all Scope 1, 2 and 3 emissions as part of our audit. We didn’t define our portfolio companies’ emissions as part of this scope.

In practical terms, auditing is as simple (and onerous) as data collection. Having items such as travel data all booked centrally made this much, much easier.

Once the spreadsheet was compiled, we sent it off to South Pole to apply the calculations.

5. Select Projects

Carbon credits do not all cost the same amount, and so getting to carbon neutral can vary in price. The price of a credit is driven by these factors:

  • The recency of certification (new projects tend to cost more)
  • The type of project (projects with heart-warming stories cost more)
  • The location of the project (Aussie projects were generally more expensive)
  • The method of offsets (electricity generation was often cheaper than forest regeneration)

The price disparity can be huge, ranging from roughly $10, to $40.

There are a few schools of thought when it comes to offsets:

  • Get to carbon zero in the most cost-efficient manner.
  • Get to carbon zero in the most cost-efficient manner and use any additional budget to over-offset.
  • Get to carbon zero by selecting projects that have outcomes in addition to carbon offsets that align with your goals or values.

Our team was broadly of the view that offsetting was the primary goal, so we took a no-frills approach to get to carbon zero as cost-efficiently as possible.

We reviewed the long list of projects, and sent a shortlist to the team for them to vote on their favourites which were:

  • Musi Hydro Power, Indonesia
  • Za Hung Hydro, Vietnam
  • SCG Biomass, Thailand

From here it was as easy as sending our chosen projects to South Pole who organised the payments and provided us with the certificate for the equivalent of 700 tonnes of C02.

Taking it to the next level

George Monboit, the environmental writer and activist, once famously compared carbon credits to the sale of medieval Catholic indulgences, where the rich could buy themselves out of sin, “you can now buy complacency, political apathy and self-satisfaction”.

We think this is an important reminder that offsetting needs to be the beginning not the end of the process. At Square Peg we’re making carbon offsets part of a boarder Climate Reduction Strategy. We’ll share more information on this as we go.

Over to you

As one part of this Strategy, we want to make it easier for others in the Square Peg community to offset. If you’d like to make offsets part of your climate reduction strategy, South Pole have offered a 5% discount on greenhouse gas calculations and free use of their carbon neutral logo (usually $1k). Please reach out to me at imogen@spc.vc and I can share more details.