HomeCarbon CreditsKlarna Funds Carbon Removals with $5M from Internal Carbon Tax

Klarna Funds Carbon Removals with $5M from Internal Carbon Tax

Klarna reveals climate commitment worth a total of $2.35 million that will support more than 20 carbon removal organizations this year. 

Klarna, the global payments network and shopping solution provider, gets the contribution from its internal carbon tax income. It’s the third time the company is doing this act since 2021, which now totals to over $5 million.  

Remarking on the announcement, Klarna’s Head of Sustainability Salah Said noted that:

“Klarna is committed to supporting impactful organizations long-term as a catalyst for change, to help them grow and maximize their impact… driving the removal of CO2 from the atmosphere while also contributing to nature protection and restoration, decarbonization, and advocacy.”

Klarna’s Approach to Sustainability

Klarna is a Swedish fintech company that provides online financial services. It’s the first fintech to join The Climate Pledge and Race to Zero campaign. 

With funds from its internal carbon tax program, Klarna is putting its money in carbon removal solutions that mitigate climate change. The goal is to achieve long-term climate impact by supporting various climate projects to make an impact by 2030. 

This climate initiative is part of Klarna’s Climate Transformation Fund in partnership with Milkywire. The Fund selects the companies to support.

What’s The Climate Transformation Fund?

The Climate Transformation Fund is a “beyond-offsetting” charitable fund arranged by planet health platform Milkywire. It particularly supports various projects that tackle the climate crisis within these areas – biomass, rock, ocean, and direct air capture. 

To help achieve the global net zero goal, the global retail bank implemented an internal carbon tax to make money for the Climate Transformation Fund. The company charges its own emissions with this breakdown:

  • $100/metric ton for Scope 1 and Scope 2 emissions, plus travel emissions 
  • $10/metric ton for the rest of Scope 3 emissions

Klarna and its Carbon Removal Partners

Last year, Klarna’s internal carbon tax income supported 16 climate projects. By the end of this year, the company will fund over 20 initiatives ranging from nature-based solutions to carbon removals. These include the following companies:

  • Carbon Capture Scotland 

This is a UK-based CO2 capture and storage firm focusing on capturing waste biogenic CO2 from whisky distilleries and storing it via geological storage. Their technology lowers the cost and footprint of sequestering CO2 from fermentation sources. Klarna plans to make a pre-purchase from this company this year. 

  • Takachar – biochar 

This Kenya-based company is producing biochar, a carbon-rich fertilizer, from crop and forest wastes. Takachar partners with local farmers to make good use of waste biomass to reduce carbon pollution with soil carbon removal. Klarna also plans to make a pre-purchase from Takachar. 

  • TerraFixing – DAC

This Canadian company has developed an adsorption based direct air capture (DAC) technology. The DAC is designed to work in cold remote locations where capturing and extracting CO2 is easier and cheaper. Klarna intends to make a pre-purchase from TerraFixing also this year.

  • Inplanet – Enhanced Rock Weathering (ERW) 

This ERW startup works in Brazilian agriculture and focuses on removing carbon by spreading silicate rock powders on farms. Inplanet does it under optimal soil and climate conditions for effective weathering and carbon removal. The company is set to make a pre-purchase deal with Klarna. 

  • SeaO2 – ocean CO2 capture

SeaO2 is a Dutch company that uses electrochemical oceanic carbon capture tech to capture CO2 from seawater and store it. It then returns the treated water back to the ocean for more carbon sequestration. 

Other CO2 removal companies that the Fund supports include existing ones such as Husk, InterEarth, and Silicate. Other new companies that Klarna will fund this year include the Kenya-based Octavia Carbon, Parallel Carbon, and Mission Zero Technologies.

Klarna had pre-purchased carbon removal credits from Heirloom and Climeworks in 2021 and 2022.

Klarna’s Net Zero Goals and Progress

Apart from funding carbon removal and other climate projects, Klarna also manages to further reduce its own CO2 footprint. The payment network cut its carbon emissions by almost 4% in 2022 compared to 2021.

The carbon reductions were due to continued improvements Klarna makes in cutting footprint from Scope 1 and 2 emissions. The company also managed to run all its offices on 100% renewable energy last year, 2 years earlier than targeted.

  • Klarna aims to cut 50% of its carbon-intensity-based emissions in line with the Paris Agreement by 2030. It seeks to reach net zero operations by 2040, 10 years ahead than the global target.

To date, here is Klarna’s climate targets and progress in a glance:

Klarna net zero targets and 2022 progress

Going forward, Klarna will continue to support and select more projects as it works toward achieving its net zero target. By making those pre-purchase agreements, Klarna and its partners help scale the emerging carbon removal industry with new climate solutions.

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