Shopify's Carbon Con
Is Shopify making a profit from its sustainability fund?
Given the state of the world, it’s unsurprising that climate change is now a for-profit industry. Opportunists extoll the virtues of planet-saving schemes, cashing in on the climate conscious with promises of carbon neutrality. One popular method is by offering up carbon credits for people to buy, which supposedly offsets their carbon footprint. One way of collecting these credits is through carbon farming.
Carbon farming is a by-product of regenerative agriculture. Despite being a native practice of many cultures for hundreds, if not thousands, of years, regenerative agriculture has only just been “discovered” in the west. Made up of practices that enrich soil rather than deplete it, it is touted as a solution to climate change, with some people claiming it can reduce up to 10% of the world’s emissions. Scientists don’t yet agree, but it’s too late. The public bought in by buying up credits—and companies are making a fortune.
First you’ve got the bright sparks who created this lucrative industry by positioning themselves as carbon brokers. They claim to buy tonnes of “sequestered carbon” and then sell those tonnes as credits onto companies—and consumers—who wish to offset their carbon emissions.
They buy the carbon tonnes from farmers using regenerative agriculture techniques, which they claim turns farmlands into carbon sinks. Some farmers are making a fortune. In 2019, one Maryland farmer was paid $115,000 for just over 8000 tonnes of carbon stored in his soil by Seattle-based company, Nori. Now, President Biden wants to set up a “carbon bank” to incentivise carbon farming—despite the scientific community warning it may not mitigate climate change in any meaningful way.
Carbon credits do nothing to tackle the reality of climate change, but people all over the world are fawning over the idea that they can pay their way to guilt-free flights. Perhaps this is why it’s become so popular, as it enables us all to continue our way of life without changing a thing. This is particularly true among billion dollar companies, who find ways to partake in such schemes for the environmental credit without paying a dime out of their own pocket.
Take Shopify, a $117 billion company that has made a show of pledging an annual $5 million sustainability fund. $1 million of this goes directly to carbon farmers through companies like Nori (which refuses to spend thousands on traditional soil testing, preferring instead to rely on third-party audits and a computer model that estimates GHG emissions).
Such eco-practices are necessary in the age of climate-considerate consumers, but a closer look at Shopify’s policies raises questions about whether they’re even paying for their own sustainability fund. On the Shopify help centre, Shopify asks their users (merchants) to opt-in for their carbon offsetting scheme. By paying a mere $0.005 per shipment merchants can offset their emissions. That doesn’t seem like much until we calculate how many shipments Shopify processes.
Shopify shipped 1.1 billion packages in 2019 alone. Offsetting the emissions of each shipment would cost the merchants $5.5 million. This covers Shopify’s entire sustainability fund, leaving them with a profit of $500,000. Of course, it’s fair to assume most merchants do not choose to offset their emissions (it was impossible to find a number on exactly how many do), but just 20% of merchants in 2019 paying the offset charges would more than cover the $1 million carbon sequestration budget. Combine this with the fact that Shopify’s 2020 sales were up 76% on 2019, totalling $5.1 billion, and that percentage shrinks dramatically.
Could it be that Shopify is offsetting its very own offset costs onto merchants despite, according to its latest financial report, having “$6.2 billion in cash, cash equivalents and marketable securities”?
Who funds the fund?
This is just another example of giants of industry placing the onus on the little man to save the planet. Shopify could make a nation-sized donation to the fight against climate change. But why bother when investing in greenwashing has such a high return?
We can all agree regenerative farming leads to healthier crops, healthier soil, more food, reduced water usage, increased biodiversity, and more produce. We can also agree carbon farming is not the solution to climate change.
There is no one solution. However, a good start would be holding accountable the companies making profit from the greatest crises our species has ever faced—and their partners in crime who ask the public to take responsibility for their miserly “sustainability fund” whilst making billions from packages travelling one trillion kilometres around the world.
For more detailed information on the incredible practices of regenerative agriculture listen to Episode 7 of Platform Enterprise where I interview Andres Jara on the regenerative techniques employed on the Stadsgroenteboer farm which allow him and his colleagues to grow over 70 different types of vegetables on a mere 4km2.
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