Nonprofits Should Consider the Potential Costs of Reducing Their Climate Impact
The message from COP26 global climate conference couldn’t be clearer: without forceful action the planet is headed on a dangerous and irrecoverable path toward environmental catastrophe. In response, more organizations are making carbon neutrality commitments, including 211 companies that have signed the Amazon-led Climate Pledge.
Achieving carbon neutrality, o is a helpful first step for companies looking to do their part in the fight against climate change. But is it the right course for nonprofits?
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The message from the COP26 global climate conference couldn’t be clearer: Without forceful action, the planet is headed on a dangerous and irrecoverable path toward environmental catastrophe. In response, more organizations are making carbon-neutrality commitments, including 211 companies that have signed the Amazon-led Climate Pledge.
Achieving carbon neutrality, or balancing the release of carbon dioxide into the atmosphere by removing it elsewhere, such as by planting trees, is a helpful first step for companies looking to do their part in the fight against climate change. But is it the right course for nonprofits?
I believe the answer is no. Here’s why: Nonprofits face a more complicated set of trade-offs than private companies to achieve carbon neutrality. Every dollar nonprofits spend on reducing their carbon footprint means less money for programs and services that help millions of people. As the founder of IDinsight’s Giving Green project, which helps donors identify the best climate-change organizations to support, I believe nonprofits shouldn’t hold themselves to the same sustainability standards as corporate America.
Companies decide to go carbon neutral for reasons that typically reflect sound business practices rather than pure altruism. Big emitters, such as airlines, worry that they’ll be shunned by customers. Other companies, most notably big tech, may need to embrace strong carbon-reduction policies to attract and retain employees who are passionate about climate issues.
When an organization decides to become carbon neutral, it generally needs to take the following steps: measure its carbon footprint, reduce direct emissions as much as possible, and purchase carbon offsets to negate remaining emissions.
The first two steps are pretty straightforward, but things get hairy with the final step — and can pose a particular challenge for nonprofits.
The carbon offset market is itself rife with questionable products and hefty overpromises. It’s unlikely that businesses that rely on carbon offsets, such as planting trees or financing wind turbines, are actually removing enough greenhouse gas from the environment to undo or offset their own emissions.
Costs and Benefits
Despite these complicating factors, carbon neutrality can make sense for corporations from a social-welfare perspective. The cost of reducing carbon footprints ultimately falls to shareholders, which means mostly wealthy people will largely cover the price tag for emission-reduction efforts. And those costs could themselves be offset by the image enhancement and subsequent increase in share prices that result from going carbon neutral.
But for nonprofits, the cost-benefit analysis is more complicated. Any dollar spent to become carbon neutral is a dollar that can’t be used to feed the hungry, shelter the homeless, tend to the sick, or support other critical programs. To justify spending any money on offsetting emissions, a nonprofit must believe that those offsets have more social value than the other services it provides. Most nonprofits are unlikely to take such a position. And if they did, the only morally acceptable course would be to advise donors to redirect their grants toward buying carbon offsets.
Nonprofits need to consider that, in their case, a decision to divert funding from programming to carbon offsets would hurt those who can least afford it — the poor and marginalized groups many nonprofits seek to help that could see a reduction in services.
Forgoing carbon neutrality doesn’t mean nonprofits should ignore the climate crisis. There are several other steps they can take to contribute to a healthy climate. This includes embracing simple, low-cost emission reductions such as retrofitting offices to save on heating expenses and replacing travel, especially international flights, with Zoom meetings. Both measures help the environment and save resources in the long run.
When considering such changes, however, nonprofits should recognize that even the process of determining how and where to reduce emissions can itself be costly and time consuming, particularly if a high-priced consultant is brought in to help. Nonprofit managers need to weigh whether the resulting emissions reduction is worth possible budget cuts elsewhere.
In some cases, an organization may instead be able to make logical programming shifts that help fight the climate crisis. For instance, integrating climate work into their larger missions can be a natural step for groups working in developing countries hit hardest by climate change. The international nonprofit BRAC is deploying such a strategy by helping the farmers it supports in Bangladesh switch to salt-tolerant rice cultivation in response to rising sea levels that are threatening traditional rice-cultivation methods.
Developing environmental-justice programs can also make sense for advocacy organizations fighting for social-justice policies in areas such as housing and health. My employer, IDinsight, has itself added a specific climate focus to its mission of using data and evidence to fight poverty in poor countries. We realized we could use similar tools to help philanthropic organizations effectively target their climate-focused giving, which resulted in the launch of the Giving Green project.
Many donors may be tempted to provide grantees with extra funding to go carbon neutral or to even partner with a service provider that can help grantees eliminate or reduce their carbon footprints. But donors should consider their opportunity costs as well. To fight the climate crisis, they should seek to direct funds toward the highest impact activities, which almost certainly are not measuring, reducing, and offsetting the emissions of the nonprofits they support.
Instead, donor dollars will go much further if they invest in systemic efforts to mitigate climate change. Climate activists are badly outspent by polluters such as oil companies. They need far more philanthropic support to move legislation forward and neutralize the efforts of big industry lobbyists.
As the devastating effects of climate change become clearer every day, each of us is searching for ways to do our part. For the nonprofit world, the best approach is likely not to jump on the carbon-neutrality bandwagon but to consider small changes that won’t force them to redirect much-needed funds away from the communities they were established to serve.