Sustainability meets financial wellness: A look at carbon savings accounts

While it sounds too good to be true, there may be a benefit that can help employers reduce their carbon footprint and save their employees' money — and it comes in the form of a savings account.

Similar to HSAs and FSAs, carbon savings accounts allow employees and employers to contribute funds towards a specific purpose, such as upgrading cars, home appliances, heating and cooling systems to be more energy efficient, and over time, less costly. CSAs were created by software company Scope Zero, which partners with various green vendors to bring these upgrades to employees at a discount.

"CSAs are both a financial wellness employee benefit and a corporate sustainability strategy," says Lizzy Kolar, co-founder and CEO of Scope Zero. "We provide strong financial incentives to upgrade their home tech and personal transportation, which decreases work-from-home and commute emissions that a company is responsible for."

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Kolar always found herself struck by how many people within her community and beyond could not afford their energy bills, nor could they afford the needed upgrades to bring those bills down. In fact, according to LendingTree, 33% of Americans have reduced or skipped basic expenses like food or medicine to pay their energy bill. 

"I was born in West Virginia, and I was surrounded by both the coal industry and poverty," says Kolar. "But going through the employer could help upgrade the residential system." 

While attending grad school at Stanford, it dawned on Kolar that employers and employees should not be fighting separate sustainability battles. Given that residential energy consumption accounts for 20% of the total carbon footprint according to the Office of Efficiency and Renewable Energy, employers could make an impact by helping their employees first. 

"The average U.S. household could actually reduce its utility consumption by about 40% if they simply upgraded to the latest tech," says Kolar. "It's nothing fancy —  it's your Energy Star appliances, your smart thermostats and your LEDs."

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However, if the average home did make these changes without any assistance, their return on investment would be negative 10%, explains Kolar. The cost of the upgrades would be too high for the annual savings on utility bills to make an immediate impact. But Kolar estimates that between employer contributions and Scope Zero provided discounts, households could see their ROI go up to 20%, saving $1,500 per year on energy. 

"This is what allows us to truly position ourselves as a financial wellness benefit," says Kolar. "We are not only for folks looking to reduce their carbon footprint."

Scope Zero also allows employees to track how their upgrades are saving money and energy through their platform, driving home its dual purpose. Kolar encourages employers to consider whether their current sustainability efforts are making an impact and if some of those funds would better serve their workforce.

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"Companies can take some of the money that they're already putting towards their sustainability efforts redirected into CSAs," she says. "Now they're providing this financial wellness benefit for employees and reducing the company emissions that they were already trying to reduce before."

Ultimately, the fight against climate change will take everyone investing and engaging in sustainable practices, so why leave employees out of the equation?

"The CSA lies at this intersection of an employee benefit and a corporate sustainability strategy," says Kolar. "Once everyone is brought on board with the company's sustainability values, the company can achieve its climate goals in a cheaper and more cost-effective manner."