Salesforce's carbon market connects with companies

While Climate Week was starting in New York City, thousands of people were in San Francisco for Dreamforce, the annual software and developer conference put on by Salesforce Inc. There, the software giant shared its plans for a new market for carbon offsets.

While Climate Week began in New York, thousands attended Salesforce Inc.'s annual software and developer conference in San Francisco. The software giant announced a carbon offsets marketplace there.

This could be important because the current carbon markets, where projects that can get rid of greenhouse gases by planting trees or taking carbon out of the air sell credits measured in tonnes of carbon to polluting companies, are limited in important ways.

The first way is that there is no global requirement to put a price on carbon, which means that carbon markets are completely voluntary in many places. There are a number of things that stop voluntary markets from growing:

The number of projects that can produce enough carbon offsets to meet the world's needs
The ease with which companies can buy and sell credits on voluntary carbon markets.
Business professionals who don't specialise in carbon markets know how voluntary carbon markets work.
How well carbon offsets from current and future projects are

The low quality of many offsets is a big problem that is unlikely to be solved by a business-to-business marketplace like Salesforce's. It doesn't get rid of useless offsets from the market or let companies off the hook for their pollution.

But sunlight is a good way to clean, and so are liquidity and familiarity. When more businesses use carbon offsets, it will be harder for fake offsets to stay in business in a market that is much bigger. Every new report on flawed offsets will be more important because it will affect more businesses.

If none of these problems are solved, the scope of voluntary carbon markets will stay small. For them to grow, they will need more money and, especially, more people to know about them.

To see why, think of two made-up companies that have both promised to cut their emissions.

Company A is a global industrial company that works in many different fields. It has said in writing that it will cut emissions in a certain way and by a certain date. It also has a high-level strategy group that will set the course for the next 20 years. Company A has a plan to switch fuels, move capital stock toward technologies with lower emissions, buy electricity with no carbon emissions, and buy carbon offsets. It sees benefits in this plan (and not just because the CEO promised it at the World Economic Forum).

It won't have any trouble holding up whatever it needs to in order to achieve its goals. It might even make more money that way.

Company B is a regional wholesaler whose new CEO has been given the task of reducing the company's carbon footprint over the next ten years. Company B doesn't have enough money to replace its boilers, climate control systems, or medium-duty trucks right away. It's not big enough to force changes in the supply chain through buying power. It can't hire full-time staff to make a strategic carbon plan; pay expensive consultants to do the same; or build its own high-tech system for trading carbon offsets.

Company B is limited by its structure, even if it is serious about cutting down on emissions.

But Company A and Company B may have something in common: they are both customers of Salesforce, which is the most popular customer resource management platform in the world. For Company A, which is big enough to do carbon accounting on its own, a Salesforce marketplace for carbon offsets is nice, but for Company B, it could be a key way to get into the process.

You don't have to create new accounts to see ratings or research each offset project individually. Instead, it can see them all in one place and pay for them via Stripe. A strategic must-do that might have needed a separate team in the past can now be handled by a purchasing manager.

There could be millions of small businesses that care about carbon now or will care about it in the future. They want a carbon strategy, but their size, budget, and abilities make it hard for them to come up with one. Today, these businesses have to work hard to get into the carbon market. Tomorrow, the carbon market might just come to the big business markets.