Wharton@Work

November 2024 | 

Getting to (Net) Zero: The Case for Carbon Offsetting

Getting to (Net) Zero: The Case for Carbon Offsetting

Ignoring climate change isn’t an option for business leaders, regardless of their personal beliefs. The stakes are too high, from environmental damage that upends communities to regulatory risks, financial losses, eroded consumer trust, and even threats to a company's long-term survival. That’s why companies like Unilever, Walmart, and Goldman Sachs have set ambitious but attainable sustainability goals. The Unilever Sustainable Living Plan, for example, commits to halving the company’s environmental footprint by 2030 by lowering greenhouse gas emissions, improving water-use efficiency, and sustainably sourcing all of its agricultural raw materials.

Many organizations seeking to develop sustainability plans and policies often place a substantial emphasis on transportation because it’s a significant source of greenhouse gas emissions (in the U.S., it accounts for almost 30 percent of total emissions). Adopting greener transportation practices can lead to significant cost savings, safer communities, and competitive advantage. But as Megan Ryerson, the UPS Chair of Transportation and professor of City and Regional Planning and Electrical and Systems Engineering at the University of Pennsylvania, notes, the focus must be on creating“the lowest-emission intercity transportation system that we can develop that still meets our goals of being efficient, equitably available, and accessible.”

Ryerson says that as a researcher and graduate school educator, she has heard the pushback on carbon offsetting as a method of addressing emissions. While policy experts and those advocating for more action around climate change call carbon offsetting a “half measure,” Ryerson believes carbon offsetting is a step in the right direction. “The best course of action is to prevent emissions from occurring, rather than emit and have to degenerate the emission. However, I think there's a lot of power in carbon offsetting,” she says. “It serves as a paradigm shift and a first step of getting everyone on board. A carbon-offsetting policy announces that sustainability is a priority. It says ‘This is who we are as an institution and these are the things we value. We're willing to invest our hard-earned profits into this.’”

Another argument in favor of carbon offsetting is that organizations and institutions who adopt these policies create best practices that can be emulated by others. “Good behavior is contagious,” says Ryerson. “Penn has been working with other universities as we continue to develop new strategies and build sustainability into our culture. We’re all learning from one another, just like companies are doing in other industries. And these policies have a clear, achievable goal that people can rally behind. I believe a little bit of positive peer pressure in this case can really change things.”

Companies who adopt net-zero policies also appeal to younger workers who often look closely at their sustainability efforts when choosing where to work. “Climate is such a focus for my graduate students,” says Ryerson. “It's a big cultural shift that has happened across the generations.” Research shows millennials and Gen Z not only expect companies to take meaningful action, but they are more likely to support brands that align with their environmental and ethical values. For them, sustainability is not just a preference — it’s a key factor in their purchasing and employment decisions.

Ryerson cites another powerful reason for adopting net-zero policies now: “We need to start now, as incremental change is preferable to doing nothing until a crisis or new regulations force action. Pragmatic solutions can move the needle and move the conversation, even if they can be a little frustrating too, if you're on a sustainability side.”

In her session in the new Net-Zero Transformation program, a seven-week live online offering that teaches leaders how to set and reach decarbonization goals, Ryerson will discuss designing low-emission travel transportation policies and plans. “We will focus on commuting policies and interactions with local and regional providers (including transit agencies, airports, Amtrak, ride share, and parking operators). Then we’ll move on to aviation and large-scale business travel. I will share my experience as one of the architects of the University of Pennsylvania's carbon-offsetting program for faculty air travel and show participants how they can design their own programs. My message is that you can take meaningful actions while honoring the fact that sometimes corporate travel is a critical part of business.”

For companies that are currently developing, considering, or fine-tuning net-zero transportation policies, she offers three ideas for where to start:

  1. Establish the scope of travel and transportation that your organization wants to take on first. “At the University of Pennsylvania,” says Ryerson, “we have faculty, staff, and student commuters; a tremendous amount of logistics that includes the deliveries needed to make our buildings and research run; and long-distance and air travel for faculty research, for education, and for students coming to and from the University. We have to decide which ones to incorporate into the initial cut at a net-zero program. This involves deciding which scope (scope 1, 2, 3) of emissions we will take on and make a part of our reduction plan.”
  2. Evaluate the landscape of potential strategies and determine which ones to focus on. That could mean providing free or subsidized public transportation for commuting, implementing energy-efficiency programs, or offering remote or hybrid work options, among many other strategies. “One strategy could also be providing information on sustainable choices,” says Ryerson. “I work with Penn’s sustainability office to create more information for new faculty and staff who are relocating to Pennsylvania to highlight the sustainability of different neighborhoods. It’s important to consider that potential strategies are wide-ranging from policy to operations to information.”
  3. Create a suite of strategies that meets your goals, considering which will be most efficient from your business perspective.