The new labeling scheme designed to help companies go carbon neutral

The new labeling scheme designed to help companies go carbon neutral

Climate Neutral label
An example of the Climate Neutral label on a package.

There’s an easy solution for consumers concerned about the environmental damage wrought by pesticides: Buy organic. Things are not so simple for climate-conscious shoppers. They can avoid well-known high-emission products, such as beef. But assessing the climate impact of many other products is impossible without time-consuming research.

A new "Climate Neutral" label aims to change that. Launched in September, the scheme already has attracted buy-in from around 50 companies, including the footwear firm Allbirds and the crowdfunding site Kickstarter. 

To earn the right to display the label, companies to commit to the Climate Neutral mantra of "Measure, reduce, offset, and label."

The process begins with a carbon footprinting exercise developed by Climate Neutral, which the organization says can be completed in "hours, not years." With baseline emissions established, companies then commit to emission reductions strategies, such as switching to renewable power. To balance the emissions that almost always remain after such measures reductions, Climate Neutral helps companies seeking the certification to invest in carbon offsets. With the offsets purchased, a company can claim climate neutral status and label its products accordingly.

The success of the label will be measured in part by the percentage of total U.S. emissions covered by the scheme, said Climate Neutral CEO Austin Whitman. "Our thinking is getting to 2 percent to 2.5 percent of the U.S. footprint by 2021," Whitman told GreenBiz. "That’s on the order of 200 million tons of CO2."

The popularity of organic food suggests that labels can have an impact. Organic crops still occupy a small fraction of U.S. farmland —  less than 1 percent of the total, according to the Pew Research Center — but organic products have seen double-digit growth in recent years. And while food labeled as organic continues to cost more, market research firm Nielsen has found that 41 percent of consumers around the world are willing to pay extra for organic or all-natural products.

In addition to boosting demand, going climate neutral may help companies attract staff and head off employee revolts such as those seen recently at Amazon, where employees from offices in multiple countries recently protested the company’s slow response to the climate crisis. 

"Today, employees ... want to know that they are working for a company or brand that is taking action to address climate change," said Adam Schoenberg, senior director of corporate partnerships at Conservation International. "Those companies that are able to demonstrate a serious long-term commitment to reducing greenhouse gas emissions — and helping their customers and partners do the same — will improve brand loyalty, build investor confidence and further retain employees."

Climate Neutral, which aims to fund itself through grants, donations and a fee charged to the companies that it arranges offsets for, is not the first organization to attempt to use ally purchasing power with corporate pro-climate activities. The inability of other consumer certification schemes to make much of an impact in the United States may be due to the complexity involved in quantifying emissions and choosing which offsets to buy, and one of the Climate Neutral’s selling points to potential partners is that it dramatically simplifies both of these processes.

Calculating a company’s carbon footprint "sounds like a big hairy thing that everyone is scared to embark on unless they know a lot about it," said Charlie Clark, director of impact at drinkware manufacturer Miir, a Climate Neutral partner. "Will we have to hire a team to do it? When we’re just trying to pay people and grow the business?"

Larger companies do indeed often bring on one or more people in order to calculate and reduce emissions, but Climate Neutral aims to help smaller businesses avoid this using a footprinting process that Whitman likens to replacing an accountant with TurboTax. 

To complete the certification process, a company is asked to gather basic information about their operations, such as employee travel miles or the quantity of specific raw materials that they purchased. It then plugs the numbers into Climate Neutral’s model, which uses industry-standard emission data to quickly produce an emissions estimate that Whitman estimates will have an error margin of plus or minus 20 percent. 

"They knocked down the barrier to understanding what footprinting looked like," said Clark, whose company was approached by Climate Neutral just under a year ago. Committing to work with the organization, he adds, "was a quick decision on our part."

Any emissions reduction scheme involving offsets comes with a risk: Companies could buy their way to carbon neutrality without making meaningful changes to their operations. What’s more, the risk is higher when offsets are cheap — as is the case. 

Asked to provide ball-park figures, Whitman estimated a typical company that manufactures physical goods will be responsible for around 500 tons of carbon dioxide for every $1 million it makes in revenue. Climate Neutral focuses on offsets that cost between $6 and $10 per ton of carbon dioxide, meaning such a manufacturing company could offset its entire emissions for $5,000 or less. 

Whitman acknowledges the risk that a company might buy its way to carbon neutrality but notes that timeframes are important. "While companies are working on reduction we’re saying you also need to offset," he said. "It’s both." 

To ensure that reductions are real, Climate Neutral requires all partners to document two emission reductions and to follow reduction recommendations identified by a group of experts convened by Climate Neutral.

Whitman adds that the price of offsets is likely to increase as more companies start buying offsets. As the price rises, companies will need either to pay more, reduce emissions or lose their Climate Neutral status. "If that’s something they have to do every year," he said, "people will start asking what can we do to get [emissions] down."