“Sustainability is one of the main pillars in our business model. We position ourselves as a premium project.” – Alina Genes on Green Tech’s Gold Standard certified voluntary carbon credits

Green Group, established in 2002 and headquartered in Romania, is an integrated group of companies which today offers a multitude of closed loop solutions for collection, logistic, recycling and re-manufacturing of waste. The company operates waste collection and recycling facilities in Romania, Slovakia, and Lithuania. Circular economy is in the DNA of the entire group, focusing on transforming waste into resources. The group’s activity is based on three principles of circular economy: fighting waste and environment pollution, keeping products and materials in use, and reducing carbon emissions.

Green Tech, part of Green Group, is the first company in Europe which obtained the prestigious Gold Standard certified CO₂ credits relating to their PET recycling activity, which significantly reduces greenhouse gas emissions.

Alina Genes is the Head of Green Group’s PET recycling division and also the CEO of Green Tech and Green Fiber.

What is Green Group doing, what is its history and what are the main business lines?

Green Group is one of the biggest players in Europe in terms of waste recycling and an important enabler of circular economy solutions for other businesses in the region. The group employs an integrated recycling business model, processing all major types of waste, such as PET, electronics, lamps, batteries, glass and industrial waste while also providing specialized environmental services to an array of industries.

Green Group’s story began two decades ago, in 2002, when we took on the challenge to solve what was then a pressing issue: tons of abandoned waste in Romania were piling up, posing a severe environmental damage. At the same time, Europe was the biggest consumer of recycled raw materials, mainly produced in Asia, so we jumped at the opportunity to locally develop an integrated business model of processing waste into secondary raw materials. Our first business unit was PET recycling and this gradually developed into the electronics waste recycling division, glass recycling unit, as well as other environmental services. Today, Green Group has the overall capacity to recycle 400 thousand tons of waste per year, reducing annually 100.000 tons of CO₂.

The PET recycling division, comprising Green Tech and Green Fiber, annually processes 150 thousand tons of waste per year, which means 2 billion PET bottles are transformed into resources each year in our factories. Green Tech processes PET waste into flakes and produces rPET for the packaging industry and PET straps, while Green Fiber is responsible for the production of polyester staple fibers out of 100% recycled PET that can be used in various applications, for example, in automotive and hygiene industries. The PET recycling business is active in Romania, Slovakia, and Lithuania.

What is your sustainability approach?

We consider ourselves to be well positioned for sustainability, especially in Eastern Europe, because we only handle recycled materials and we do not work with any virgin inputs, setting our business apart from our competitors. Our business model and mission to transform waste into resources for other industries is at the heart of the circular economy movement that is now gaining momentum since it plays an essential role in fighting plastic pollution, reducing carbon emissions and slowing down climate change while saving natural resources. This strategic business decision gave us a competitive advantage, since, in a way, we were already more sustainable compared to similar companies ever since the foundation of our business. And now, we are proud to be at the core of the sustainability movement, providing a gateway towards the circular economy for other industries.

Sustainability is one of the main pillars in our business relations as well, because we could only grow by convincing our clients to use more recycled materials instead of virgin input, which was cheaper, so we assumed the market education role implicitly.

Fortunately, over the years, our clients understood that using recycled materials is a win-win situation for them.

By 2019-2020, recycled materials became a separate stream and were no longer replaceable for our customers with non-recycled materials.

By this time, they were using such materials mainly for CSR purposes even if there were no legal incentives.

And do you apply sustainability principles in your own operations as well?

Of course, sustainability has always been important in our own operations as well. This is partly because we have been owned by private equity for a long time and the focus on sustainability was seen as risk mitigation.

Since 2016, the company has been owned by the Central European private equity investor Abris Capital Partners, and ESG has become a strategic pillar of the business. Recently, Abris has made responsible investing a central organizational focus and earlier this year, Abris launched ESG Universe 2023 strategy – a comprehensive program of environmental, social and governance initiatives that commits the firm to achieving a carbon neutral portfolio by 2025. Essentially, every decision in the company is submitted to be evaluated according to ESG standards. Thus, sustainability is deeply embedded in our organizational culture and is not only about making reports or part of a box ticking exercise.

You received Gold Standard carbon credits based on the emission savings you achieve with PET recycling. Where did the idea come from to obtain such voluntary carbon credits?

In the beginning, we kept an eye on the voluntary carbon credits market that was already well established in Asia. Since we knew PET recycling was saving CO₂ emissions, we initiated a discussion with a consultant to see if PET recycling could be considered for such a project.

As we were the first recycling company in Europe to work with Gold Standard, the main challenge we had to face was that there were no similar initiatives and this meant no recycling methodologies were implemented anywhere in practice.

Finally, Gold Standard agreed on using the methodology of the UN’s Clean Development Mechanism developed for plastic recycling. Even so, the process of adjusting our project to this methodology took several years. Today, with the help of Gold Standard, we are now the first recycling company in Europe to sell carbon credits on the voluntary market.

What was the process for becoming officially certified by Gold Standard?

After finding the proper methodology, another long period of time was spent fixing the issue of avoiding double counting. Basically, we had to prove that the savings achieved with our project were not included in other schemes that were awarded with EU certificates.

The challenge is that the EU has issued numerous certificates schemes for CO₂ emission savings across several countries which authorized companies exceeding the allowed emissions quota to purchase certificates from companies with a proven record of saving CO₂ emissions. There was also the mandatory market that was issuing such certificates. And you must provide an enormous amount of paperwork to justify that there are no infringements and that your certificates are in no way sold in other schemes. Thankfully, we found the necessary solutions along the way.

Once we completed this process, we finally started the official application process in 2017 where the project was audited by a third party. After the audit, we received the first trench of certificates at end of 2019. Therefore, we received the formal approval from Gold Standard and the right to issue certificates ten years after starting the project.

Congratulations! Ten years sounds like a long time. Regarding the certification process, can it be shorter in your opinion?

I think it could be done in 2-3 years with our current knowledge. However, the vetting process still remains very rigorous and it takes time to consider all requirements to prove that there is no double counting and to undertake the necessary public consultations. Also, you need to take time to find the appropriate consultant to help the company agree on the correct methodology and calculate the carbon footprint.

Also, Gold Standard recently amended the certification process. Alongside tracking and reporting the CO₂ savings, the company must now report on its alignment with the UN sustainable development goals, so this makes the reporting more in depth and time consuming. But in the end, you have a completely clear picture of the true impact of the CO₂ reduction involved in the project and I think this greatly enhances its credibility and makes our accreditation more appealing to our clients.

How many credits did Gold Standard issue for your PET recycling activity? What is the formula for calculation?

The formula is very simple: we can get certificates in an amount that is equal with the saving of CO₂ emissions throughout our production process.

Our savings amount to approximatively 0.95 tons of CO₂ per ton of plastic recycled, and 1 ton of CO₂ saved equals 1 carbon credit.

This means we receive around 50 thousand tons of CO₂ credits per year.

We have received the first trench of certificates for our activity in 2018 which amounted to one year and a half of CO₂ savings, meaning 62 thousand certificates issued.

How do you see the voluntary carbon credit market, the main challenges and what makes your carbon credits different?

We position ourselves as a premium project, positioning our credits in the high-end price region. Still, somehow, we managed to outsell almost all the credits issued so far.

In our view, this is because there are customers, especially in Europe, who are willing to pay the higher price because they know these credits are coming from a well-deployed and transparent process, not from greenwashing.

There is a big controversy that still stands out on the market: do voluntary credits lead to greenwashing or not?

In summary, greenwashing is when a company buys certificates to offset its carbon footprint, but chooses to purchase them at a very low price, from projects that are not thoroughly audited and do not lead to genuine reductions in greenhouse gas emissions. Offsetting – even if only used as the last choice – should be a valid alternative to direct emissions reduction which can be technically impossible in certain sectors still dependent on fossil fuels. Thus, if the offsetting is done in a credible and transparent way, it actually creates a mechanism where projects with genuine CO₂ reductions are encouraged to grow. And we take great pride in being such a project. Even though the vetting process and the auditing was complex and time consuming, in the end, it shows our business has credibility and real sustainability.

For example, we know that it is much easier to develop a similar project in Africa and Asia, mainly due to the regulatory rules that are less strict there compared to the EU regulations. These conditions make the investment and operational costs far cheaper: credits can be purchased even for 5 eurocents!

Unfortunately, we sometimes see an incomplete communication and approach in the field of carbon offsetting.

It sounds appealing to become neutral by compensating CO₂ emissions at a rate of 5 eurocents per ton. But, in our opinion, this is not the right price for saving the environment.

Not even 5 euro is a good price. In reality, it probably costs even more than the price of our credits, considering the complexity behind this purpose.

Is creating voluntary CO₂ credits profitable?

To put this into perspective, our revenue from the credits per tons of our PET product is around 1%.

But there is so much more to it than purely a financial gain. We want to set an example for recycling companies saving CO₂ emissions and show that we play an important part in slowing down the process of climate change. Also, we are passionate about raising awareness of the responsibility we all have towards protecting our environment. Each company or person that buys carbon certificates sets an example for each other to follow and this could lead to a global movement towards reducing emissions.

How do you sell the credits and who are your customers?

We target our credits to responsible customers who understand they have to minimize the impact of their CO₂ emissions if they are active in a European market; for example, some of their ships could operate on the Danube River. On the other hand, they also understand that they should do the offsetting with projects that do not create other problems such as social issues or harm to communities involved. And for Green Group, the welfare of the local community is a priority. Not only do we implement CSR projects in the areas connected with our operations, we also promote the circular economy and strive to set an example in this matter, with an emphasis on educating the younger generations.

We are also selling a significant amount on the marketplace of Gold Standard. There are individual buyers, mainly from Switzerland and Germany, who want to do something for the environment and are buying our certificates.

The second layer of our strategy is working with traders as well. Some of them have clients in their portfolio who are willing to pay the higher price for a good quality certificate. As far as we know these are medium-sized companies, for example from logistics or retail sectors.

The third stream is via direct transactions. These are medium size companies too, who want to tell their customers that the offsetting is done through Green Group, because we enjoy good credibility throughout the European business community & a stellar reputation on the carbon offset market.

This market is also rapidly growing in front of our eyes. There is now a major trend and big companies are starting to understand that they have to complete the offsetting in the correct way.

Based on your experiences, would you recommend this certification to others?

From our point of view, being one of the main recyclers in Europe and a leader in sustainability, we think it is a very good project and we completely recommend it.

However, we underline one more time that financial goals are not the only elements to be considered. For a regular business focusing on profit only, the described process can be discouraging. However, if you focus on long-term sustainability and the shift of business processes to a more ESG-oriented approach, then the certification process is hugely worthwhile.

Nevertheless, I think that we should create more voluntary credits in Europe. There are companies which really save CO₂ emissions and I hope more of these businesses will choose to undertake similar projects in the future. Lastly, we are just happy that we could set an example for others in the recycling industry to follow.