Shopify

Carbon Removal: How Shopify Is Leading The Charge On Corporate Responsibility

carbon-removal:-how-shopify-is-leading-the-charge-on-corporate-responsibility

“I want Shopify to be a company that sees the next century,” wrote CEO Tobi Lutke in 2015. Getting there, he recognized, relied on taking deliberate steps to ensure it was a future worth building for. 

That’s why, in 2019, in the midst of growing concern about climate change and its impact on the planet, the company announced the launch of the Shopify Sustainability Fund. The fund includes an annual commitment to supporting projects that work to combat climate change. 

As new technologies emerge, Shopify’s approach has evolved. The company’s climate change focus is now carbon removal—the act of removing carbon dioxide from the atmosphere—with the Fund prioritizing these projects.

But how does carbon removal actually work? And how is its impact measured? Ahead, explore carbon removal technologies and case studies, and learn how Shopify is leading the charge on corporate responsibility.

What is carbon removal?

Aerial view of a choppy oceanCarbon removal, also known as carbon dioxide removal (CDR) or carbon sequestration, refers to the process of removing carbon dioxide from the atmosphere and storing it away. Methods to remove carbon from the air include natural solutions such as carbon sinks in oceans or forests as well as technology-based solutions like direct air capture (DAC), which extracts carbon from the air using machinery.

A number of countries, including the US and Canada, have committed to net-zero emissions by 2050 or sooner. Alongside strategies to reduce emissions (and therefore the amount of new carbon dioxide in the air), carbon removal is a critical process in achieving these goals. The world could stop emitting carbon tomorrow and there would still be too much in the atmosphere. That’s why removal—and not just reduction—is critical. 

Examples of carbon removal

Carbon removal solutions are often referred to as negative emissions technologies (NETs) and encompass both nature-based and engineered strategies:

  • Natural solutions for carbon removal include capturing carbon in natural resources like soil or oceans. Running Tide, for example, deploys carbon buoys seeded with algae and, through a natural process, captures and sinks carbon to the ocean floor. Another solution, from DroneSeed, involves using drones to speed up reforestation for regions affected by forest fires.
  • Technology-based solutions often use machinery to pull carbon from the atmosphere like a sponge. Carbon Engineering is currently constructing the biggest direct air capture facility in the world, capable of capturing up to one million metric tons of carbon dioxide per year. Another company, Twelve, uses captured carbon to produce an aviation fuel that has a lower carbon footprint than jet fuel made from fossil fuels.

How Shopify is kickstarting the carbon removal market

Aerial view of a forest and winding roadIn addition to the Sustainability Fund, Shopify has extended its commitment to fighting climate change through a number of initiatives. 

Most recently, Shopify founded Frontier alongside Stripe, Alphabet, Meta, and McKinsey Sustainability. Frontier is an advance market commitment (AMC) to spend a combined $925 million on carbon removal. For its customers, Shopify launched Planet to enable business owners to offer carbon-neutral shipping on their orders. And through Shop Pay, the company empowered consumers to fund carbon removal on every purchase. 

Shopify’s climate commitment: A timeline 

🍃 September 2019: The Shopify Sustainability Fund launches

🍃 July 2020: Shop purchases go carbon neutral

🍃 September 2020: First round of carbon removal purchases made by Shopify

🍃 March 2021: Shopify makes history purchasing more DAC carbon removal than any other company

🍃 March 2022: Total carbon removal purchases reach $32 million 

🍃 April 2022: Shopify founds Frontier

🍃 June 2022: Shopify’s Planet app launches

About the Shopify Sustainability Fund

View of a mountain from afar set against a blue cloudy skyThe Shopify Sustainability Fund backs the development of technologies that accelerate carbon removal from the atmosphere. It aims to achieve the following:

  • Generate demand for carbon removal
  • Enable new companies to make impact and scale
  • Spend millions per year to drive down future prices

The strategy behind the fund relies on three key elements: long-term atmospheric carbon removal, building a balanced fund, and corporate climate commitments. 

Long-term atmospheric carbon removal

While reducing emissions is key to slowing climate change, the existing levels of carbon dioxide in the atmosphere are beyond acceptable. Carbon dioxide removal at scale is the only way to reverse this damage. While there is no single solution that could accomplish this, Shopify has committed more than $33 million to a number of projects and technologies focused on atmospheric carbon removal, long-term storage, and avoided and reduced emissions offsets.

Diagram showing the process of carbon removal in the environment

Building a balanced fund

The planet can’t wait for the perfect solution. That’s why the Shopify Sustainability Fund backs several approaches. A combination of multiple solutions is the only way forward, given the high levels of CO₂ already in the atmosphere. Putting capital behind a number of companies allows for the best engineered and nature-based solutions to emerge through learning.

Chart showing the breakdown of Shopify investments in climate change projects

Corporate climate commitments

Many companies with large carbon footprints are committing to becoming net zero or carbon negative. To reach those goals, it’s important to invest now to ensure that carbon removal credits become less scarce and more affordable as the technologies scale. Shopify is committed to kickstarting the carbon removal market to enable more companies to reach their goals.

How Shopify analyzes and selects carbon removal technologies

Cows graze in a field against a blue skySelecting projects to back relies on a strong process to identify the most promising companies. Shopify analyzes and evaluates each company to determine the most promising technologies and solutions in the following ways:

  1. Using a targeted approach by partnering with a network of industry experts and narrowing down the criteria.
  2. Applying a research template that ensures a consistent framework of evaluation.
  3. Conducting a life cycle analysis to compare a project’s effort to its benefits.
  4. Using a recommendation template to track the decision-making process.
  5. Setting fund targets to ensure coverage across a number of technology types.
  6. Taking a customized approach to contracts.
  7. Investing in monitoring, verification, and reporting.
  8. Setting key objectives and performance indicators.

💡Looking for more? Explore How to Kickstart the Carbon Removal Market: Shopify’s Playbook

Carbon dioxide removal case studies

Through the Sustainability Fund, Shopify is committed to investing $5 million annually into technologies and projects that contribute to carbon dioxide removal and reversing climate change. This investment is distributed among several types of projects and technologies. These are a few notable examples. 

Climeworks

Aerial view of the Climeworks facility
Climeworks

Climeworks is a direct air carbon capture company that is extracting carbon dioxide from the atmosphere for permanent storage underground. Shopify has made a 5,000 tonne purchase to support the company’s growth. In 2021, Climeworks launched Orca, the world’s largest direct air capture plant.

Heirloom

Heirloom’s technology speeds up the rate at which naturally occurring minerals capture CO₂. It uses a process that allows minerals to passively contact air rather than using energy-intensive fans to draw it in. Shopify’s purchase will help fund Heirloom’s first deployment on its journey to remove one billion tonnes of carbon dioxide from the atmosphere by 2035. Heirloom recently teamed up with another Sustainability Fund partner, CarbonCure, to store captured carbon dioxide in concrete for the first time. 

Charm

Pile of organic matter including dried stalks and leaves. A Charm logo appears in the background
Charm

Charm captures CO₂ using plant waste, converts it into a stable, carbon-rich liquid, and safely stores it deep underground—out of reach of wildfires and soil erosion. Shopify has helped Charm permanently store the most atmospheric carbon in the world to date. Given this success, Shopify is expanding its support to help Charm accelerate its progress.

Tips for purchasing carbon removal

One of the Shopify Sustainability Fund’s goals is to pave the way for other companies to take action. Any business of any size can buy carbon removal—and with more companies doing so, climate targets will be achievable much sooner.

Through research with carbon removal partners, Shopify developed a set of guidelines to help small and large businesses get involved. Some tips to get started:

  • Fund the right types of carbon solutions.
  • Split your budget across suppliers from several verticals (like direct air capture, mineralization, and ocean-based removal).
  • Be flexible with purchases to maximize impact on companies.
  • Run a strong process to identify the most promising companies.
  • Stick to companies that fall within your risk level.

💡Ready to join the fight against climate change? Consult Shopify’s guide to buying carbon removal.

Building for the next century

Carbon removal is part of a larger effort to improve the way companies, governments, and individuals engage with the world to protect it for future generations. Shopify is committed to investing in emerging technologies to make carbon removal accessible to all and achieving climate goals together. 

Feature illustration by Borja Bonaque

Carbon removal FAQ

What is meant by carbon removal?

Carbon removal, also known as carbon dioxide removal or carbon sequestration, refers to the process of removing carbon dioxide from the atmosphere and storing it away. This is achieved through various natural and engineered methods called negative emissions technologies that accompany reducing greenhouse gas emissions to combat climate change.

How does carbon removal work?

Carbon removal works by capturing carbon dioxide through natural processes like soil carbon storage or trapping carbon in ocean reservoirs (or “sinks”). It can also be achieved through engineered processes that absorb carbon dioxide from the atmosphere and store it permanently in materials like concrete.

What is the best way to remove carbon?

There is no single company or technology that has emerged as the best way to remove carbon dioxide from our air. Carbon capture solutions can include natural and engineered methods, all of which are emerging technologies. Alongside reducing greenhouse gas emissions, investing in multiple carbon capture companies is the best way to achieve the goal of slowing global warming.

Does carbon removal work?

A recent study has demonstrated that carbon removal technologies can contribute to lower global warming levels. To have the most impact, it concludes, carbon removal methods should be used in conjunction with a reduction in carbon dioxide emissions and other greenhouse gases. Scientists continue to test carbon removal and storage technologies to improve their efficacy. An investment in multiple solutions is the best way forward to make a difference on a large scale.

This originally appeared on Shopify and is made available here to cast a wider net of discovery.

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