The recent shift to remote work has created a loophole in the way corporations calculate their carbon footprints. Fixing this loophole is an enormous — and about to be missed — opportunity to tackle climate change.
Working from home (WFH) has changed much about how we work. From being treated with unexpected drop-ins by kids and pets during virtual meetings, to the establishment of the “Zoom uniform” (business on top, comfort on the bottom), to disruptions of traditional office cultures, the WFH transition has fundamentally altered the typical workday and the economy including how people get to work and what kinds of homes (and home offices) we live in. But when companies calculate their total greenhouse gas emissions (GHG), most companies include the emissions from heating and cooling their company offices but do not include the emissions from employees heating and cooling their home offices. Even with a new law with important climate provisions, the Inflation Reduction Act, and other public and private sector actions, estimates suggest that the US will fall 10 to 20 percent short of meeting the U.S. goal of 50 percent reductions by 2030. Harnessing the WFH transition can reduce households’ energy burdens thereby moving us closer to that goal while simultaneously slowing inflation and reducing Russia’s energy leverage.
Our new research shows the importance of the WFH transition for climate policy, but also the conceptual barriers that companies and governments must overcome to take advantage of the opportunity. For example, if I work at a large office building or factory, my emissions from heating and cooling the office, lighting, using of office equipment and other activities are reported by my employer. But when I shift to WFH, my office emissions now shift to my home. For the employer, it looks as though the emissions have disappeared, when they’ve simply moved outside the reporting boundary. Emissions reporting creates pressure for emissions reductions. So, if shifting emissions are reported as emissions reductions, the incentive for actual emissions reductions has been missed.
WFH can lead to decreases or increases in emissions. If I reduce commuting and work more efficiently at home, I can make major GHG reductions. However, if I drive around at lunch from home instead of walking from my office — which appears to be happening — I will increase my transportation emissions. Emissions increases also can occur if I use inefficient home equipment, follow bad energy habits or WFH allows me to move somewhere with a dirtier energy grid. For better or worse, energy habits and technologies will solidify and set the pattern for the next decade.
Changing these energy habits with education and behavioral nudges can reduce emissions and energy bills at minimal costs — and the opportunity is now. Decades of research show that habits are hard to break. When patterns are disrupted, as happened to workplaces around the country in response to COVID-19, new actions can become habits and new technologies can be adopted that reinforce those habits. A massive WFH transition is now underway that could help the U.S. and millions of employers meet their climate goals while making work more enjoyable and more remunerative for millions of workers. But governments and the private sector risk missing this opportunity, and, once it is gone, it will be gone for a generation.
The opportunity is substantial. According to Environmental Protection Agency (EPA), 27 percent of the US’s total greenhouse gas (GHG) emissions come from transportation; one-quarter of which are from commuting. Household electricity use accounts for an additional 15.4 percent of total GHG emissions once you include the emissions released from creating that electricity. Including commuting and electricity use, households contribute over one-quarter of all U.S. GHG emissions.
We can close the loophole by attributing WFH emissions to employers. This would allow employers and employees to better understand the effect of WFH on emissions and would create public pressure for employers and employees to act. The most common emissions reporting framework, the GHG Protocol Corporate Standard, could be easily adapted to include WFH emissions. Armed with even just rough estimates, corporate responsibility managers could create valuable incentives for reductions that would cut pollution, save employees money and reduce pressure on our electricity grid and transportation networks.
Employers have two major tools to harness the WFH transition. The first is simply to report WFH emissions. Whether required by government or private standards, nothing stands in the way of establishing the norm of reporting employee WFH emissions.
Even if GHG reporting isn’t updated, employers can mobilize employees by utilizing Employee Energy Benefits (EEBs). This could include giving employees benefits for installing more efficient heating and cooling systems, subsidizing public transportation or giving employees easy-to-use systems for real-time home energy use feedback. This list is far from exhaustive; businesses have access to dozens of effective, low-cost methods to reduce the carbon footprint from WFH. Employers have incentives to improve employee recruiting and retention, as well as an easy way to compensate employees in pre-tax dollars is to reduce their energy burden by reducing the costs of commuting and home energy use.
When properly implemented, EEBs can induce households to reduce their annual emissions by up to 20 percent, roughly 5.8 metric tons per household per year. EEB initiatives also can overcome the problems of scale that undermine other household initiatives. Large employers include hundreds of thousands of employees who are a ready audience for energy benefits.
The time is right to close this loophole and reduce the GHG emissions and energy burdens of America’s employees. But the lock-in effects on behavior and technology are already underway. As the WFH transition continues to unfold, public and private organizations have an opportunity to tackle the climate problem while reducing energy burdens and improving the lives of employees and the profitability of companies. We must not let it slip through our hands.
Michael P. Vandenbergh is the David Daniels Allen distinguished chair in law at Vanderbilt University Law School. He is also director of the Climate Change Research Network and a 2022 Andrew Carnegie fellow. He is a former chief of staff of the U.S. Environmental Protection Agency.
Sharon Shewmake is an associate professor of economics at Western Washington University’s College of Business and Economics and a member of the Washington State House of Representatives where she serves on committees dealing with energy, environment, agriculture, rural development and the capital budget and is a candidate for reelection.