Why more and more big brands are using carbon offsets to bolster PR, profits and the planet.

By: Samar Farah “The VW Forest” sounds like the name of a sporty German all-terrain vehicle, or perhaps an advanced level in a video game designed for Jetta zealots. In fact, it’s a straight forward moniker for acres of trees in Louisiana’s Lower Mississippi Alluvial Valley, paid for by carmaker Volkswagen of America and its customers. So far, more than 900 acres designated as the VW forest have already been replanted in an effort to offset the carbon dioxide produced by VW vehicles. These figures represent some of the new thinking driving the latest trend in environmental marketing carbon offsets. An initiative that allows companies to underwrite environmentally friendly measures as a way of counterbalancing (or “offsetting”) the ecological harm of their business practices, offsets have become a valuable instrument for many brands seeking to spotlight their “green” bona fides. The trend cuts across industries, too, with offset programs embraced by everyone from airlines to credit card companies. Of course, there’s still some debate around select issues within carbon-offset programs. For instance, disagreement remains over certain measurement standards (a comparable disagreement is the debate over whether to switch to the metric system). Meanwhile, the government continues to monitor the programs closely to ensure compliance, although it has found no evidence of fraud. Despite this, though, experts agree that consumers and brands should use common sense when deciding to join an offset program and choosing which groups to work with. For its own program, the Carbon Neutral project, Volkswagen of America went with an approach that’s equal parts volunteer work and gift to consumers. Between September 2007 and January 2008, for every VW that consumers purchased or leased, the automaker pledged to plant enough trees to offset carbon emissions equivalent to one year of driving. To market the effort, Volkswagen set up a mini-site within its site where customers are informed about VW’s efforts and allowed to make donations to the offset program. The site remains up to foster ongoing dialogue with consumers, even though the program has officially ended. Meanwhile, only a couple of clicks away is a portion of the site where customers can sign up to have VW product brochures mailed to their homes, thus using the environmental effort as a springboard for a multimedia dialogue about both ecology and VW cars. Laura Soave, marketing manager at Volkswagen of America, has this warning about “green” campaigns: “It’s definitely something you can’t just jump into.” Still, environmentalists and business experts agree that these offset programs, if done properly, can have a positive impact on the atmosphere, and on business. “It’s a wonderful entrepreneurial response to a real set of concerns in the public,” says William Moomaw, director of the Center for International Environment and Resource Policy at Tufts University. What makes a project well executed? Marketers interested in pursuing such projects need to think about what kind of program makes sense for them, as well as how they’ll choose to communicate with and involve their consumers. A Range of Possibilities The most common carbon-offset projects generally fall into three categories: renewable energy, energy efficiency and reforestation. Renewable energy projects typically involve a company purchasing renewable energy credits (RECs) from a utility. These credits, which are a separate commodity from the electricity itself, represent a revenue stream for generators of clean energy, such as wind turbine or solar energy plants. They also give a company the right to say that a percentage of their electricity consumption is based on renewable energy. By contrast, energy efficiency projects look at ways that companies can reduce their emission through more efficient technologies, and reforestation initiatives involve planting trees. Planting trees is arguably the most tangible action a brand can take to offset carbon emissions. Most consumers intuitively understand that trees are good for the environment. It conjures a specific image a leafy, green image unlike energy efficiency programs or REC projects, which take some explanation and abstract logic for stakeholders to grasp. Still for some providers and practitioner companies, these last two projects are more attractive. David Ragland is the general manager of the Marriott Residence Inn in Washington, D.C., which is now operating on 50-percent renewable energy. Marriott announced its renewable energy program last September and now offsets half of its emissions by purchasing RECs. (Guests are also invited to donate $5 toward additional RECs.) Clean Currents, Ragland’s offset provider of choice, focuses primarily on buying RECs for its partners through private markets. “There’s certainly a role for reforestation,” says Lee Keshishian, vice president of business operations at Clean Currents. “Customers ask us about it, but so far we’ve shied away from it. It’s harder to measure.” While reforestation proponents argue that there are indeed clear measurement tools in place, Clean Currents’ position nonetheless reflects the varying opinions that exist even among those who support offsets. Carbonfund.org takes a slightly different approach it offers all three categories of projects and even gives partners the option of building a portfolio of projects in different categories. Michael Stewart, the nonprofit’s partnerships manager, argues that each type of project accomplishes something slightly different. Reforestation, he points out, is the only kind of offset project that can impact the current high level of CO2 emissions in the Earth’s atmosphere. Says Stewart, “The other two offset methods are critical, but they can only focus on reducing the amount of CO2 that we produce in the future.” Stewart, whose company is VW’s offset program partner, adds: “While individuals may have a project preference, Carbonfund loves all of its kids’ equally. By employing all three methods together as a cohesive team, we hope to address the whole process of fighting climate change. Along with direct reductions, offsets are simply a great tool to use toward that end. That’s our motto: Reduce what you can, offset what you can’t.” VW’s Soave says the company chose to go the reforestation path because they found there were added benefits to rebuilding a forest, like creating jobs for planters and supporting endangered wildlife, in this case the Louisiana black bear. The idea of rallying a community of VW owners around a project with a tangible and visible impact on U.S. land was also appealing, as opposed to a parcel of land in, say, Guatemala. “We tried to keep a closer-to-home approach,” says Soave. The Alluvial Valley in Louisiana was attractive for another reason: Its climate and growing conditions support a rate of carbon absorption that is significantly higher than in other parts of the United States. A Tale of Carbon Offsets Once VW’s tree-planting project was under way, the company’s biggest challenge was to portray to consumers that the automaker was undertaking the project strictly for its environmental benefit. Ultimately, VW decided that an advertising campaign touting the project would only taint it in the eyes of consumers, so Volkswagen of America refrained from advertising or marketing the VW Forest. “It would have been easy for us to go out with a huge campaign, and we did discuss that at length,” Soave says. Instead, the carmaker announced its project strictly through dealerships: Car salesmen at VW dealerships promoted the program verbally. Bloggers soon caught wind and helped get the VW Forest some press in major publications. A micro-site on the company’s Web site, jointly designed by its ad agency and Carbonfund.org, explains the project and invites other car owners to participate. Although VW and Marriott pursued completely different offset projects, they both had to think through how they would explain their projects to customers an increasingly skeptical group when it comes to environmental claims. While Ragland says he needed to train hotel staff to explain the concept of RECs to inquisitive customers, he also left some of the explaining in the hands of Clean Currents. For example, the offset company provided Marriott with a list of quantifiable benefits from the hotels’ REC purchase, including the fact that the 1.3 million kilowatts in RECs that the hotel has saved through its program is the equivalent of 178 cars off the road, a fact that Ragland has published on the hotel’s Web site. VW also has had to balance transparency about its program with a desire not to inundate customers with technical details. The Web site for the VW Forest sticks mostly to generalities. VW and Carbonfund.org plan to update the site with recent photos of trees being planted in the valley. But, for example, the Web site excludes facts about how the new forest will support 17 different species of trees with specific consideration for how the ecosystem will be affected. Indeed, most customers don’t expect brands to be environmental experts, but are looking for an honest and open conversation about the issues. “When we have conversations about offsets with customers, we don’t pretend we know it all,” says Ragland. Shortly after introducing the company’s carbon-offset program, Ragland was confronted by a Marriott guest who called out the hotel for using Styrofoam cups and plates. Guests have also requested more efficient LED lights in elevators. Ragland got rid of the Styrofoam, but didn’t add the expensive LED lighting. Says the hotel general manager: “We’re not afraid to explain that we are a business, and we do need to maintain margins.” Click here to read more. Brand Marketing, Green Marketing, Large Business