General Electric today is introducing Earth Rewards, a credit card aimed at reducing cardholders' carbon emissions. It's perhaps the most visible sign yet that climate change is reaching not just the mainstream, but Main Street.
A carbon-reducing credit card from GE may seem incongruous at first, but even a cursory look connects the dots. GE Money, GE's consumer and small business financial services unit, provides private-label credit card programs and other services for national and regional retailers in 55 countries. And GE's Ecomagination initiative has committed the company to introducing new environmentally focused products and services. So, Earth Rewards is GE Money's contribution to GE's overall goal of making money by helping its customers become cleaner and more efficient. (Note: GE is a client of GreenOrder, with which I am affiliated.)
The Earth Rewards card will invest 1% of consumer purchases made with the card in carbon offset projects. (Consumers can opt to get a half-percent cash back, in which case only one-half percent of their purchases will fund offsets.) The company isn't claiming that the card will necessarily render purchases "carbon neutral," though its promotional material explains that an average consumer charging $750 per month on an Earth Rewards card -- that's $9,000 a year in purchases -- would offset all of the emissions he or she is likely to produce in a year.
The launch of the card is accompanied by the release of a standard for carbon credits in the United States. The standard, which will be used by GE's joint venture with AES Corp. to develop and sell carbon credits, aims to ensure that the offsets purchased by GE on behalf of its credit card customers "are scientifically verified and provide a positive, measurable environmental benefit," in the words of the company. AES and GE plan to generate 10 million metric tons of greenhouse gas credits annually by 2010, some of which will be purchased by GE itself on behalf of its Earth Rewards customers.
According to GE:
If 100,000 cardholders spend $750 per month, the annual offsets retired would total approximately one million metric tons, equivalent to removing more than 175,000 cars from American roads for one year. If those 100,000 cardholders receive their statements electronically, they could save more than 50,000 pounds of paper, sparing 600 trees and more than 500,000 gallons of wastewater associated with paper production collectively.
GE turned to GreenOrder to help develop the standard. Among GE's concerns were that given all the questions over the quality and authenticity of some carbon offsets, that theirs would be seen as credible. "GE realized that there was controversy about the offset market, about whether carbon reductions were really resulting from the offsets," says Nicholas Eisenberger, GreenOrder's managing principal. "And they realized that they have a lot at stake in addressing those concerns proactively."
GreenOrder and GE consulted with the World Resources Institute, The Nature Conservancy, ClimateCHECK, the Pew Center for Climate Change, and others, and conducted an evaluation of the major global standards for offsets -- both regulated and mandatory -- in order to craft a standard that addressed things like additionality, verification, and the myriad other techno-geeky issues surrounding offsets. You can download the standard here (PDF).
GE's market research found that the promise of Earth Rewards appealed to consumers. "We found that consumers had increasing interest in how they could take steps to make a change to address global warming," Peter O'Toole, director, public relations at GE, told me this week. "In theory, people want to contribute to make a positive change to address warming. Realistically, it has to be a baby step."
GE explored various ways to make the card appealing to consumers. For example, one idea was to give consumers credits toward the purchase of such things as Energy Star appliances or compact fluorescent light bulbs (both of which GE makes). "What we found was that a fairly small group of consumers would go out and do that," says O'Toole. "And a large subset of that small group is the kind of active green that already would have done these things. So this wouldn't be attractive to that group."
In the end, GE determined that Earth Rewards had to appear similar to existing credit card reward schemes. GE found that the combination of cash back and offsets received the most enthusiastic response. (However, purchasers applying for the card will find that 1% for carbon offsets and no cash back is the default offering.) Says O'Toole: "We worked hard to figure out a tipping point that would get an enthusiastic response from consumers and I think we've found it."
GE's isn't the first carbon-focused credit card -- or the last. In March, the Dutch-based Rabobank introduced the Climate Card, which claims to offset consumer purchases. Earlier this month, U.K.-based Barclay Bank announced the Barclaycard Breathe card, which will "donate half of all profits to carbon reduction projects around the world." It's unclear exactly how the bank will calculate "profits," but Barclay has guaranteed at least £1 million (just over US$2 million) in donations towards environmental projects in its first year.
Stateside, Bank of America is readying plans to introduce its own card, probably in the next few weeks, contributing a portion of consumers' purchases to an environmental organization to invest in carbon offset projects. And there are still other climate-focused credit card schemes forthcoming from smaller, start-up ventures, often in partnership with leading environmental groups.
Can all of this actually transform our consumptive behavior? Is GE joining the teeming masses of marketers seeking to encourage consumers shop their way to environmental redemption? GE's O'Toole readily acknowledges that Earth Rewards is no silver bullet. "You can't spend your way to completely solve your own contribution to climate change," he says. "This is just one tool in a toolbox of things people should be using to reduce their carbon footprint." Toward that end, the Earth Rewards website offers calculators and other tools. GE says it will be sending monthly communications to customers to give them feedback on how they are reducing their impacts.
It's too early to tell, of course, but Earth Rewards has the potential to catch on with the large middle market increasingly concerned about climate change but willing to make only small, incremental changes, if that. (GE envisions a potential market of 25 million Americans.) Earth Rewards doesn't require consumers to change habits: It's a conventional credit card with a green sheen. Some would say that's a bad thing -- consumers need to make radical changes in their daily habits -- but it's also a realistic approach.
Incremental realism versus radical change: I'll bet a lifetime of carbon credits on the former, any day of the week.