Being carbon neutral can be good for business, as Subramaniam Eassuwaren, Co-Founder of Carbon Consulting Company and Deputy Chairman of Eswaran Brothers Exports, a big tea exporter, has found. The magic term, that demonstrates you’ve estimated the impact your company has on the environment and paid for and offset the pollution you caused, can open doors that might otherwise remain closed. Eassuwaren was set to fly to Australia last month to meet with a buyer for his tea at a major supermarket chain. “The ONLY reason I got it was purely because I was able to offer him a carbon neutral tea bag,” he recalls. “I sent him an email a couple of times. He didn’t reply. So I sent him another email saying that I am ready to give you the first carbon neutral tea bag in Australia. I got a reply back from the buyer immediately.” The buyer was apparently fed up with receiving at least half-a-dozen calls a week from virtually every Sri Lankan tea company with a plantation, convinced they could sell their tea to the supermarket chain.
The different response to the carbon neutral tea offered by Eswaran Brothers demonstrates the lure of the eco-friendly label in overseas markets where consumers, especially the younger ones, are increasingly appreciative of corporate carbon offset efforts and are willing to pay a little more for it.
“This is a differentiator,” Eassuwaren declared in an interview with Echelon magazine. “It’s a major differentiator especially in those countries when in a market place that is so crowded, where people are doing the same thing again and again, we are able to offer them something completely different. And when you are doing something like this it also says a lot about yourself as a company, that you are ethical, that you are responsible, that you are willing to look after the world around you.”
Carbon neutral tea costs Eswaran Brothers more to make but the company can also charge a higher price for it. That’s somewhat like the carbon credits Carbon Consulting Company, whose business is to help companies calculate their carbon footprint and take action to reduce and offset that pollution, sold to British retailer Marks & Spencer at US$35 a tonne when the going rate for ordinary credits was less than half that.
Tesco was another big British retailer captivated by Eassuwaren’s carbon neutral tea. Eswaran Tea Exports in 2010 became the first carbon neutral tea company in the world by buying carbon credits to offset the carbon footprint of its manufacturing process and shipments by sea. That label gets Eassuwaren speaking invitations. Once, invited to speak at a forum in the UK, he found himself sitting next to the CSR director of Tesco. The ensuing conversation led to Eassuwaren getting an appointment with the head of purchasing at Tesco.
Convincing companies in their own country about the virtues of going carbon neutral has not been as easy for Eassuwaren and Fazal Fausz, the Co-Founders of Carbon Consulting Company (CCC). The relatively youthful duo – both are under 40 – are convinced that calculating corporate carbon footprints is essential to ensure sustainable business practices, is good for the bottom line and useful as a marketing tool.
“Our role is actually to create awareness,” says Fausz, who is also Managing Director of Rainco, a family business that has emerged as one of the world’s top 20 umbrella manufacturers. “To get organizations to feel that going green is profitable and it actually adds to the bottom line and that there is actually a very good marketing angle when it comes to how people perceive their organizations.”
The duo talk of how difficult it was initially to get companies to accept the need to measure their environmental impact – the total amount of greenhouse gas emissions a business generates, directly and indirectly – and how to mitigate it. Many firms still have only a superficial understanding of the concept, believing that spending a few million rupees a year to plant trees as a corporate social responsibility project is enough. Or some do half-baked initiatives that fail to capture the entire emissions generated by a business simply to be able to wave a certificate. For the certification to be authentic and internationally acceptable, emissions that are neutralised must be not only those generated directly such as by company vehicles, generators and refrigerants but need to include indirect emissions like electricity bought from outside and others like the pollution caused by hired vehicles. And measuring and reducing things like energy means companies also reduce costs. CCC helps businesses reduce their carbon footprint using both internal and external methods. Internally means reducing their own pollution by changing their own habits. Externally means seeing how many tonnes of pollution they emit and buying carbon credits for a similar value to reduce pollution elsewhere to off-set their own footprint. Carbon dioxide is the main one of the green house gases, believed to cause climate change, targeted for reduction.
“It’s been a struggle but we’re making some headway,” says Eassuwaren. “We are now working with some of the best corporates in Sri Lanka.” These include conglomerates like John Keells Holdings or subsidiaries of Hayleys and Aitken Spence, local units of multinationals like Standard Chartered Bank, top apparel exporters like MAS, and Hirdaramani, Expo Lanka, a big logistics firm, and foreign firms like Sheraton Maldives Full Moon Resort & Spa.
Carbon Consulting Company (CCC) works with several international partners and employs local experts for the scientific measurement and mitigation of carbon footprints. Professor Mohan Munasinghe, an internationally renowned expert on climate change and sustainable development, is also on the CCC board of directors, along with Azam Ameer, a consultant based in Sydney. Partnerships with internationally recognised organisations like the Carbon Neutral Company of the UK help bring credibility and expertise. It uses robust, internationally accepted certification methods like the Greenhouse Gas Protocol to calculate green house gas emissions. CCC is the south Asian partner for the Carbon Neutral Company, one of the world’s top carbon offset retailers which helps companies cut carbon emissions, exchange carbon credits and provides internationally recognised carbon neutral certification. Its clients include the BBC, UPS and Tata Steel.
CCC also works with Ecometrica, an internationally recognized carbon accountant which, as an independent auditor, verifies CCC’s carbon offset projects. Other partners include the Carbon Trust which advises on energy-saving strategies and commercialising low-carbon technologies, PE International, which provides software and consultancy services in the field of sustainability, and the Water Footprint Network.
CCC offers two types of certification, one for international use and a cheaper option for local use. Its revenue comes from consulting and certification fees for doing the carbon footprint assessments and suggesting mitigation methods, and margins kept on sale of carbon credits done through Carbon Neutral Company or international registries. These registries connect buyers and sellers and are a mechanism that ensures funding for ‘green’ projects whose return on investment would otherwise not have generated funds under normal circumstances.
“That’s the only way some of these ‘green’ projects can get off the ground,” says Eassuwaren. “The idea of having these credits is to put a price on the pollution you cause so that although you’re doing some harm on one side, you’re paying a price to reduce that harm and at the same time your money is going into funding these great projects on which there is normally no return on investment.”
Companies in effect can outsource their green CSR work to CCC instead of having their own CSR departments do it. If, say, it’s a reforesting programme, CCC takes care of all the spadework from choosing the plants and making sure they are planted properly, to all the calculations needed to measure the impact and the certifications for which it charges a flat fee. A connected company in the group, the Conservation Carbon Company, handles conservation projects under its bio-diversity enhancement assessment work which generate carbon credits. It is currently doing a large project working with small farmers just south of the Sinharaja rain forest whose trees have been decimated over the years. The project aims to create links between remaining patches of rain forest in one area by paying farmers to plant species native to the region and nurture them over a 20-year life cycle to achieve their carbon sequestration goals. It was these carbon credits that were sold to Marks & Spencer. The technique is called a ‘bio link’ which is simply a corridor that is built between two patches of forest allowing the flora and fauna to interact with each other.
“The Conservation Company aims to use existing financial mechanisms like the sale of carbon credits to help protect Sri Lanka’s threatened eco-system,” says Eassuwaren. The first carbon credits were sold to Marks & Spencer which was willing to pay a high price not simply for the offsets but also because of the biodiversity benefits derived from protection water resources and the gains to small farmers.
These sorts of projects do not remain mere CSR projects for the client companies. “They get to use the fact that they created the carbon neutral product or they bought these carbon credits for their marketing and their business purposes,” says Fausz. “So it becomes a complete business transaction. There’s business value that is gained by it. Marks & Spencer gets business value by buying it. So what might have once upon a time been purely a CSR project or a charitable project is now a business transaction now. We have a business contract with those farmers to plant those trees.”
Their work must be seen in the context of the Asia and Pacific region’s ‘biocapacity deficit’. This means the exploitation of natural resources on land and at sea for consumption purposes like food and energy or to absorb emissions is more than what’s available or the environment’s ability to replenish them. Such a gap can only result in the continuing, unsustainable depletion of natural resources. The loss of natural ecosystems and biodiversity is now much more than a conservation issue. This is why certification of the type provided by CCC is sought after by multinational retailers as consumption patterns change and buyers signal their desire to see sustainable business practices.
Eassuwaren believes their struggle has been worth it as corporate attitudes are changing. It’s not merely going and selling carbon credits but convincing companies of the need to measure their impact on the environment and to do something about it. “Although Carbon Consulting is a for-profit company, the purpose of this company is much greater than that. We want to change the way Sri Lanka’s corporates look at the environment.We want to make sure that we as a country get together and protect our environment. There is business to be gained by this. If we market Sri Lanka as an eco-friendly tourist destination or an apparel manufacturing eco-friendly destination or an eco-friendly tea destination. we could justify the higher price we charge for this as people are ready to pay.” He feels it’s a shame that people are not recognizing enough the natural assets that the country has and also not marketing them as they should be.
Compared with a lot of other countries Sri Lanka still has a lot of its original eco-systems left intact but needs to market it better. Multinationals like Marks & Spencer are ready to spend good money to help farmers protect their own environment. It’s something that the country should take advantage of and use.
Adds Fausz: “We are here to truly make a difference. It is actually the private sector that’s driving the local economy today. If the private sector doesn’t make the first step to change we won’t see a significant change in the global context. Our objective is to get the private sector aware of what they need to be doing. It’s a very early steps that we are taking but I believe that we can go a long way in getting everyone involved and hopefully making the big change.”