If you're an online business owner, you’re likely to have heard of the payment platform Stripe.com. It's used by thousands of eCommerce retailers to process payments and is one of the most popular eCommerce tools for merchants worldwide.
But, what you may not know is that in October 2020, Stripe launched Stripe Climate. With a few simple clicks, this empowers businesses to divert a small portion of their earnings to help grow carbon removal technologies. While these technologies are still developing, you could be part of a group of small and growing businesses that want to change how carbon removal operates.
Given Stripe Climate is less than a year old at the time of writing, we’re giving you all the information that's currently available to help you familiarize yourself with Stripe's climate initiative.
Running an online business is tough, but running a startup that allows customers to retain and live by their ethical standards presents a unique set of challenges.
Suppose you’re committed to operating ethically by selling products that comply with your values, including doing your bit to tackle climate change and improve the ecosystem. Why not go a step further by making it easier for your customers to do the same?
We’re talking about using a payment platform that allows customers to make carbon removal purchases.
Are you ready? Great. Let's dive in!
What’s Stripe Climate?
In October 2020, payment platform Stripe (established by co-founders Patrick and John Collison), launched Stripe Climate. Initially only available for US users only, since February 2021, Stripe Climate was made accessible globally.
At its launch, Stripe’s Head of Climate, Nan Ransohoff, said: “Many of our users have told us they want to take climate action, but don’t because figuring out what to do can be time-intensive and complicated…Stripe Climate makes it easy for businesses of any size to help tackle climate change by funding frontier carbon removal.”
Stripe Climate enables businesses to help tackle climate change by directing a small amount of their revenue towards initiatives that remove carbon dioxide (CO2) from the atmosphere permanently.
We go into how this is done lower down in our review.
For now, this is what Stripe says about Stripe Climate is: “We direct 100% of your contribution to carbon removal. Our scientific advisors help maximize the long-term impact. Stripe buys carbon removal from the exact same projects.”
In its early pre-launch stages, 25 companies tested Stripe Climate in a closed early-stage beta, including heavy hitters like Substack, OpenSnow, and Flexport.
So far, so great – let’s take a look at how this works:
Stripe Climate Review: How it Works and What it Costs
First off, Stripe Climate is free to sign up for. Unlike the fees Stripe charges for regular transactions, the platform doesn’t take a penny for climate contributions. So in that sense, your commitment to climate change via Stripe costs you nothing.
As for how it works? Here’s how:
All Stripe account holders have a dashboard where you'll find the Stripe Climate settings. Here you can sign up for Stripe Climate, pause contributions, and change contribution levels.
When you sign up to Stripe Climate, Stripe suggests a revenue percentage contribution. This is determined by the amount you process through Stripe. If you feel the percentage is too low or too high, you can set either a fixed monthly contribution or customize your own percentage.
Here’s an example, if you opt to give 1% and you sell something for $200, you’ll contribute $2 on top of any Stripe transaction fees. Typically, Stripe debits your Stripe Climate contribution from your balance 1-3 days later.
More in-depth details on the Stripe Climate website take a deeper dive into calculations, VAT, and so on. We also tackle some of those in our FAQs section at the end of this review. However, for more details, we recommend consulting their page directly.
Where Does the Money Go?
Cynics may be forgiven for thinking this is just another attempt by a company at greenwashing. I.e., giving customers the impression you have green credentials when really, you don’t.
Stripe is pretty transparent on this score. The Stripe Climate website currently lists six specific carbon removal projects it supports:
- Sea Change
- Running Tide
- Missing Zero Technologies
- Carbon Built
- Future Forest
While we’re not going into each of these companies' specifics here, Stripe started by supporting four projects at its launch last year. It also bought $1m worth of carbon removal in May 2020. These projects were chosen by an expert group of academics and scientists. This list has now grown from the original four to the six projects we’ve listed above.
When you join Stripe Climate and start making contributions, Stripe doesn't offer traditional carbon emission offsets. Instead, they allocate monies towards the projects they’ve selected. They buy the permanent removal of CO2 at a particular price per ton. At the time of writing, Stripe Climate subscribers don’t get to choose where their contribution goes.
What’s In It for Your Business?
There are a few obvious advantages to signing up for Stripe Climate. First and foremost, you get to feel good about yourself for taking climate change seriously and putting your money where your mouth is. However, looking past that, there are some business advantages too.
Becoming an early adopter of Stripe Climate has the potential to show customers you’re a business that's ambitious and brave enough to be different.
This is especially important if you know your customer base is concerned about climate change and wants to see your environmental credentials.
Stripe allows Stripe Climate users to tell their customers about their commitment. You get a badge that’s automatically updated across the following Stripe-hosted actions:
On top of that, Stripe provides you with what it calls an “asset kit,” which allows you to use your Stripe Climate badge wherever you want, including on your e-commerce website. The Climate settings on your Stripe Dashboard have all the details on how to use the badge.
You could even go one step further to ensure your eCommerce site provides information about what you’re actively doing about climate change. Stripe grants Stripe Climate contributors permission to use terminology from the Stripe Climate web page and any information in its related blog posts on making carbon removal purchases. Handy, right?
If you’re still skeptical, here are a few statistics that may give you pause for thought:
- 88% of US and UK consumers want brands to help them be more environmentally friendly
- 89% of consumers care about protecting the planet
- 83% will choose a brand that's committed to sustainability
That said, it’s important to note that committing to contributing to Stripe Climate isn’t going to make your business carbon neutral. Carbon removal is still a relatively new idea. Stripe recommends that if you want to shout about your adoption of Stripe Climate, you're better off telling customers what percentage of their purchase goes towards carbon removal technologies.
Its web page uses one example of a company called Blackthorn that states it “will contribute 1% of your purchase to remove CO2 from the atmosphere.”
Hopefully, you now have a better idea of what Stripe Climate is and what it isn’t. There are always more questions to be answered, so check out our FAQ below.
Frequently Asked Questions
While we can’t answer everything here, there's a helpful, detailed, and pretty transparent FAQ on Stripe's website. Here the company has put together a list of its most commonly asked questions if you want to delve in further.
However, here’s a few questions we’ve also put together:
Can My Customers Pitch in Too?
At the time of writing, the answer to this is no, they can’t. However, it's possible Stripe may introduce this feature for customers to take advantage of at checkout. However, at the time of writing, this idea is still in the pending tray.
Is Stripe Climate Available for All Stripe Customers?
Yes and no. Any global business with a Stripe account can join. Or if you have a Standard Stripe Connect account used by marketplace platforms such as Booking.com, Shopify, WooCommerce, and ASOS Marketplace. However, businesses located in Gibraltar, Indonesia, India, the Philippines, and the United Arab Emirates cannot access Stripe Climate.
Which Companies Will I Be Joining if I Sign Up?
Information on this is scant. The Stripe Climate page currently lists Substack, Flexport, Flipcause, and Panic Inc. as contributors. However, given that earlier this year, Stripe pledged that its chosen six companies would receive a total of $2.75m, there have to be more contributors, right?
At the time of writing, the only info we could find was that since Stripe Climate launched in 2020, more than 2,000 Stripe users across 37 countries have contributed to Stripe Climate. That’s still pretty impressive, given it’s only been around 7 months.
Hopefully, you now have enough information to at least take your interest in Stripe Climate and removing CO2 from the atmosphere a bit further.
Our verdict is that this is an innovative and exciting way of making it easier for businesses to contribute to stopping climate change without losing a significant amount of money.
It’s free to use, and while you can’t control precisely where your contribution goes, you can adjust it, pause, and/or cancel it if you change your mind. It’s important to remember that doing this won’t make you carbon neutral. Still, it will help you to reassure your customers you’re making a visible contribution to climate change, which may, in turn, lead to a better bottom line.
Are you ready to fight the catastrophic effects of climate change with Stripe Climate? Let us know what you think in the comments box below!