The ‘environmental’ premium: why it highlights organizational inefficiencies

Recently I purchased tickets to a popular Australian music festival.   After securing the tickets and finalizing my purchase, I was asked if I wanted to pay an additional fee to help offset the carbon emissions of the festival.  Reluctantly (and not wanting to be stricken with environmental guilt), I agreed to pay the additional fee.

A number of weeks later when I received the paper tickets by registered post, I couldn’t help but reflect on this additional fee and how it highlighted a number of inefficiencies within the organization supply chain.

Consider the environmental costs involved in transporting two paper tickets across Australia via registered post:

• People are employed to print the tickets and supporting documents
• These are sorted, double checked and folded into envelopes for postage
• The packages enter the Australia post supply chain and dispatched to various processing centres
• A postal worker attempts to deliver these packages to the recipient
• Many recipients are not available to sign for them, so packages are returned to the processing centre
• The recipient receives a notification and travels to the processing centre themselves to pick up the ticket
  

  The environmental costs of postage can be overwhelming

Clearly once materials, administrative expenses and travel are factored in, the environmental costs associated with transporting two paper tickets across Australia are substantial.

So, why did I agree to pay a small premium to offset the carbon emissions for the event when the environmental costs associated with dispatching me the tickets far outweighed the impact of the environmental premium I paid?

If the organizers were serious about reducing their carbon emissions, an e-ticketing system would be an obvious way of reducing the total environmental footprint of the event.  An e-ticketing system would reduce all the above costs to practically zero and would have a much more substantial impact on reducing the total environmental footprint of the event than asking customers to pay an additional ‘environmental’ premium

A wider trend

By no means am I using this example simply to denigrate the festival.  Rather, it is representative of a much wider trend whereby businesses are charging ‘environmental’ premiums to their customers to offset the environmental costs caused by inefficiencies in their supply chain.  How many times has a business suggested that you pay a little extra to help the environment, when they themselves are doing little more than using said premium to make some ‘environmental’ contribution?

If businesses were serious about reducing their total environmental footprint, they would think of more efficient ways to run their operations, rather than passing on these costs to customers under the guise of an ‘environmental’ premium and operating ‘business as usual’.

In many cases, the ‘environmental premium blatantly highlights organizational inertia and a willingness to exploit customers for a socially acceptable premium.

Businesses should be smarter.

// Alec Schumann