Offsets today are neither a good deal nor a good value. And that’s a big problem.

May 18, 2018

I was recently told by a Wall Street Bank that the best way to fight climate change is to make carbon offsets commercially viable. That is, make the type of offset that companies and people will willingly buy because they are either a good deal or a good value.

Offsets today are neither a good deal nor a good value. And that’s a big problem.

With this on my mind, I started looking online for companies that buy offsets strategically. Carlson Rezidor Hotel Group (now the Radisson Collection) doesn’t buy offsets for CSR or compliance. Instead they use offsets like loyalty points. Carlson Rezidor Hotels use offsets like a service; offering their loyal customers choices they already want to make such as hosting a carbon neutral conference, trip, or meeting. Within 8 months of introducing offsets to their loyalty program, Carlson Rezidor Hotel’s loyalty club members used more than 700,000 Gold Points to offset their travel and meetings. Their loyalty club members made the program so successful that Carlson Rezidor Hotels expanded the program twice, doubling down on loyalty-based sustainability by launching a successor program with Radisson Blu hotels in 2017.  

The lesson seemed obvious: Offsets are not a product to buy and use. They are services that your customers want you to provide. They help you stand apart from your competition, and more importantly, offsets help your customers do the things they already want to do.

Which got me to the question of whether airlines could adopt offsets in the same manner. After all, airlines and flier’s both share the emission created by flying, more than 50% of airline customers in the U.S. will be Millennial or younger by 2020, and millions of us already buy airline tickets so regularly that its as simple as ordering our favorite Starbucks.

Right now, if you want to fly carbon neutral, you can either buy offsets yourself (good luck) or buy them from the airline (nope!). Both of these options are bad because they make the customer pay for their emission, which seems a lot like a guilt tax to me. Instead, like Carlson Rezidor Hotels, I think airlines should give carbon neutral flights to loyal customers and those opting to buy upgrades. So to find out if we were right, we asked vendors, exhibitors, and visitors of the spring Furniture Market in High Point NC if they would purchase a seat upgrade if that seat upgrade made the flight carbon neutral for them.

At no additional cost, either. I wanted to see if removing the cost to offset a flight would encourage fliers to make more of their flights carbon neutral. The airline could cover the cost of offsetting the upgraded flight using money from that seat upgrade. We purposely did not go into the science of climate change or what an offset was because we wanted to test the idea of carbon neutrality first.

Here’s what the results told us: Just less than 54.3% of all respondents told us they did not buy seat upgrades regularly. We then asked them if buying a seat upgrade that made their flight carbon neutral at no additional cost would change their minds. 31.6% told us they would change their behavior and buy an upgrade if doing so made their flight carbon neutral AT NO ADDITIONAL COST to them. Another 21% of the “we don’t buy upgrades today” group told us “Maybe, depending on the cost of the upgrade itself”. Those results astonished me. They shouldn’t have, I suppose in hindsight based on the success of Carlson Rezidor Hotel’s offset loyalty program over the past 10 years.

But I want to say that one more time: The data suggests that providing carbon neutral flights strategically to customers at no additional cost could sell 38% more seat upgrades.

How much would this cost the airline? 2% of the upgrade will make a domestic flight in the US carbon neutral. That’s about $0.89 on a $50 seat upgrade for a one way flight between ATL and LGA based on Delta Air Lines carbon calculator.

Why hasn’t this been done before? My guess is that sustainability in the US isn’t viewed as a profit center yet. Companies making a sustainable choice today accept the fact that doing so comes with a cost and generates only soft benefits that can’t be felt today or directly.

What happens if sustainability becomes profitable for companies? I think profitable sustainability increases investment in sustainability. That’s a good thing. More investment produces more offsets and funds more green infrastructure programs. Directing that investment into the communities where these companies operate helps the communities that so desperately need protection against climate change.

Does this reduce the ethical value of being sustainable? We should be making The Right Choice regardless of the revenue potential! I agree. We should be making the right choice. But we don’t. Ethics produces lines in the sand and lawsuits. It does not make sustainable choices commercially viable. If we truly want to make a difference for our families and our communities, for our climate, then we need to use the market to make sustainability something people will want to buy.

Make sustainability easy, transparent, shared, and local.