Business columnist Kevin Carmichael recently argued that carbon offsets gives the international shoe manufacturer and retailer ALDO an advantage in attracting customers. To be clear, he was basing the claim on an interview of the shoe giant’s CEO David Bensadoun, not on research.

But are such claims valid? Do carbon offsets give a business a competitive advantage?

Bensadoun and Carmichael certainly seem to believe so. By all indications, the Montreal-based, privately-held ALDO Group is performing well. It has stores in over 100 countries and competes directly with other international players, such as Steve Madden Ltd. which had earnings of USD 1.5 billion last year.

But unlike its competitors, ALDO claims to have offset all of its carbon emissions as part of its ‘Corporate Social Responsibility,’ which it also advertises to the world. The company installed over 14,000 LED bulbs in its stores, reduced its air freight by 70% with the trade-off of weeks-longer delivery times, and invested in hydro-electric projects in China and wind farms in Europe.

For these efforts, ALDO won a certification from South Pole, a climate change-fighting social enterprise, which on its website asserts: “The moral case for climate action is clear – failing to meet the climate and sustainable development challenge would push hundreds of millions of people into poverty …”

Carmichael notes that ALDO’s carbon offsetting is valid because there are “hundreds of scientists who describe climate change as an existential threat.” (This argument is a logical fallacy: the fact that people with PhDs hold certain views does not makes those views valid, or based on facts. Think of activists such as David Suzuki, a PhD in genetics who pontificates about climate change, those scientists at the University of East Anglia who concocted fake findings to create climate alarmism, or those who alter their research to fit the climate orthodoxy to secure funding).

Never mind that climate science has not established a negative impact on climate from human-caused carbon emissions, despite the best efforts of the UN’s Intergovernmental Panel on Climate Change.

CEO Bensadoun acknowledges that his carbon offset investment made “a bit of hit” to the profit margins. The company is not publicly traded, so it is up to him to make such investments. However, he is running a profit-seeking company and did not make the decision based on climate change-altruism, at least not solely.

According to Carmichael, Bensadoun relied on polls showing the youngest generation of workers and customers to “care deeply” about the environment. He reasoned that carbon offsetting will attract younger employees and win over younger customers.

Sounds logical enough and might help ALDO win some market share from competitors in the short term. But will it give the company a significant, lasting competitive advantage? I argue no.

Buying carbon offsets cannot secure competitive advantage and long-term profitability, because it violates important moral principles: rationality and human life as the standard of value.

The principle of rationality guides us to use reason—to adhere to facts through observation and logic—when making decisions. Polls may indicate that the millennials care about the environment—similar to their fondness of socialism. One can argue that the polls are factually true, but they need to be considered in the broader context of facts.

For example, we know from research and historical evidence that young people are attracted to ideologies such as environmentalism and socialism. But once they gain more knowledge—such as of the beneficial impact of CO2 on plant growth and food production, and the destructiveness of switching to renewable energy now (particularly on the world’s poor), or of the destructiveness of socialism on human well-being—many will change their views.

Not everyone, of course, is open to facts and bases their views on them. However, according to the second principle, human life as the standard of value, we cannot live without using reason and adhering to facts—including the factual requirements of our survival and flourishing. We can make decisions based on arbitrary assertions and mistaken beliefs, but we cannot succeed by doing so, not in the long term.

A business can gain a temporary advantage by appeasing popular views that fly in the face of facts (such as the fact that there is no evidence for catastrophic, human-caused climate change, or that some increase of CO2 in the atmosphere has beneficial effects). But when those views are inconsistent with the requirements of human survival and flourishing—as the current climate change alarmism is—the business, and everyone else, will lose in the long term.

 

3 COMMENTS

  1. Several reasons come to mind for the phenomenon:
    – poor thinking skills (thus rational people won’t want to deal with them, I fired the cola company that claims the polar bear species is in trouble due to global warming, a claim obviously false given actual data not negative fantasies).
    – pandering to government’s ability to make trouble for the company (a tricky situation)
    – pandering to irrational customers (part of ALDO’s motivation, people like Richard Branson are hypocrites)
    – ‘green guilt’, as Keith Lockitch pointed out in his presentation to a Heartland Institute climate conference
    – phoniness (probably the reason some insurance companies blame climate for increasing rates, when the real reason may be they had set rates too low)
    All those activities will harm the business, because they are based on unsound thinking methods that will taint all decisions.

  2. Beware that some organizations are getting PR from doing what they should be doing for financial reasons. ALDO’s savings in lighting and transportation are monetary savings regardless of benefit to climate or PR. (The term ‘greenwashing’ comes to mind.) The LED lights do require an investment up front as they are expensive, and slower transportation may reduce sales.

    And beware of location – LED lights and solar panels are viable where electricity rates are very high, as in Chico CA where the marginal rate at peak-demand times is $0.93/kwh – in contrast to BC at roughly a tenth of that. Ontario is in between I guess, due to its mismanagement, I don’t know about Quebec which has much hydro-electric generation but sells power south.

    Investments into ‘alternative energy’ have not worked well for many, including Ontario and GE.

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