Two innovative new offerings provide forward-thinking companies an engaging way to not only compensate for their product emissions, but to engage with their customers around climate action in a new way.
Our economic system is fraught with externalities. The production of goods and services comes at the expense of the natural environment and to communities, yet they are not taken into account in today’s marketplace.
The climate crisis has helped make people aware of this discrepancy. Today, more and more consumers are concerned about the impact of their consumption of goods and services, and it’s motivating them to seek out options that address these shortfalls. The good news is, some companies are taking action to make it easier.
According to Shelton Group, 63 percent of US consumers say that a company’s environmental performance impacts their purchasing choices; and 25 percent can name a brand they have purchased from because of the company’s environmental record. According to Forbes, 88 percent of consumers want brands to help them live sustainably. Now that we have a US administration making climate change a top priority and businesses committing to ambitious net-zero goals, the moment is right for companies to respond to this momentum.
Consumers have more power than they realize. Their purchasing decisions and ability to influence one another can directly impact the fate of most companies and our environment. Should they choose to, businesses can address those concerns directly through their products, their operations, their physical infrastructure and supply chain — and by committing to climate-supporting actions.
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Beyond product design and innovation, new options have emerged that allow both businesses and shoppers to support climate action at either end of retail transactions — known as Climate Neutral Checkout and Climate Neutral Products.
Climate Neutral Checkout
Concerned consumers may want to offset their own impact when purchasing a product for which there is no climate-neutral option. Similarly, a company may prefer to pass the cost of climate neutrality on to customers. That's where Climate Neutral Checkout comes in — it allows consumers to "make every purchase a climate action."
A Climate Neutral Checkout process has several components. First, the retailer needs to access data on the carbon footprint of every item it sells. This information is presented to the consumer at the time of checkout, with an option to offset that footprint. Next, the retailer provides a set of verified carbon-offset projects to which funds can be directed to effectively offset the impact of the purchased product. Both the retailer and the consumer will, of course, want assurance that the diverted dollars are getting to where they need to go and having the desired effect.
One example is houseof, a UK lighting company, which was born out of a desire to end “throw-away” culture. Co-founder Helen White remarked, “houseof has purpose at the core of its product design and brand values — we wanted to ensure purpose ran through all areas of our business, and decided to take climate action by offering a climate-neutral checkout for our customers.”
Besides taking the usual steps to make its products as sustainable as possible, houseof takes its sense of purpose a step further at the point of sale: “We saw an increasing demand from customers looking for higher standards of sustainability in the products they buy for their home,” White said. “To empower our customers to take climate action, we worked with South Pole to measure the carbon footprint of all our lighting products, including their future usage. Our customers are now given the opportunity to offset the usage emissions of the product they buy — calculated by the corresponding tCO2e at checkout.”
In Switzerland, research found that one in three people want to understand the CO2 emissions of their own online purchases and offset them directly at point of purchase. Young people under the age of 30, in particular, are more conscious consumers. Swiss online market leader Digitec Galaxus recognized this interest and took it as a mandate to inform consumers, create transparency around its products, and offer the possibility of combining online shopping with a contribution to climate-protection projects.
Digitec Galaxus sought a solution that would inform customers and prompt them to think more critically about their shopping choices. “Our goal was to give customers the opportunity to compensate for their online purchases,” says CEO Florian Teuteberg. Data transparency was the top priority.
Climate Neutral Checkout therefore provides the customer with the choice to make his or her purchase a climate neutral one, and it also gives retailers an opportunity to distinguish themselves. Of course, not every product being sold by retailers will have this option available, but those that can will be indicated during checkout. While this is a new opportunity, we expect to see it catching on among shoppers, particularly among those who want to do all they can to reduce their own personal impact, and who recognize the key role that their purchases play in determining our collective climate future.
Climate Neutral Products
Some companies prefer to take the offsetting responsibility out of the hands of customers and make their products climate neutral to begin with. There are a small but growing number of climate-neutral and even carbon-negative products coming to market. Most of these focus on the impact of raw materials needed to make goods, by incorporating a high proportion of sustainably harvested bio-based materials. Such products go through rigorous certification protocols to determine the validity of their efforts. In particularly innovative cases, they may be made from carbon pulled directly from the atmosphere.
But the vast majority of producers do not yet have the ability to produce their products in a climate-neutral way, or they are not able to put enough climate-neutral content into their products to offset the product’s overall carbon footprint.
These companies can offer customers a different path to climate neutrality by building it into the price of goods. This is done through a multi-step process: First, the full carbon footprint of the product is calculated by means of a life-cycle assessment that examines all inputs and outputs. Next, opportunities to reduce the carbon footprint are identified by analyzing the current or future product's design, manufacturing process, materials, supply chain and transportation strategy. Using these tools to refine the offering, the product footprint is assessed; and any remaining gaps can be addressed by supporting quality carbon-reduction projects outside the company through offsets, which are then built into the price at point of sale.
According to Bram Veenhof, Director of Climate Neutral Applications at South Pole: “This provides a path for manufacturers to bring a product to market that can be considered climate neutral. Companies then have a formula that they can periodically revisit as new developments enable increasingly smaller footprints in the product or its supply chain. The end result is a product that, if it meets a set of rigorous standards, can be certified as climate neutral.
Either of these two approaches offers companies an engaging way to not only compensate for their product emissions but to engage with customers in a new way.