Swedish fintech giant Klarna has taken a bold step in its environmental commitment by doubling its internal carbon price to $200 per tonne of carbon dioxide for emissions directly linked to its operations. This adjustment, announced in conjunction with their 2023 ESG report, underscores Klarna's dedication to enhancing its voluntary climate finance contributions, even as it successfully reduces its carbon footprint.
Since 2020, Klarna has implemented an internal carbon fee system, initially set at $100/tCO2 for its Scope 1 and Scope 2 emissions, which include direct emissions and those from electricity consumption, respectively. This innovative approach allows Klarna to calculate and channel funds to various carbon projects through the Swedish environmental tech platform Milkywire’s Climate Transformation Fund.
In a significant policy update, Klarna has not only increased the fee for Scope 1 and 2 to $200 per tonne but also adjusted its fees across other emission scopes. The company now charges $100 per tonne for business travel emissions and $10 per tonne for all other Scope 3 emissions, which encompass the broader value chain.
Despite the hike in carbon pricing, Klarna reported a 13% decrease in funds raised through its internal carbon tax in 2023, totaling $2 million, attributed to a dramatic reduction in its CO2 emissions. The company achieved a 66% year-on-year decrease in absolute Scope 1 and 2 emissions, primarily due to a strategic shift to more flexible office spaces and the consolidation of its office locations. This operational change not only reduced direct emissions but also shifted some emissions to Scope 3, reflecting a more complex emissions profile that incorporates value chain considerations.
The funds accrued from Klarna’s internal carbon tax support a variety of climate projects, with the company’s contributions aiding 15 projects in 2023 alone. Looking forward, Klarna aims to support over 45 organizations by the end of 2024, focusing on initiatives ranging from carbon removal to nature protection and decarbonization.
Klarna was one of the founding partners of the Climate Transformation Fund in 2021, which is described as a 'beyond-offsetting' charitable financial vehicle. This fund does not merely purchase carbon credits but seeks to maximize the impact per dollar by supporting projects that aim for policy change, technological innovation, and nature-based solutions like reforestation.
The Climate Transformation Fund, supported by Klarna and other diverse donors including Spotify, ING Bank, and Pangaia, has funded 30 projects with a total of $8 million since its inception. This collaborative approach highlights the growing trend among tech companies to take a proactive role in addressing global environmental challenges, emphasizing impactful and sustainable solutions over traditional carbon offsetting.
Klarna’s decision to double its internal carbon price is a testament to the company's strategic foresight and commitment to environmental stewardship, setting a benchmark for corporate responsibility in the fintech industry and beyond.