Sustainability of Sustainability Initiatives

In order to make #sustainability initiatives #sustainable, we must make sure that the money spent on #carbonremoval or #carbonreduction does not sit under expenses in the business's P&L. If it becomes #compliance, compliances are always difficult and businesses will evade or the cost will have to be borne ultimately by the consumer, as the cost will eventually be reflected in the final price of the product.

This can be avoided if units of carbon removal or reduction are made to sit in the #longterm#assets portion of the balance sheet.

Before designing any solution to reverse or mitigate climate change, we must be clear about the #objective of businesses (currently the onus is completely on the businesses with billions of tonnes to remove or reduce): Businesses want to reach #netzero as quickly as possible by reducing what can be reduced at the source and removing the rest directly from the atmosphere. The whole objective is to nullify whatever they currently are, and have been emitting.

But this is a huge cost.

What should be important for businesses is only the "Unit of Carbon Reduction or Removal"; the "unit" is important because it is what nullifies or balances the emissions and nothing else. The businesses, thus, should try to see that they pay only for the Units. Thus, Spending on emission-reducing technological assets will not give them any joy - this should not be the price they will pay for having the technology to reduce their emissions - it will be heavy for them and the initiatives will not be sustainable as the business must also continue to thrive. The initiatives cannot be taken at the cost of the business, right?

For. e.g. A company buys a number of EVs, they are depreciating assets - after a few years, they will add no value to the company, and will not add to the net worth. It will be of great help if some company, preferably a #startup, is able to offer EV #services to this company and the company pays only against the number of tonnes of CO2 it is able to reduce. The same will be the case if some startup provides CCUS services to Cement, Steel, and Power companies and charge only for the CO2 reduction. In other words, these companies buy "Carbon Reduction Units" from these service providers and place them in the asset portion of their balance sheet.

I am just brainstorming. I don't know how far this will be possible.

Summarily, to make sustainability initiatives sustainable:

- Every tonne (unit)of CO2 removed or reduced, whether technologically or using natural solutions, should be treated as an asset, at least a non-depreciating asset, if not an appreciating asset.

- Businesses should not spend on capital assets for reducing emissions at the source but outsource and pay only for the tonnes of CO2 reduced at the source.

- Each unit of CO2 reduced or removed should be transferrable.

- A business having more units of reduction or removal or both should be valued higher.

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