Environmental, Social & Corporate Governance

Locus Technologies Celebrates 25 Years of Innovative EHS & ESG Software

Locus looks back on the last 25 years of pioneering EHS, ESG, and water quality software.

MOUNTAIN VIEW, Calif., 11 April 2022 — Locus Technologies, the leading EHS Compliance and ESG software provider, today celebrates the 25th anniversary of its founding, and with it, a quarter-century of customer success. Locus looks back on its founding as a Silicon Valley leader in EHS & ESG software with pride in its leadership through expertise, stability, and innovation.

Locus was founded in 1997 with a revolutionary vision that set the framework for what is now widely known as environmental, social, and corporate governance (ESG) and environmental, health, and safety (EHS). Locus envisioned a simplified and data-driven approach, offering software in the cloud, on mobile devices, and as a service. The company pioneered SaaS (Software as a Service) model in EHS, ESG, and water quality management spaces in 1999 and never installed its software on customers’ premises.

Over 25 years, Locus has pioneered cloud environmental solutions, online and mobile GIS (Geographic Information System) services, has revolutionized environmental information management, and AI and IoT technologies for organizations ranging from Fortune 500 companies to forward-facing municipalities and the US Government.

Locus recently broke new ground by releasing the first Visual Calculation Engine for ESG Reporting. Locus’s visual calculation engine helps companies quickly set up and view their entire ESG data collection and reporting program, enabling full transparency and financial-grade auditability throughout the entire process.

As the industry continues to evolve, competitors merge and disappear. New markets emerge and grow. Locus remains a constant in the environmental space, an innovative and independent pioneer.

“For 25 years now, Locus has brought together industry-leading experts in EHS, sustainability, and technology. Although regulations and requirements have changed over the years, that combination remains at the core of what Locus does, as demonstrated by our stability and long-term customer partners. We look forward to continuing our path of growth using those same values for the next 25 years.” said Wes Hawthorne, Locus President.

Locus Founder and CEO, Neno Duplan is proud to look back on the growth of Locus over the last 25 years. He said, “Locus did not start in the clouds, but back in 1997, we had a rather good view. Locus’s vision for better global environmental stewardship has not changed since its inception. We focus on empowering organizations to track better and mitigate the environmental impact of their activities. That vision has come to fruition through the Locus software services used by some of the world’s largest companies and government organizations. Locus’ SaaS has been ahead of the curve in helping private and public organizations in not only managing their water quality, EHS compliance or ESG reporting but also turning their environmental information into a competitive advantage in their operating models.”

Locus Introduces Visual Calculation Engine for ESG Reporting

MOUNTAIN VIEW, Calif., 1 March 2022 — Locus Technologies, the leading EHS Compliance, and ESG software provider, today announced the industry-first visual calculation engine for ESG reporting. Locus’s visual calculation engine helps companies easily set up and view their entire ESG data collection and reporting program, enabling full transparency throughout the entire process. Through an interactive branching interface, ESG professionals can quickly identify areas where to focus efforts to improve their ESG performance. Companies that set goals in line with the Science-Based Targets initiative (SBTi) can use Locus’s ESG software to track progress to reach those goals in a transparent and credible manner.

Having a visual calculation engine reduces the burden, time, and potential inaccuracies associated with ESG reporting. The environmental portion of ESG reports includes complex calculations, factors, and numerous data inputs. The visual calculation engine goes beyond GHG (Greenhouse Gas) and addresses any calculations that are part of ESG reporting such as waste generation, resources, and water consumption. Through the visual hierarchical tree, companies can easily get to the sources of any raw data, factors, and formulas used to generate reported ESG metrics.

With an increased focus on ESG reporting and transparency, ensuring accurate reporting is more important than ever. Locus’s award-winning ESG data tracking, analysis, reporting, and visualization software aims at helping organizations plan, implement, and accelerate net-zero strategies. Choosing the right calculation engine plays a crucial part in remaining compliant with rapidly evolving requirements and regulations. In the US, the SEC’s proposed rules expected this year will likely require public companies to report emissions from their operations, energy usage, and resources they consume. The SEC requirements are being driven by the fact that many investors are considering ESG disclosures in their investment decisions. With those requirements, there is an expectation that these reports will be subject to some form of auditing to ensure accuracy. Locus’ accredited GHG verifier designed the visual calculation engine to support this impending requirement. It provides a single consolidated view of all input data, referenced factors, and calculations that went into the ESG report. Through the calculation engine, raw data can be traced back to the user input, integrated external database, utility API, supplier attestation, or any other data source.

Locus’s visual calculation engine supports simultaneous calculations using multiple methods so that users can input data once and report to federal, state, and voluntary reporting programs according to each proper protocol. Once raw data is in the Locus ESG app, reporting can be performed to several different reporting standards such as U.S. EPA Mandatory Reporting Rule, European Union Emissions Trading Scheme (EU ETS) or GRI, SASB, CDP, DJSI, GRESB, and DNSH.

“Locus’ visual calculation engine builds upon over a decade of experience performing verification of ESG data for many companies. Coupled with Locus SaaS Platform it provides all necessary tools to simplify data management, reporting, and visualization of necessary carbon and other calculations in real-time. It provides full transparency for calculations, which become part of an organization’s ESG reporting. As financial-grade audits are applied to ESG reporting, this becomes a critical feature for organizations needing a reliable ESG reporting tool.,” said Wes Hawthorne, President of Locus.

Locus Technologies Receives 16th Consecutive EBJ Award for Information Technology in ESG

Environmental Business Journal (EBJ) recognized Locus for ESG software growth and innovation.

MOUNTAIN VIEW, Calif., 24 February 2022 — Locus Technologies, the leading EHS Compliance and ESG software provider, was awarded a 16th consecutive award from Environmental Business Journal (EBJ) for growth and innovation in the field of Information Technology in the environmental software with particular focus on ESG.

EBJ is a business research publication providing strategic business intelligence to the environmental industry. Locus received the 2021 EBJ Award for Information Technology by growing and innovating its unified EHS compliance and ESG software platform.

In 2021 Locus took a leading market position in the fast-growing space of ESG software. Locus’s ESG SaaS covers carbon data aggregation via a powerful visual calculation engine, investor-grade emissions calculations audit capabilities, reporting to multiple standards from a single data set, integration APIs, dashboards, and carbon reduction goal setting and tracking. This separates Locus from competitors as customers demand integrated net-zero ESG software that supports investor-grade data in disclosure rules such as the EU’s corporate sustainability reporting directive, mandatory TCFD reporting, and anticipated SEC action on climate disclosures.

In 2021 Locus continued to expand its ESG SaaS to include built-in business intelligence tools allowing for interactive, actionable insights into EHS and ESG data, forecasting tools to predict future ESG reporting, APIs linking to utility meters, and interfaces with other Locus and third-party systems that house ESG data. Locus’s ESG application is focused on “enter once, report many times.” The gold standard for multinational enterprises with many locations worldwide is to have a system configured to report to multiple organizations and many standards from a single dataset. Essential built-in reporting in the Locus ESG app includes state or federal regulations, internal CSR, and ESG based on whatever standard their organization adheres to, such as CDP, GRI, SASB, TCDF, or more recent World Economic Forum (WEF) attempt to standardize many voluntary standards.

Locus also expanded its ESG consulting expertise by becoming the first and only software provider to offer accreditation services under new Oregon DEQ guidelines requiring third-party verification for GHG and CFP programs.

Besides strong growth in ESG space, Locus also continues to lead the software for water quality management market with the addition of new SaaS customers in 2021, such as the City of Hillsboro, Oregon for water quality management and Westinghouse Electric Company for control of environmental and radionuclides data, cementing Locus’s market leader position in the space of nuclear facilities.

“Locus’s investment in integrated carbon management software and EHS compliance is paying off. As one of the early SaaS leaders in net-zero digital solutions for ESG reporting, Locus continues to provide value to companies that want to be credible with their carbon reporting and sustainability software.,” said Grant Ferrier, president of Environmental Business International Inc. (EBI), publisher of Environmental Business Journal.

“We would like to thank EBJ for recognizing Locus for a 16th consecutive year and for taking note of our industry-leading ESG software. We aim to continue expanding our software offerings to customers in 2022,” said Wes Hawthorne, President of Locus Technologies.

The Locus Technologies ESG Survey Tool

The Locus Technologies ESG Survey Tool enables users to email surveys and questionnaires directly from Locus to their supply chain. This is achieved without having to create usernames and credentials those receiving surveys.

When surveys are issued, the tool generates a secure link to each email recipient. Email recipients click the link, respond to the survey or questionnaire (without having to create a Locus username/password), and the data will be captured within Locus software for ESG purposes. Recipients of the link only receive access to their survey form, and nothing else in the system, and the links expire within a prescribed timeframe to further strengthen security.

The survey tool securely streamlines data collection from external entities who would traditionally never be given access to the system, including suppliers, vendors, sales channels and consultants. Once collected, the data can be immediately be used for ESG calculations and reporting.

Want to learn more about the Locus ESG Survey Tool? Reach out to our product specialists today!

ESG: Why Uptime of SaaS Vendors Matters

In a Software as a Service (SaaS) delivery model, service uptime is vital for several reasons. Besides the obvious of having access to the service over the internet at any given time and staying connected to it 24/7/365, there are additional reasons why service uptime is essential. One of them is quickly verifying the vendor’s software architecture and how it fits the web.

Locus is committed to achieving and maintaining the trust of our customers. Integral to this mission is providing a robust compliance program that carefully considers data protection matters across our cloud services and service uptime. After security, service uptime and multitenancy at Locus come as a standard and, for the last 25 years, have been the three most essential pillars for delivering our cloud software. Our real-time status monitoring (ran by an independent provider of web monitoring services) provides transparency around service availability and performance for Locus’ ESG and EHS compliance SaaS products. Earlier I discussed the importance of multitenancy in detail. In this article, I will cover the importance of service uptime as one measure to determine if the software vendor is running genuine multitenant software or not.

Service Uptime

If your software vendor cannot share uptime statistics across all customers in real-time, they most likely do not run on a multitenant SaaS platform. One of the benefits of SaaS multitenancy (that is frequently overlooked during the customer software selection process) is that all customers are on the same instance and version of the software at all times. For that reason, there is no versioning of software applications. Did you ever see a version number for Google’s or Amazon’s software? Yet they serve millions of users simultaneously and constantly get upgraded. This is because multitenant software typically provides a rolling upgrade program: incremental and continuous improvements. It is an entirely new architectural approach to software delivery and maintenance model that frees customers from the tyranny of frequent and costly upgrades and upsell from greedy vendors. Companies have to develop applications from the ground up for multitenancy, and the good thing is that they cannot fake it. Let’s take a deeper dive into multitenancy.

An actual multitenant software provider can publish its software uptime across all customers in real-time. Locus, for example, has been publishing its service uptime in real-time across all customers since 2009. Locus’s track record speaks for itself: Locus Platform and EIM have a proven 99.9+ percent uptime record for years. To ensure maximum uptime and continuous availability, Locus provides redundant data protection and the most advanced facilities protection available, along with a complete data recovery plan. This is not possible with single-tenant applications as each customer has its software instance and probably a different version. One or a few customers may be down, others up, but one cannot generally aggregate software uptime in any meaningful way. The fastest way to find if the software vendor offers multitenant SaaS or is faking it is to check if they publish online, in real-time, their applications uptime, usually delivered via an independent third party.

Legacy client-server or single-tenant software cannot qualify for multitenancy, nor can it publish vendor’s uptime across all customers. Let’s take a look at definitions:

Single-Tenant – A single instance of the software and supporting infrastructure serves a single customer. With single-tenancy, each customer has their independent database and instance of the software. Essentially, there is no sharing happening with this option.

Multitenant – Multitenancy means that a single instance of the software and its supporting infrastructure serves multiple customers. Each customer shares the software application and also shares a single database. Each tenant’s data is isolated and remains invisible to other tenants.

A multitenant SaaS provider’s resources are focused on maintaining a single, current (and only) version of the software platform rather than being spread out in an attempt to support multiple software versions for customers. If a provider isn’t using multitenancy, it may be hosting thousands of single-tenant customer implementations. Trying to maintain that is too costly for the vendor, and sooner or later, those costs become the customers’ costs.

A vendor invested in on-premise, hosted, and hybrid models cannot commit to providing all the benefits of an actual SaaS model due to conflicting revenue models. Their resources will be spread thin, supporting multiple software versions rather than driving SaaS innovation. Additionally, suppose the vendor makes most of their revenue selling on-premise software. In that case, it is difficult for them to fully commit to a proper SaaS solution since most of their resources support the on-premise software. In summary, a vendor is either multitenant or not – there is nothing in between. If they have a single application installed on-premise of customer or single-tenant cloud, they do not qualify to be called multitenant SaaS.

Before you engage future vendors for your enterprise ESG reporting or EHS compliance software, assuming you already decided to go with a SaaS solution, ask this simple question:

Can you share your software uptime across ALL your customers in real-time? If the answer is no, pass.

Multitenancy Explained

And if the vendor suddenly introduces a “multitenant” model (after selling an on-premises or single-tenant software version for 10+ years), who in the world would want to migrate to that experimental cloud without putting the contract out to bid to explore a switch to well established and market-tested actual multitenant providers? The first-mover advantage of multitenancy is a considerable advantage for any vendor. Still not convinced? Let me offer a simple analogy to drive home the point as to why service uptime and multitenancy matter: Tesla vs. Edison–War of Currents.

The War of Currents was a series of events surrounding the introduction of competing electric power transmission systems in the late 1880s and early 1890s that pitted companies against one another and involved a debate over the cost and convenience of electricity generation and distribution systems, electrical safety, and a media/propaganda campaign, with the leading players being the direct current (DC) based on the Thomas Edison Electric Light Company and the supporters of alternating current (AC) based on Nikola Tesla’s inventions backed by Westinghouse.

With electricity supplies in their infancy, much depended on choosing the right technology to power homes and businesses across the country. The Edison-led group argued for DC current that required a power generating station every few city blocks (single-tenant model). In contrast, the AC group advocated for a centralized generation with transmission lines that could move electricity great distances with minimal loss (multitenant model).

The lower cost of AC power distribution and fewer generating stations eventually prevailed. Multitenancy is equivalent to AC regarding cost, convenience, and network effect. You can read more about how this analogy relates to SaaS in the book by Nicholas Carr, “Big Switch.” It’s the best read so far about the significance of the shift to multitenant cloud computing. Unfortunately, the ESG/EHS software industry has lagged in adopting multitenancy.

Given these fundamental differences between different modes of delivering software as a service, it is clear that the future lies with the multitenant model.

Whether all customer data is in one or multiple databases is of no consequence to the customer. For those arguing against it, it is like an assertion that companies “do not want to put all their money into the same bank account as their competitors,” when what those companies are doing is putting their money into different accounts at the same bank.

When customers of a financial institution share what does not need to be partitioned—for example, the transactional logic and the database maintenance tools, security, and physical infrastructure and insurance offered by a major financial institution—then they enjoy advantages of security, capacity, consistency, and reliability that would not be affordably deliverable in isolated parallel systems.

Locus has implemented procedures designed to ensure that customer data is processed only as instructed by the customer throughout the entire chain of processing activities by Locus and its subprocessors. Amazon Web Services, Inc. (“AWS”) provides the infrastructure used by Locus to host or process customer data. Locus hosts its SaaS on AWS using a multitenant architecture designed to segregate and restrict customer data access based on business needs. The architecture provides an effective logical data separation for different customers via customer-specific “Organization IDs” and allows customer and user role-based access privileges. The customer interaction with Locus services is operated in an architecture providing logical data separation for different customers via customer-specific accounts. Additional data segregation ensures separate environments for various functions, especially testing and production.

Multitenancy yields a compelling combination of efficiency and capability in enterprise cloud applications and cloud application platforms without sacrificing flexibility or governance.

Want to learn more? Reach out to our product specialists today.

Selecting ESG Software? Watch out for these 7 Red Flags

One of the biggest recent trends we have seen with novice ESG providers (both startups and major software providers new to the field) is a lack of substantial software tools presented. What is lacking is covered up by grandiose statements about the efficacy of their options. These statements are so vague that they could cover anything if you switched out references to ESG with any other nouns, since these providers don’t show their tools transparently.

Here are seven red flags to be aware of when selecting ESG software:

These providers prominently share statements and statistics about the current ESG climate, without any offering of how their software fits into the picture. This is a major ‘tell’ that someone is jumping on the ESG bandwagon without adequate expertise or software tools.
There is a lack of explanation about how their tools directly improve your ESG program. There is no mention of their dashboards or reporting options or other integrated tools. A seasoned software provider will happily share the specifics of what they offer.
You’ll find over-the-top flashiness on their website, but there are no software previews to be found. If they’re not showing an example of their software, it may be because it lacks functionality, or is theoretical.
Their site is filled with buzzwords. They will talk about reaching net-zero, about how their software is expert-led and data-driven. They will offer no insight as to how they meet these goals.
They will shy away from offering demonstrations. Instead, they will seek to have conversations where they make lavish promises about what their software will be able to do in the future. They may be quick to offer a PowerPoint presentation, but you’ll find that many organizations are reluctant to show their software in action. You deserve to see the software you intend to purchase.
No case studies or current customers can be found. If there’s not an example of their software in use, then it may not be worth exploring, or it may not exist.
If an ESG software provider has grown by acquisition, there are likely issues with software integration and staffing knowledge/support for the product. And if they’re owned by investors, it’s inevitable that they’re being packaged to sell, and they’ve raised prices to meet the needs of the investor.

So, what should you look for in an ESG Software Solution instead?

When selecting an ESG software solution, don’t waste your time with something that either isn’t functional or doesn’t exist. More importantly, your software should have a long track record of usability and be backed by years of expertise. Locus ESG software is proven and is a vital part of the Port Authority of New York and New Jersey’s Clean Construction Program. It also helps Del Monte Foods meet their sustainability goals by improving analyzation and forecasting.

Want to learn more? See it for yourself. Reach out to our product specialists today.

Embodied Carbon in the Construction and Building Operations Industry

When we look at all the new construction in the next 20 years, we see the critical role embodied carbon plays. The world urgently needs to address carbon emissions from buildings and construction, constituting almost 40% of global carbon emissions. Of those total emissions, building operations are responsible for 28% annually, while building materials and construction (typically referred to as embodied carbon) are responsible for an additional 12% annually.

The construction industry is the world’s largest single industry. Oxford Economics estimates the global construction market at $10.7 trillion in 2020. The market is expected to grow by $4.5 trillion between 2020 and 2030 to reach $15.2 trillion.

Unlike operational carbon emissions, which can be reduced over time with building energy upgrades and the use of renewable and nuclear energy, embodied carbon emissions are locked in place upon completion of construction. The owners and construction industry must handle embodied carbon now if we hope to achieve climate change goals by target dates. Embodied carbon typically precedes Scope 1, 2, and 3 emissions and should be added to those for any new construction.

Achieving zero embodied emissions will require adopting the principles of reusing, reducing, and sequestering, including retrofitting existing buildings, using recycled materials, and designing for deconstruction. Reducing means material optimization and the specification of low to zero carbon materials. Sequester means including the design of carbon sequestering sites and the use of carbon sequestering materials.

Just three materials – concrete, steel, and aluminum – are responsible for 23% of total global emissions (most of the materials used in the built environment). Concrete is the second most-consumed substance on Earth after water. Overall, humanity produces more than 10 billion tons, about 4 billion cubic meters of concrete and cement per year, or about 1.3 tons for every person on the planet, more than any other material, including oil and coal. The consumption of concrete exceeds that of all other construction materials combined. Making modern cement and concrete has a heavy environmental penalty, being responsible for 5% or so of global carbon emissions. And yet, most of those emissions are not accounted for during regular carbon reporting protocols. Steel and aluminum are not much different.

All companies that want to be credible with their carbon reporting need software tools for embodied carbon tracking and management. For this reason, Locus has developed a SaaS application to manage and report embodied carbon data in real-time during construction projects. The Locus Embodied Carbon app, part of the ESG toolset, advances environmentally friendly infrastructure design and increases the ability to track and reduce emissions before being built in the new structure forever.

Locus’s Embodied Carbon management software automates carbon emissions management throughout the design and construction processes. It is one of the most ambitious real-time carbon management software programs in the US. Locus Embodied Carbon app helps site owners, construction companies, and the supply chain reduce embodied carbon from on-site construction activities and reduce air pollution from construction activities.

Locus Embodied Carbon application combines the advantages of Locus Platform’s multitenant SaaS with its powerful configuration tools and APIs that, for example, stream carbon data from construction equipment to online software. The construction industry now has precisely the ESG software solution they need to fit their business processes for the low carbon construction program management to incorporate other EHS compliance and Sustainability data on the same unified platform in the future.

Locus to Provide GHG Verification Services in Oregon

Locus Technologies has received accreditation by Oregon DEQ for GHG and CFP verification services.

MOUNTAIN VIEW, Calif., 21 December 2021 — Locus Technologies (Locus), industry leader in environmental compliance and ESG software, has been accredited by the Oregon Department of Environmental Quality (DEQ) to provide verification services for mandatory greenhouse gas (GHG) reporting and the Clean Fuels Program (CFP). Locus is the first of a select few to receive approval for verification services.

The accreditation allows Locus to provide verification services for GHG emissions reports, which are now mandatory for facilities in the State of Oregon. The verification team at Locus consists of experts in all reporting requirements. Locus’ in-house Lead Verifiers are certified in all reporting types, including air contamination stationary sources, electricity suppliers, fuel suppliers, natural gas suppliers, natural gas systems, and process emissions. Locus verifiers are also certified for all report types under the Oregon CFP.

The Oregon Environmental Quality Commission (EQC) updated their rules in May 2020 to enhance the data collection of Oregon’s greenhouse gas emissions. The adopted rules incorporate existing reporting and emissions accounting protocols into rule and improve the specificity of how emissions data are calculated, reported, and verified. The regulation requires mandatory reporting and verification of greenhouse gas (GHG) emissions by third-party verifiers like Locus, starting in 2022.

“Locus is proud to become an accredited GHG and CFP verification body for the state of Oregon, as we have been in California since the inception of that program. We are continually committed to staying informed on new and updated ESG reporting frameworks, which we accomplish first and foremost through domain expertise. Our field expertise and industry knowledge allow us to provide a vital service, while also further expanding on our ESG software to support these new reporting programs” said Wes Hawthorne, President of Locus.

Building on over a decade of GHG verification experience, Locus remains the only software provider for collecting, managing, and reporting GHG emissions that is also an accredited verifier. Using this expertise, the software includes unparalleled tools for transparent and auditable calculations for GHG programs.

Don’t Trust Your ESG Reporting to Just Anyone

Is ESG the new gold rush? Some tech giants and startups seem to think so. With each passing day, more and more software providers throw their hat into the burgeoning ESG ring, hoping to cash in. While it’s perfectly reasonable for these companies to seek out profitable endeavors, most of those companies have limited real-world experience with ESG reporting and software. You may want to think twice about trusting your critical ESG reporting to someone looking to ride the wave toward a quick buck.

Locus has been developing and supporting ESG solutions for over two decades, before the ESG acronym ever made its way into headlines and boardrooms. In addition to the years of experience, Locus places great emphasis on domain knowledge, hiring experts in environmental science, engineering, sustainability, and mathematics to name a few. Our solutions are built and supported by these qualified experts, opposed to developers who are frantically cobbling together a solution that they can rush to market.

It takes years to develop a foolproof system for handling massive quantities of complex data. In a recent piece written by President of Locus, Wes Hawthorne, he delves into the importance of having accurate, audit-ready ESG reporting. Data quality and reporting accuracy have been pillars of Locus’ success since our founding in 1997.

Do more for your ESG program than applying a cookie-cutter tool meant to meet the bare-minimum needs of the many or an application that is new and untested, and unfit for your requirements. Our robust solutions help you manage impact, create reports with ease, and meet your ESG goals effectively.

Contact Us to Get Started Today

Carbon Offsets Have a Huge New Problem—Wildfires

As if the world of calculating forest and natural assets to be used as carbon offsets for big businesses isn’t complicated enough, now there’s a huge new, unexpected issue. Wildfires are threatening the underlying nature itself.

A pyrocumulus cloud from Oregon’s Bootleg Fire can be seen for miles as it burns in the Freemont-Winema National Forest. As of Thursday night, the fire had burned more than 400,000 acres, including forest that had been preserved to compensate for greenhouse gas emissions elsewhere. Photo: National Interagency Fire Center.

The wildfires in the American West this past summer, including one big fire in Southern Oregon, the Bootleg Fire, torched a large percentage of land set aside for carbon offsets. Another fire in Washington State threatened an Indian reservation carbon offset project. Companies who produce greenhouse gases pay nature and forest reserves to maintain and build themselves out to help trees pull carbon from the atmosphere. The offset allows the companies to claim they are carbon neutral. The more they pollute the more they pay. A growing financial market for offsets in Europe, the UK and now China is based on the premise these assets can be correctly measured and managed.

That premise routinely comes under fire, as one forest is different from another, some trees in the same forest suck carbon at a different rate then others and, of course, there’s no way to tell how a forest used as an offset today will look 100 years from now. Now the natural land is coming under fire literally. In order to counteract CO₂’s climate-warming properties, a carbon offset project needs to promise to sequester carbon permanently. That’s because CO₂ can linger in the atmosphere for up to 1,000 years. If the carbon that is avoided or removed ends up getting released, then the program is flawed. The impact of the fires is already generating calls from advocates who argue carbon output needs to be reduced at its source, not offset with money and accounting gimmicks. Those are legitimate arguments but as we are nowhere near approaching a global scenario like that, offsets are our best shot to make polluting more expensive and ultimately reduce it.

The problem is that the offset market is developing so fast that all the parties in it — buyers, sellers, brokers — are profiting, and so are thinking of new ways to grow it. Already, ideas about securitization of carbon offset assets, where they would be packaged into tradable derivatives, like mortgages or interest rate products, are catching on.

This feeds into more participants in the carbon market, and as a result, higher prices, and then more participants on that. On the European Trading System for carbon prices, the value of futures contracts for UK carbon topped $100 (£ 72.4 pounds) in late September amid the country’s petrol delivery crisis. But none of this compares to what could happen if global leaders can advance the idea of an international carbon price and emissions trading mechanism at the United Nations’ COP26 global climate summit in Glasgow in November.

The carbon market, one way or another, is certain to develop in coming years, and with it, the potential for abuses. Those can be fought by new regulations and better policing of markets. But at present, there is nothing to stop the natural threat of fires or other disasters on the underlying offset assets. In the investing world, we call these developments Black Swans. Something completely unexpected that comes along and upends markets. Kind of like China’s sudden attack on its tech industry this past summer, and its impact on Chinese stocks worldwide. It is another sad and ironic tragedy of climate change that global warming itself is destroying the very tools we have to fight it.

[sc_image width=”150″ height=”150″ src=”24014″ style=”11″ position=”centered” disable_lightbox=”1″ alt=”David Callaway, Callaway Climate Insights”]

About the Author—David Callaway, Callaway Climate Insights

David Callaway is founder and Editor-in-Chief of Callaway Climate Insights. He is former president of the World Editors Forum and editor of USA Today.

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