He has something new to sell you.
Photo: Michael Kovac/Getty Images for WeWork
A luxury afforded to billionaires is that they don’t have to disappear, even if they fail spectacularly, and Adam Neumann, who co-founded and was exiled from the leadership of WeWork, is a prime example of this. When he was CEO of the real estate company, the independent Silicon Valley entrepreneur marketed expensive shared office space using a kind of witty gibberish. “Our mission is to elevate the conscience of the world” was the infamous pitch to Wall Street investors in WeWork’s initial securities filing in 2019. The document attempted to explain the patchwork of companies seemingly unrelated to parent We, including wave pools and private schools. Why be a real estate company when you can sell all aspects of a lifestyle? Some investors considered it a reasonable question – until it all exploded in spectacular fashion, leading to a delayed initial public offering and Neumann’s own ignominious and costly separation from the company.
But now he’s back, baby! Neumann is behind a new company whose market is once again as vast as life itself: the air we breathe and the environment in which we live. Reuters reported on Tuesday that he was the force behind Flowcarbon, a trading platform which, in his own words, sits at the intersection of the voluntary carbon market and Web3, leveraging blockchain to scale solutions to climate change. To translate: companies can buy credit on the lightly regulated carbon offset market via a cryptocurrency called Goddess Nature Token to give the impression that they are helping the environment. Great. In theory, this will make it easier and cheaper to trade credits on a market — all Neumann’s company wants in return is a 2% discount.
Here’s the problem with carbon offsets: they won’t save the environment. Under this system, companies that add more carbon to the atmosphere can pay – via credits – for projects that, in theory, remove carbon from the air elsewhere in the world. It is also supposed to create an incentive to reduce overall emissions. But in practice, it’s easy to play. According to Bloomberg, only 5% of credits actually remove carbon from the atmosphere. In fact, a separate investigation by the news agency revealed that huge corporations such as JPMorgan Chase, Disney and BlackRock were working hand in hand with one of the world’s biggest environmental groups, Nature Conservancy, to buy land that was in no danger of being destroyed – all as a way to make himself look greener than he really was.
These kinds of accounting tricks have big implications. The rise of environmental, social and governance investing — an increasingly influential investment philosophy that seeks to incentivize companies to adopt greener behavior — generated around $400 billion in funds last year. But the market as a whole is replete with sweeping definitions of what is considered environmentally friendly, a problem that has gotten so out of control that the Securities and Exchange Commission is seeking to reform it. Elon Musk spoke out against these funds as “scam“because ExxonMobil counts as an ESG company for its efforts to reduce its carbon footprint to net zero by 2050 (a plan that relies in part on carbon offsets), unlike Tesla, the world’s largest vehicle maker And even if he’s right, his own company is making billions selling the carbon credits on the open market, essentially laundering the very companies that Musk criticizes.
Neumann’s company doesn’t really deal with any of that, but it does have backing from investors like the crypto arm of Andreessen Horowitz, and the bridge has McKinsey contributing. In reality, what he’s trying to do here is make it cheaper and easier for the companies most likely to need carbon credits – like those in finance, insurance and energy – to buy them. It is entirely possible that the market will develop into something that has more accountability to it. For now, however, Neumann doesn’t seem to be raising the consciousness of the world as much as making the planet greener than it actually is.