The False Promise of Corporate Carbon Neutrality

(Photo by iStock/RichVintage)

Highlighting the gap between real action and tokenism, Patagonia founder Yvon Chouinard’s visionary donation of his company to the climate cause lights the way for other progressive corporations—if they choose to follow. But they probably won’t.

Last year I did some sustainability consulting for a young outdoor company. They opened the conversation by saying they already had a strategy in mind: to pursue a certification called “Climate Neutral,” and as part of that, buy offsets so that they could claim “net-zero” emissions status.

I spent the next hour explaining why I thought that was a terrible idea. For a start, Climate Neutral has certified 300 companies, many of them in the outdoor industry (and they’re just one of many such certifiers). From a brand-differentiation standpoint, this would be reaching up to touch bottom. More to the point, from an environmental perspective, buying offsets—credits for carbon reduction elsewhere—is highly questionable.

Why? Taking tree-planting as just one example: It has proven devilishly hard to demonstrate that the trees you protect will stay alive over the long term, that they weren’t already legally protected but sold as offsets anyway, or that their preservation didn’t ensure that nearby trees would be cut instead. The media is positively exploding with offset takedowns these days, from Bloomberg to Fast Company to John Oliver, who recently spent a whopping 24 minutes brilliantly destroying the concept. Given this growing press storm, there’s obvious brand risk to such a strategy.

Instead, I suggested, why not use the money they would have spent on offsets for something actually impactful, even if it doesn’t allow you to make great claims? Retrofitting all the windows in your office to save energy, for example, or switching company vehicles to electric, as a model for your industry and the world. Then take the remaining time and energy and publish an op-ed in The Wall Street Journal about the need to pass climate legislation in the Senate. You’d be the only CEO in your industry doing that!

I was hopeful, but in the end the company decided to pursue the Climate Neutral certification. They meant well, but doing anything else felt unfamiliar and risky.

The Problem With Neutral

Setting “climate-neutral” goals (“I promise to quit smoking by 2030!”) and then buying offsets to get there has become such the norm in the sustainable business world that if you’re not doing it, you seem corrupt. In fact, it’s just the opposite. “Net-zero” or “climate-neutral” as a concept is so hard to pin down, let alone achieve any version of, that it’s flimflammery by definition.

If you google recent headlines to prove the point, your screen looks like the road to Baghdad, a killing field for the concept: World’s Biggest Companies Accused of Exaggerating Climate Actions. The Truth Behind Corporate Climate Pledges. Companies’ Climate Targets Are in Jeopardy from Flawed Energy Credits.

How did we get to a place where companies make bold climate pledges and then, when they fall behind, they try to cram for the test by buying up dodgy offsets? One reason is that it’s damned hard to cut emissions, which is what we ought to be doing in the first place. My own experience speaks to that: After 20 years of implementing energy efficiency at a hotel my company manages in Aspen, Colorado, I asked the engineer. “Have we missed anything? Is there any big energy savings left?”

“Yes,” the engineer replied, spinning a pencil in his hand. “You could put a door on the garage.” Two decades in, and we hadn’t thought to install a door at the top of a heated garage at 8,000 feet in the Rockies, to keep warm air from escaping. Why? Because energy is so cheap, it didn’t register at the bottom line. (We did finally install that door…)

Carbon neutrality has captured the public’s imagination, in part, because the climate issue is complex, and people don’t understand it well enough to know better. So even though setting goals and buying offsets is like suntanning in the fifties—a supposedly healthy thing that is actually killing us—conventional wisdom rules. And offsets seem to make sense. How could planting trees—or other measures like destroying methane at landfills—not be good? But analysis by the emissions-modeling group Climate Interactive shows that even if we successfully deployed all the possible natural carbon offsets in the world—without cutting emissions—we won’t limit warming below catastrophic levels. (This leads to my only gripe with Patagonia’s approach, which is a disproportionate emphasis on nature-based climate solutions. We need those, but based on the models, job one is stopping emissions.)

The nonprofit community has tried to help improve corporate target-setting through “Science-Based Targets,” which attempt to estimate a company’s “fair share” of global emissions reduction. But never mind that SBTs replace unrealistic targets with even more unrealistic targets; the real problem is that “fair share” doesn’t mean anything in a purely voluntary initiative. Today, a motivated businesses’ fair share is arguably eliminating all the emissions in the world—because almost nobody else cares or acts effectively. That’s what Patagonia’s trying to do.

How Do We Break This Pattern?

Let’s start by asking what businesses really want around “sustainability.” First, they need brand differentiation, which gets them employee attraction and retention, good press, and customer loyalty. But it can also be good for the environment. If a legitimately good company gets recognition for its climate work, then it will outperform others, force them to change, educate consumers, and even put bad actors out of business. So media, branding, and press, if not based on greenwashing, matters environmentally as much as it does financially. But in order to have good press, you have to be different, and that means not following the herd.

Second, in theory, businesses actually do want to solve the climate problem, because warming is proving to be so disruptive to global economies (Google “flood Pakistan Mississippi.”) It must be addressed.

Which brings us back to the only viable solution for business that actually cares and wants to stand out—very publicly wielding power to support policies that drive large-scale change. The recently passed Inflation Reduction Act is the most important piece of climate legislation in history. It not only fires billions of dollars at solutions, but it re-establishes the United States’ leadership, pressuring other nations to act. The bill passed because of pressure from a social movement—citizens, NGOs, climate leaders in the US House and Senate, and elites like Bill Gates.

Conspicuously absent were some of the most powerful entities in the country: big business. In fact, only Walmart, Salesforce, and Constellation energy had spoken out in favor of the bill. (Microsoft joined at the end.) Some businesses protest that they work “behind the scenes.” If that’s true, it’s not nearly as valuable as public advocacy. A huge part of what will be required to solve climate change will be a change in social norms—starting with the norm that it’s taboo to speak about climate policy.

This strategy—wielding corporate power for systemic change—grows dimensions the more one thinks about it. Business can weaponize customers in the fight (as Patagonia has long done). They can pressure trade groups that exhibit abusive relationships, as the Chamber of Commerce does when they take climate-regressive positions counter to member goals. They can spend lobbying dollars on climate instead of trade. And then, rather than buying offsets, they can use the money to do hard things that actually cut emissions, model solutions, and develop community expertise. That means things like converting an office building from natural gas to electric heat, or building worker housing near mass transit. It’s wide-open running for wannabe climate leaders. They just have to run. 

Winston Churchill famously quipped: “You can always count on Americans to do the right thing ... after they've tried everything else.” Climate neutrality, carbon targets, and offsets neatly summarize “everything else.” Perhaps now it’s time to do the right thing.

Read more stories by Auden Schendler.