Will Ben & Jerry's carbon price help moove markets?

For many companies, carbon pricing is still very much a concept — a realization that in the future they may be forced to factor in the costs of their pollution when taking investment decisions, and awareness that such an approach could drive them towards greener technologies.

But for ice cream super brand Ben & Jerry’s, carbon pricing is already a reality, allowing the scheme to pay U.S. dairy farmers to invest in onsite renewable energy generation and other clean technologies as it looks to slash its supply chain emissions.

“We’re not sitting in the office and demanding they change,” said Jostein Solheim, Ben & Jerry’s chief executive. “We’re putting hard cash on the table.”

Earlier this year, Ben & Jerry’s set itself an internal carbon price, the revenues from which are recycled to help farmers finance biodigesters that process manure to generate renewable energy and fertilizers. Under the initiative, for each tonne of carbon a technology is expected to offset, Ben & Jerry’s will pay the farmer $10 per tonne, to help reduce the upfront costs of investment. 

“You take responsibility for your own carbon use, and me as the user, I’m paying for it,” explained Solheim. “The farmer is getting that money to inset emissions and getting some additional revenue streams from the by-products.”

The project is in early days and Solheim said Ben & Jerry’s is still testing out a range of financial models for mobilizing investment in clean technology. But overall, he reckoned the scheme will prove attractive to farmers financially, which is of major importance for an industry that has at times struggled politically with the concept of climate change. Federal government officials admit they have had to find creative ways of discussing global warming with traditionally conservative farmers without mentioning the “c” words, so any scheme that works economically as well as environmentally is seen as a win-win when it comes to convincing farmers of the merits of clean technologies.

“Farming is really challenging,” said Solheim. “It’s one of the toughest enterprises to run. Prices swing around and costs are pretty fixed, so anything that can expand their business model and cushion them and create new revenue streams is really interesting to them. Farmers live off the land, and the more they understand and learn, they really want the land to prosper.”

Ben & Jerry’s, owned by Unilever since 2000, is part of a coalition of companies calling for world leaders to set a global price on carbon to ensure everyone is pricing externalities in their investment decisions. Solheim doesn’t expect a global carbon price to be agreed at the U.N. summit in Paris next month, although he does hope some form of pricing agreement will be signed off before 2020.

Ben & Jerry’s already has played a small role in the U.N. negotiations, giving away free ice cream to weary diplomats during technical negotiations in Bonn earlier this year. However, its role is about to become significantly more visible thanks to its supporting for the People’s Climate Marches that will take place in some of the world’s major cities as part of a plan to convert half a million people to become climate activists ahead of the Paris talks. Since launching the campaign earlier this year, it has signed up 300,000 people, said Solheim.

The company had planned to have major presence at the climate march Nov. 29 in Paris, which has since been cancelled in the wake of terror attacks in the French capital earlier this month. Solheim said he completely respects the decision of the organizers. “The discussions at COP21, and the wider global climate change movement, provides an opportunity for us to stand together, with hope and compassion for the future of the planet, and to counter the many terrible events over the last weeks, designed to push us apart,” he said.

However, he also reiterated that the Paris Summit is really only the start of efforts to tackle climate change, and as such the company is already drawing up plans to campaign and lobby governments over the next decade to ensure the world really does put itself on a pathway towards less than 2 degrees Celsius of warming.

“Nobody believes there’s going to be a silver bullet coming out of this meeting and then it’s all going to be done,” he said. “There’s going to be enormous shifts and disruptions over the next 10 years and I think every single business leader out there now recognizes this is something they have to address, not just from a humanity point of view but from a business continuity point of view.

“But I really do believe that we’re at a tipping point and we’re going to see progress really fast, real strong signs of hope on one side and some of the dramatic consequences that are further going to sharpen people’s attention around the issue unfortunately.”