Salesforce sees an opportunity in the uncertainty of carbon offsets

Salesforce is wading into the wild world of carbon credits.

The software giant will offer a new platform later this month called Net Zero Marketplace to sell credits that support ~90 different conservation and clean energy projects around the globe from developers including Climate Impact Partners, Cloverly, Lune, Pachama, Native, Respira International, and South Pole.

The move comes at a time when demand for carbon credits (aka carbon offsets) is skyrocketing as companies face increasing pressure to reduce their greenhouse-gas emissions. That growth is likely to further accelerate as the “voluntary” part becomes a thing of the past, and governments increasingly put a price on carbon.

The voluntary carbon market totaled $1 billion for the first time last year, according to Ecosystem Marketplace, and could reach $50 billion by 2030, according to estimates from McKinsey.

Improving transparency and quality control in this largely unregulated market remains a significant challenge. Salesforce, with its 150,000+ existing customer relationships to make use of, sees it as a potential business opportunity.

Counting carbon

Carbon credits are controversial for many reasons, including that they can be very difficult to measure and verify. While the idea is that companies can pay for one metric ton of carbon dioxide to be removed or prevented from entering the atmosphere in order to cancel out an equivalent amount of their own emissions, determining whether CO2 projects selling credits are actually achieving that goal has proved challenging.

“The immaturity of the carbon marketplace is what is hindering action,” Patrick Flynn, Salesforce’s global head of sustainability, told the Wall Street Journal. “There’s not a lot of trust, there’s not a lot of transparency. Buyers are afraid of making a mistake. Suppliers can’t connect with enough buyers.”

On its new platform, Salesforce will provide details on how credits can support an organization’s climate action plan, per the WSJ, along with third-party ratings from sources like Calyx, Sylvera, and the nonprofit Verra’s Verified Carbon Units registry.

Salesforce’s Net Zero Marketplace will enter a market with several other established carbon-offset sellers, such as Xpansiv’s CBL Markets and Puro.Earth, which was recently bought by Nasdaq. The company plans to promote the platform to existing customers, like those using the Salesforce Net Zero Cloud application, Flynn told WSJ, and charge buyers a transaction fee of 1.5%.

But even with more information about the projects selling credits, the carbon market is fraught.

There is little transparency into who is buying carbon offsets. Less than a quarter of transactions last year named the buyer, according to analysis by Bloomberg.

The practice also enables companies in North America and Europe—some of the biggest contributors to the climate crisis—to continue emitting while purchasing credits from countries in the global south that have little responsibility for the greenhouse gases in the atmosphere.

Reporting from Bloomberg has revealed, for example, that oil giant BP has been paying well below market rate for carbon credits in Mexico’s poorest regions; avoided deforestation efforts are largely a “nothing-burger” for climate impact; and major companies’ claims that they are carbon-neutral could be based on some shaky math.

Looking ahead…Climate-focused groups like Science Based Targets initiative (SBTi) are pushing for companies to only use permanent carbon-removal methods to reach net-zero emissions goals.