We need to talk about carbonSeptember 12, 2019
Shopify commits a minimum of $5M annually to fight for the environment with Shopify's Sustainability Fund
A letter from Shopify CEO Tobi Lütke
As Shopify prepared to go public in 2015, I wrote a letter in our F1 filing that read,
“I want Shopify to be a company that sees the next century.”
Upon further reflection, I realize I left out an important caveat. For this to be a desirable goal, we have to ensure that the next century is worth reaching. To make our 100-year vision come true, we need to not only make commerce better, but take better care of our planet.
Shopify has taken many steps to build a sustainable company, including becoming carbon neutral. We’re setting best-in-class standards by buying offsets for all the carbon this company has ever used and will ever use, and we choose renewable energy to heat and power our operations.
But it’s not enough.
Here’s why it’s not enough
When we discovered fossil fuels in the ground, the path of human history changed forever. For the past 200 years, we’ve used that fuel to kickstart everything from the Industrial Revolution to modernity. Our planet has enjoyed a phase of unprecedented wealth and health because of these innovations. There has never been a better time to be alive, and the same should hold true tomorrow.
Unfortunately, our energy use has consequences. Every step of the way, we’ve been pumping carbon into the atmosphere and gradually changing our climate.
Before the Industrial Revolution, our air contained 280 parts per million (ppm) of carbon dioxide (CO2) on average. But new markets born from this revolution used a lot of energy, causing atmospheric CO2 rates to rise dramatically. For the first time in recorded history, our CO2 levels are above 400 ppm. This is really bad.
We’ve unwittingly created a reinforcing feedback loop that is causing a massive imbalance in our atmosphere. It’s leading to rising sea levels, increased drought and flooding, ocean acidification — externalities that put our survival at risk.
Many of us want to do something about this, and so we buy carbon offsets. This conjures up images of solar power and tree planting, but the reality can be quite different. Carbon offsets are often opaque and misleading. Some are created by putting filters on the smokestacks of especially dirty factories that shouldn’t be running in the first place. The biggest buyers of carbon offsets are often the largest polluters looking to be absolved of their guilt; a modern twist on medieval indulgences.
Plus, carbon offsets don’t often reduce carbon in the air. At best, they slow emissions. At worst, they fund ineffective projects. Even if we could offset all future emissions, there’s still too much in the air right now. Offsets are better than nothing, but they’re not good enough.
We’ve collectively procrastinated so long that the only way to solve this problem is to get carbon out of the air, not just prevent more from going in. That means we need to invest in direct-air carbon sequestration. This involves taking CO2 molecules from the air, breaking the carbon out of them, and turning them into a brick (or a valuable product!) that will never re-release its carbon into the atmosphere.
This is one of the best long-term approaches to climate change because it works independently from emissions and can mitigate the problem retroactively. However, sequestration is incredibly expensive right now. I could offset one tonne of carbon for $5 USD, but direct-air sequestering the same amount could cost upwards of $1,000. This means most people don’t do it, or don’t know about it, and so the demand for sequestration is vastly lower than other offsets.
I think this is where Shopify can help
In an abstract way, Shopify has always used engineering skills to create market forces. We used those skills to make it easier and cheaper to become entrepreneurs, and because of this, more entrepreneurs started more online stores. By improving the supply of simple tools for entrepreneurship, we reduced friction and increased demand drastically.
If we want to solve the climate crisis, we collectively need to do the same for carbon sequestration: decrease the friction (in this case, the price) so demand can go up. Throughout industrial history, we’ve repeatedly seen that demand leads to more efficient supply. Consider the incredible price reductions of computers, cell phones, and the internet over recent decades. Lithium-ion batteries are 85% cheaper now than a decade ago thanks to the huge spike in demand from electric cars, grid storage, and other electronics.
Once a committed, long-term, and growing demand for sequestration exists, engineers can invest in the same efficient manufacturing techniques that have brought down the prices of all the other technologies we love so much. Great companies like Carbon Engineering and Climeworks are already tackling the science and prototyping solutions, and there’s room for many more innovators. There’s also space for more companies to invest in this area, as our partners Google and Stripe have committed to.
So we need more demand to get better pricing, but we need better pricing to get more demand. How do we solve this puzzle? By intentionally overpaying for carbon sequestration to kickstart the demand.
This industry has the potential to spur innovation just like fossil fuels did. Except this time, the externality is not pollution. It’s exactly the opposite. It’s saving the planet.
We’re launching Shopify's Sustainability Fund
Shopify commits to spending at least $5 million USD annually to fight for our environment.
Shopify's Sustainability Fund will house all of our environmental investments, including carbon sequestration. Our intention is to increase our financial commitment annually based on our revenue growth.
The fund will intelligently commit every dollar to the most promising, impactful technologies and projects fighting climate change globally, even if it means overpaying for them.
To start, our fund includes:
- Buying $1M of sequestered carbon annually at any price: Shopify is committed to investing at least $1 million USD each year into carbon sequestration. Our goal is to kickstart the demand and predictability of this market so industrial engineering can scale and the price can come down.
- Carbon-neutral operations: We've bought enough renewable energy to neutralize our carbon footprint in Canada, and in 2020 we plan to power 100% of our global operations with renewable energy. We’ll offset all travel-related emissions too.
- Carbon-neutral platform: All of Shopify runs in data centers powered by renewable energy.
- Sustainable offices: We look for LEED-certified office space, and most of our square footage is LEED Gold or Platinum. We’ve chosen buildings in areas with high transit and walkability scores, and built with local materials wherever possible. This also includes minor but locally impactful things like adding bike racks and storage to every office.
We'll allow our merchants and their buyers to take part in our efforts.
- Sustainable shipping: Sustainability will remain a core principle of the Shopify Fulfillment Network, with a focus on sustainable packaging.
- Merchants can participate: We plan to offer our merchants the ability to achieve carbon neutrality or negative carbon emissions on their shipments through a simple app, Offset by Shopify, which they can install in their stores.
- Buyers can participate: People who are concerned about the impact of all the packages arriving at their door can download Shopify’s Arrive app. We plan to use our fund to automatically offset the carbon impact of all shipments tracked through the app.
We urge you to join us
Commerce is a powerful vehicle for change. Using the market forces of supply and demand to further worthy causes is one of the most potent recipes for progress. We can apply this thinking to even the world’s greatest problems, like climate change. If you’re curious, read more about Shopify’s environmental stance.
Individuals and businesses making conscious choices can change the world. Vote with your dollars to kickstart markets like carbon sequestration, and help us preserve our pale blue dot.