Carbon Offsetting: Is a Carbon Fund The Answer?

Around this time last year, French conglomerate LVMH (Moët Hennessy Louis Vuitton) admitted that they and the fashion industry as a whole have contributed to the vast air pollution we’re witnessing today. But they went a step further and decided to do something about it. Step one: they acknowledged how much they needed the environment for each and every facet of their empire. Thus the decision to invest in the environment by creating a group-wide fund whose mandate is to reduce the impact of the company’s operations on the planet.

[Image: Courtesy of Ecomagut]

So they set out to establish an initiative that would place a monetary value on the greenhouse gases (GHG) that the 70 subsidiary companies under the LMVH brand – which spans Céline, Christian Dior, Donna Karan, De Beers, TAG Heuer, Fendi, Givenchy, Louis Vuitton, Marc Jacobs and Nicholas Kirkwood  –  would emit. They set it at 15 Euros per tonne of CO2 emitted, a figure the brand claims will be reviewed on an annual basis.  This money, which would make up the carbon fund, would then be invested in mechanisms that would offset the carbon they’ve released. A concept the Business of Fashion (BOF) refers to as ‘Carbon Trading’. These mechanisms, also referred to as ‘carbon projects’, were then selected using five criteria, namely the efficiency of the investment, the carbon impact, the trigger effect, how well its performance rates were and lastly its innovation level.

“Today respect for the environment is not only an imperative, it is also a lever that drives progress.” ~ Bernard Arnault, Chairman and CEO of LVMH

The tax isn’t just to work as a reactive measure, but also as an active response. Because, let’s face it, no business wants to pay tax. If they can find ways to bring it down, they will. So if that comes in the form of reducing energy consumption such as the use of roof insulators, opting for renewable energy or working with an external body to monitor consumption, they’d probably do it. However, the folks at LVMH seem genuinely vested in making a difference. In a statement published on the group’s website, Bernard Arnault, Chairman and CEO of LVMH, said “[t]oday respect for the environment is not only an imperative, it is also a lever that drives progress.”

Chairman and CEO of LVMH Bernard Arnault.[Image: Getty Images / Guillaume Souvant]

The idea was to reduce their emissions by 25 per cent by 2020 under their LIFE program (LVMH Initiatives For The Environment), which is in charge of LVMH’s approach to all things environmental. That includes how they deal with biodiversity, eco-design, supply chain management, product sustainability, ethical production site standards, traceability and GHGs. A year later, the conglomerate announced that its internal carbon fund surpassed their earlier estimated funds of five million Euros, to amerce over six million euros (that’s approx. over KShs680 million!).

The LIFE program, Bulgari example [Image: Courtesy of LVMH]

Watch LVMH’s official video below to find out a little more about how their internal carbon fund works:

The idea of ‘Carbon Trading’ as BOF calls it, isn’t a new one, having been around for a decade or so now. According to BOF, The European Union (EU) Emission Trading Scheme uses the same concept and has around 11,000 power stations, factories and other installations that pay the fee towards reducing their carbon footprint in a bid to balance out the emissions they can’t reduce on their own.

One of the carbon reduction projects [Image: Courtesy of carbonfund.org]

While LVMH decided to internally handle the issue, there are external organisations such as Carbonfund.org that can help in monitoring your company’s output and suggesting a relevant ‘taxation rate’ that would donate to a reforestation, renewable energy or energy efficiency projects to help offset the CO2 you put out. And you don’t have to be a design house to get involved with carbon offsetting. There are options for individuals and families to contribute to these restoration practices for the clothes or activities they’ve undergone that contribute to the rising CO2 levels. To learn more about how the Carbon Fund works or if you’d like to make your own contribution, head over to their website: www.carbonfund.org.

The idea of carbon funding boils down to reduce what you can and offset what you can’t.

So the idea of carbon funding boils down to reduce what you can and offset what you can’t. But are design companies on the continent ready for that level of transparency? Keeping in mind that brands like Zara who have publicly declared their sustainability efforts have been met with criticism from the press on everything from not doing enough to going about it the wrong way. Would the concept work here, whether as self-initiative or via government intervention? Who then holds both the companies and the Carbon projects responsible for following through on their end of the bargain? And do we as consumers need to make an offsetting gesture for the clothes we buy?

Environment [Image: Courtesy of LVMH]

As always, we look forward to your thoughts on the issue in the comments below. In the upcoming post, we’ll be looking at African designers that have purposefully ensured they do something about their carbon footprint for a little inspiration; so keep posted.