Carbon offsets will increasingly be embedded in many purchasing decisions that retail consumers make each day. Deloitte predicts consumer purchases of carbon offsets will become pervasive and grow into a nearly US$100 billion market in developed economies by 2030.
Deloitte expects new carbon-trading networks to emerge that cater to the heightened demand for tailored, localized, and niche actions to help mitigate climate change. There is already a growing appetite for products that have a sustainability label; roughly two-thirds of US consumers say they would pay more at the pump for gas that offsets its greenhouse gas emissions. Moreover, an international survey conducted by Shopify last year found that two-fifths of consumers say they would pay a higher price for climate-focused products. Demand for offsetting will likely only grow as younger people, who often voice a preference for sustainable products, gain purchasing power.
Several categories of consumer spending, including food, transportation, and entertainment, could easily incorporate an option to purchase carbon offsets. We estimate that a small percentage of these expenditures will include a supplemental offset, leading Americans to spend US$21.3 billion a year to mitigate the environmental impact of their purchases by 2030, adjusting for expected inflation. If these habits are mirrored in other developed economies, then global consumers in developed economies will collectively pay nearly US$100 billion to offset goods and services at decade’s end.
While there may be those who reject environment, social, and governance principles, the majority of Americans remain concerned about the carbon footprint of the items they buy. Despite the surge of inflation in 2022, the market for sustainable products accounted for 17.3% of purchases in the United States last year, according to Circana and the New York University Stern Center for Sustainable Business. These products experienced a five-year compound annual growth rate of 9.48%—nearly double that of conventionally marketed products—and consumer behaviorists do not expect those preferences to wane.
Carbon offsetting is becoming more common in the travel and tourism industry. Tour operators such as World Expeditions, Bamboo Travel, and Intrepid purchase offsets to neutralize the impact of their consumers’ trips. Stand-alone organizations that offer travelers carbon calculators and the option to offset activities are gaining in popularity as well. Cool Effect, for example, has retired five million tons of carbon emissions and generated US$36 million for emerging countries since it launched in 2016.
In addition, more than 50 global airlines now offer carbon offsetting to passengers, and some carriers reward loyalty points to customers who purchase carbon-credit units when booking their flights. Hotels are also beginning to offer carbon-neutral packages to guests, and large employers, such as HSBC, are incorporating offsets into their low-carbon policies for business travel. After making more informed decisions about conferences and flights, some companies may purchase offsets when they exceed their “carbon budget” allotments.
Other industries are encouraging consumers to make sustainable choices as well. The American tea company, Harney & Sons, reports that one out of four customers choose to offset their transactions, which usually equates to 2%–3% of the purchase cost.
Several startups have also developed application programming interface (API) software—a code that makes it possible for applications to communicate—bridging apps, devices, and services to shared back-end systems. These APIs can link carbon-offset crediting to web and mobile platforms, so businesses can quickly embed a widget that will calculate an order’s emissions and offer users the ability to offset it. EcoCart, for example, which partners with brands such as Walmart Canada, Siete Foods, and Cotopaxi, reports that 60% of e-commerce shoppers use this functionality when checking out online. Retailers and service providers will likely continue adding capabilities to offset products or shipment and transportation to boost customer loyalty. Carbon Checkout, a one-click offsetting application cofunded by European Innovation Council of the European Union, has formed over 2,000 e-commerce partnerships since launching in 2015.
Most major segments making up the US$23 trillion global retail industry—food and beverage, clothing, entertainment and lifestyle, and fuel—can easily incorporate carbon-credit purchasing options into their payment platforms. Large retailers such as Walmart, Amazon, and Alibaba could provide a boost to offsetting practices on their own. Given that consumer spending accounts for two-thirds of US economic activity, these brands’ transactions could channel a significant amount of new funding to climate action projects around the world.