Circular Economy

Should Externalities Be Billed to the Customer?

As I was getting ready for my recent move from Los Angeles to San Francisco, I was looking for the best moving options available. Should I tow my belongings behind my car? Rent a truck and tow my car? Hire a moving company to do all the work for me? That is when I noticed U-Haul’s Environmental Protection Fee — an additional $5 charge for renting one of their trucks.

By Tamay Kiper | Published 10 years ago | About a 4 minute read

On its website, U-Haul describes how the company has provided an economical, sustainable and environmentally friendly means of moving for families. The company understanding is that a family moves an average of every five years; sharing the cost of a U-Haul truck with other moving families, instead of every family purchasing its own truck, results in not only a more economical move, but also a more environmentally friendly move. Furthermore, according to U-Haul’s study, every truck placed in a local community helps keep 19 personally owned, large-capacity vehicles — such as pickup trucks, SUVs and vans — off the road. Overall, U-Haul’s truck fleet helps reduce hundreds of thousands of tons of greenhouse gas (GHG) emissions annually, according to the company.

So far, this is great — I agree that truck-sharing is a brilliant idea and is in fact more sustainable. But as I kept reading, the last paragraph revealed the logic behind the $5 fee:

“While truck sharing reduces the need for additional vehicles on the road and therefore reduces carbon dioxide emissions, U-Haul is committed to pursuing practices that support and foster the development of sustainable and environmentally friendly business operations. The Customer money collected as an environmental fee is expended to reduce the negative impact of our business on future generations. Aerodynamic fuel-saving truck skirts, the fuel economy gauge, storage re-use centers, environmentally friendly truck wash soap, are examples of where these funds go.”

It is great that U-Haul prioritizes sustainability and thinks about future generations, but why should customers have to pay an additional fee to help the company reduce the negative impact of its business? Shouldn’t it be factored into their prices already? Why am I paying for “environmentally friendly truck wash soap” for U-Haul?

If U-Haul wants to tout its sustainability practices, it might want to consider finding ways to embed this fee into its existing prices and better communicate the sustainability aspect with customers in order to attract new ones. Existing customers who are already in the process of renting a truck might stop to think before choosing U-Haul when they see the Environmental Fee.

Another example is United Airlines’ “Carbon Offset Program,” which is an opportunity for travelers to purchase carbon offsets aimed at reducing the environmental impact (similar to a program instituted by Norwegian Cruise Line in 2011) associated with their air travel. The carbon offsets are provided through United Airlines’ partnership with Sustainable Travel International (STI) and allows customers to support projects designed to help reduce GHGs and provide social and economic benefits to some of the communities that United serves. After travelers calculate the carbon footprint of their travel, they have the option to donate to one of several high-impact carbon-reduction projects offered by STI. The contribution will be invested in the designated project through the purchase of carbon offsets, or units representing a certain amount of reduction in GHGs, and it can be made in the form of money or miles.

This is another good initiative to help customers become more aware of their personal choices and their own carbon footprint. But I don’t see what exactly United Airlines is doing to reduce their impact besides giving me an opportunity to donate my hard-earned money. I support projects that are helping the environment; I’m already doing many things to reduce my own carbon footprint. If I need to fly to another city, I would like to choose the most sustainable option, not pay extra to offset my carbon footprint. In my opinion, airlines should be doing their part to reduce their customers’ carbon footprint by providing more sustainable options, such as using biofuels (as have some of United’s more proactive competitors) or more efficient planes. In U-Haul’s case, providing trucks run on biodiesel, or giving an option to select an electric or hybrid truck is much more sustainable than asking $5 from customers for “environmentally friendly truck wash soap.”

In times like these when more and more customers are looking for more sustainable products and services, businesses should be willing to change their long-existing processes and products in an effort to move towards providing these options. Companies shouldn’t rely on doing ‘less bad’ and charging customers for sustainability improvements for much longer. Today’s conscious consumers are looking for companies willing to go the extra mile (and not charge them to offset the impact) and back their words up with action, in their efforts to truly become more sustainable.