Last week, Delivery Hero made a bold claim. The food delivery company, which operates in over 40 countries around the world, says that it’s now carbon neutral in Europe and Latin America.
Since launching its carbon neutrality programme in 2019, the business has offset 215k tons of CO2 equivalent.
It’s not the only business making claims around carbon neutrality. European micromobility leaders Tier and Voi both made commitments to climate neutrality last year, while fashion resale app Depop this week released its sustainability plan, which also sets a deadline of end of 2021 for carbon neutrality.
Meanwhile, Delivery Hero’s food delivery competitors are also making noise in this area. In September 2020, Deliveroo announced that it would start offsetting emissions generated through its deliveries in Australia, while Uber revealed its plans to become a “zero emissions'' business by 2040.
It’s clear that it’s trendy to be climate neutral. What’s less clear is what, exactly, that means — and how ‘green’ it really is.
How is Delivery Hero doing it?
Delivery Hero’s been on the ‘road’ to total carbon neutrality since 2019, when Jeffrey Oatham, the company’s chief director of sustainability, joined the business. It expects to achieve this goal by the end of 2021, or the beginning of 2022 at the latest.
In practice, that means it’s moving through several stages.
The first step in any carbon neutralisation plan is to understand the scale of the problem being dealt with — in other words, how many greenhouse gases are being emitted. To figure this out, Delivery Hero has been working with South Pole, a sustainability consultancy headquartered in Zurich, to measure its Scope 1, 2 and 3 carbon emissions. (Scope 1 covers direct emissions, Scope 2 indirect emissions and Scope 3 those generated throughout a company’s value chain.)
Delivery Hero has then used these calculations, which are complete for its Europe and Latin American operations, to purchase the equivalent amount of carbon offset credits, thus neutralising its impact.
However, this is not quite the approach endorsed by climate experts and intergovernmental organisations such as the UN. They say businesses should first be looking to reduce their emissions as much as possible, before using offsetting to neutralise any remaining emissions.
While Delivery Hero has taken some steps to reduce its emissions already — such as switching to a renewable energy supply for its Berlin HQ — it says that offsetting is an essential first step to meet its ambitious (self set) deadline, prior to putting concrete reduction plans in place. Delivery Hero says it is currently “reviewing reduction goals” and that it intends to make a decision on this later this year.
“It’s a very short time frame to begin with, and the only way to achieve [carbon neutrality] at that pace is through offsetting,” Oatham tells Sifted. “We want the emissions to be addressed in some way while we take time to find solutions to reduce... We can’t really do the big, strategic, scaled reduction programmes until we know where the big problems are.”
One of those big problems is the emissions its food deliveries create. In Q3 2020, the company was delivering over 120m orders around the world per month; that’s a lot of miles being travelled by burgers.
Carbon offsetting: A quick fix?
Still, carbon offsetting is far from an ideal solution.
Critics argue that offsetting gives companies the option of throwing money at the problem of climate change, without having to change their behaviours. (“Offsetting has a troubled past,” admits Oatham.)
Offsetting has a troubled past.
The average offsetting programme is thought to cost around €9 per metric tonne of CO2 offset, although more expensive (and, some argue, more effective) technologies like carbon capture can also be invested in. Delivery Hero has not confirmed how much its carbon offsetting programme has cost, but it is likely to be in the range of hundreds of thousands of euros.
As part of an offsetting programme, a company can choose which specific projects to invest in, from rewilding initiatives to recycling programmes that prevent plastic from being dumped in the ocean. Few are perfect — reforestation, for example, can take years to produce the desired carbon-capturing effect, and while energy farms create jobs they also take up swathes of land.
Delivery Hero selects by weighing up price, which of the sustainable development goals the project is aligned with, where in the world it is based (in order to make sure its efforts are spread out across the world) and the quality standards they meet. Right now, it’s investing in renewable energy projects in China, India and Bulgaria.
What motivates sustainability goals?
Oatham, who has worked in corporate sustainability for 15 years, says the commitment to sustainability is stronger at Delivery Hero than companies he has worked with before. It helps that the mission to become carbon neutral by 2021 is being driven by the company’s CEO, Niklas Östberg. Oatham’s job has been to find a practical way to achieve this goal, which was set before measuring activities had taken place.
But there are business drivers, too. Customers are increasingly demanding that companies take action on climate change (according to Nielsen, 81% of consumers think companies play an important role in mitigating climate change), and Oatham says that having a sustainability mission also provides a point of differentiation from a brand perspective. As a publicly listed company, Delivery Hero also has to answer to shareholders who are increasingly prioritising sustainability. Such headlines also create a great PR moment — so long as the business is being totally truthful.
Lubomila Jordanova, cofounder of ‘carbon accounting’ company PlanA, says that a business can only claim to be carbon neutral if the amount of carbon it’s offsetting takes into account Scope 1, 2 and 3 calculations. “Carbon neutrality is the moment where you’ve gone through this calculation, hopefully with the help of scientists, and then you neutralise yourself,” she says. Not all companies that claim carbon neutrality have actually ticked all these boxes.
Delivery Hero is in the clear here — but it still needs to speed up its carbon reduction efforts.
Offsetting is not going to be able to get us where we need to be, even if every single company on this planet offsets.
“If you are informed enough of the problem, you know that reduction is the only way forward,” Jordanova says. “Offsetting is not going to be able to get us where we need to be, even if every single company on this planet offsets.”
“Climate change is the big world issue,” Oatham agrees. “All players need to do something. We have to step up, and in doing so we hope to show that it’s possible. Whether or not it’s possible by reducing first, we’ll leave that to others, but we want to show that having an offsetting-led [strategy], so we can account for all of our emissions and then find sustainable ways to reduce those over time, is also possible.”