Hollow words: Stewardship leads show continuing scepticism over offsets

Corporates and investors should be focusing more on actually bringing down their reductions rather than merely talking about offsets, an asset management heavyweight told the industry.

Michael Herskovich, head of stewardship at BNP Paribas Asset Management, was also critical on firms that have net zero targets but directly or indirectily contribute to firms lobbying against climate legislation, stressing that addressing this issue was a key plank of BNP Paribas’ engagement strategy.

On offsets, Herskovich said: “When you're thinking about net zero the overall goal should be to reduce your carbon. We really are sceptical on the fact that there are a lot of companies that are almost only talking about offset."

He stressed: “That's not what we're wanting on climate strategy. Net zero offset is part of the picture, but that's not the biggest part of the picture for me."

Certain offset strategies have proved controversial, with a Guardian investigation into Verra forestry credits declaring them largely worthless, and estimates by Oxfam that using land alone to achieve net zero by 2050 would require at least 1.6 billion hectares of new forests, equivalent to five times the size of India.

The remarks were made at a panel discussion on governing to net zero, hosted by Canadian business law firm Fasken, alongside Lisa DeMarco, chief executive of law firm Resilient, and Robert Walker, sustainability policy advisor at the International Corporate Governance Network (ICGN).

Scientists on boards

On the issue of governance and climate, DeMarco argued for greater input from the scientific community in board representation.

“I don't see enough science competency on boards. I really like to see somebody with an engineering or climate science background. I like to see somebody with some science training in there because you can't divorce the science, particularly on the adaptation side, from the related financial competencies, and this is where we see some boards getting it wrong”, she said.

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Last year, Deloitte’s Audit Committee Frontier survey found that only half of the board audit committee members considered themselves “climate literate”, and half of the respondents in the survey did not believe they are well-equipped to fulfil their climate regulatory responsibilities.

Walker also noted there was “a low level of awareness” among investors on developing technologies that could one day revolutionise discussion around climate change, such as direct air capture carbon mineralization.

Pushing back against the notion of climate scientists on boards, Herskovich said: “I'm not 100% convinced.

“Of course, scientists can bring a lot, but also we have seen in some board sscientists that have no idea of the business, no idea of the link of the strategy, and are perceived as the only expert on climate change, meaning you need to go with this person’s decisions.”

In October last year, Notre Affaire à Tous (NAAT), Oxfam France and Friends of the Earth France put BNP Paribas as an overall body under formal notice to comply with its legal obligations under the French Corporate Duty of Vigilance Law.

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