SMEs under pressure to measure, reduce harmful gases

Greenhouse gas emissions are of great concern as they contribute to changes in climatic conditions


What you need to know:

  • The trees they are planting today are part of MGI Worldwide's carbon credit project.
  • According to the World Bank, a carbon credit is a tradable certificate that represents GHG emission avoidance or removal of one tonne of carbon dioxide equivalent from the atmosphere.

“There seems to be a symbiotic relationship between the planes buzzing above Bomas of Kenya in Nairobi and the trees we are growing,” Felix Kimoli, the managing partner of MGI Alekim LLP Certified Public Accountants, tells me.

MGI is a mid-sized accounting firm affiliated with MGI Worldwide, an international network of accounting, legal, and consulting entities with members spread over 101 countries. That affiliation has come at a premium: They must be carbon neutral. This explains why they are braving the chilly Saturday morning soiling their hands as they exuberantly plant seedlings at a half-acre land at Bomas.

"Do you know that Bomas is a flight path for Wilson and Jomo Kenyatta International Airport?" Mr Kimoli asks me. I frankly admit I am hearing it for the first time.

But I know that the big birds are propelled into the skies by burning fossil fuel, specifically jet fuel. When these fossil fuels are burnt, they produce greenhouse gases (GHG) such as carbon dioxide. Scientists say GHGs, or carbon gases, are responsible for heating up the world and causing all kinds of natural disasters, from droughts to floods.

But for the last three years, Kimoli and his staff have endeavoured not to be caught on the polluters' side by planting trees once a year during Earth Day. Trees and forests, scientists say, are good at capturing and storing carbon.

Every year, whenever Kimoli joined other MGI affiliates for their annual conferences, he was bombarded with tough questions, most of which he didn't have answers for.

"I would complete a questionnaire detailing how I got to the airport and from the airport to the conference venue," says Kimoli.

The GHG emissions might be direct from the operations of MGI Alekim such as heating using diesel generators, or indirectly when its management flies in planes powered by burning fossil fuels.

So, tree planting is not only aimed at protecting the environment, but the accounting firm is also trying to offset the carbon gases that they emit, either directly or indirectly.

MGI Alekim is just one of the many small and mid-sized firms, including those in the service sector that do not have a massive carbon footprint, that have been forced by their global body to account for the greenhouse gas emissions they produce, including those from the taxis and aeroplanes they use while travelling.

The trees they are planting today are part of MGI Worldwide's carbon credit project. According to the World Bank, a carbon credit is a tradable certificate that represents GHG emission avoidance or removal of one tonne of carbon dioxide equivalent from the atmosphere.

Last week, the World Bank published a carbon market guidebook for Kenyan enterprises, including medium enterprises such as MGI Alekim. For the last eight months, Sarah Njoroge, a principal at Intellecap Advisory Services, has been helping entities, including medium enterprises, to measure their carbon footprint.

After entities have quantified their emissions, they are expected to set their decarbonisation targets, which they can reduce through operational efficiency such as increasing energy efficiency in their processes. However, most organisations cannot attain their decarbonisation or net zero targets by optimising their operations.

"They then have the opportunity to explore the carbon markets regarding offsets. They could do it by setting up their own projects, and the carbon credits that are generated could go towards offsetting their own footprints," said Ms Njoroge.

"But they could also produce more than they need, which could then be traded in carbon markets," she added. A carbon market means that MGI can sell carbon credits to other companies that need to offset their emissions.

According to the World Bank, carbon markets are not only crucial for enterprises' climate action, but are also a source of non-debt, results-based financing that does not require collateral. It has since developed a guidebook to help organisations conceptualise, finance, develop, verify and sell carbon credits.

The carbon credit trading, whose legal framework was only created last year, has not picked up. Nonetheless, a World Bank report shows that in 2022, Kenya was the second largest issuer of the voluntary carbon market (VCM).

Since 2011, over 59 metric tonnes of carbon credits have been issued, a large chunk of them through VCM. Most are nature-based projects like MGI's- forestry and land use projects.

The goal is to have a net zero effect where as much GHG gases being emitted are also being removed from the atmosphere. This means that the project has to actually be working- the trees removing GHG from the atmosphere.

This means that Kimoli and his team have to be vigilant.

"At first, we were not very serious. So when the people from the MGI came and told me they wanted to see the project, we found a few trees. I was really embarrassed," says Kimoli. These carbon credit projects have to be verified to pass the test.

But now, Kimoli believes he has the momentum towards a net zero target. Later this year, he will travel to South Africa and Italy for two MGI conferences. But this time, he will not be under immense pressure as he was three years ago.