Aspiration is under investigation by the Commodity Futures Trading Commission about the quality of its carbon offsets

How Aspiration went from a fintech investment firm to a carbon broker.

Aspiration is a company that sells carbon credits to businesses looking to greenwash their polluting operations. The company won some prestigious deals, including with the Los Angeles Clippers basketball team, with the International Finance Corporation’s Carbon Opportunities Fund, and in 2023 Meta signed a deal to buy 6.75 million carbon credits from Aspiration.

Aspiration became the first Founding Partner in the Clippers new arena, the Intuit Dome. Steve Ballmer, former-CEO of Microsoft who owns the Clippers, said the arena will be “the most sustainable arena in the world”. Aspiration would pay more than US$300 million over 20 years in a sponsorship deal that would get its logo on player’s jerseys.

But now with the arena almost completed, Aspiration is no longer a sponsor.

Bloomberg reported last week that,

Investigators from the Justice Department and Commodity Futures Trading Commission are looking into whether Aspiration misled customers about the quality of carbon offsets it was selling, according to people familiar with the matter.

Before we get to Aspiration’s carbon credits, let’s take a look at the company and the people behind it.

Aspiration’s co-founders: Joe Sanberg and Andrei Cherny

Aspiration Partners, Inc, was incorporated in the tax haven of Delaware on 18 July 2013. The company’s co-founders were Joe Sanberg and Andrei Cherny.

Joe Sanberg describes himself as “a progressive business leader and anti-poverty advocate”. After studying at Harvard on scholarship, he worked on Wall Street for seven years. He earned what he calls a “ridiculous” amount of money that he will “never be able to spend”.

He worked two years as an analyst at Blackstone and five as a managing director at Tiger Global Management. In 2016, he told the Jewish Journal that,

“I made my money in a way that really created no value for anybody, except for a small number of people at the investment firm where I worked. I struggle with that.”

After Wall Street, he moved to investing in start-ups, including a meal delivery firm called Blue Apron. He co-founded Aspiration. He also set up CalEITC4Me which helps people claim tax refunds under the earned-income tax credit (EITC) in California.

Sanberg supports raising the minimum wage, taxing the ultra rich, cancelling student debt, medicare for all, and the green new deal.

Andrei Cherny is a lawyer and political speechwriter. He also studied at Harvard but not at the same time as Sanberg. They met in 1997 at a Harvard networking event in Washington DC.

In 2000, at the age of 25, Cherny was the lead writer of the Democratic Party platform when Al Gore ran for president. He was a speechwriter for John Kerry during Kerry’s 2004 presidential campaign.

In 2006, he co-founded Democracy: A Journal of Ideas, he worked as a criminal prosecutor and Arizona Assistant Attorney General from 2006 to 2009. He wrote Barack Obama’s 2008 campaign policy plan, “Change we can believe in”. In 2011, he became a Senior Fellow at the Center for American Progress.

In April 2023, Cherny announced that he is running for congress in Arizona.

Aspiration

Aspiration was created to offer investment funds to customers who could pay what that think is fair. That sounds like a good deal. But as Scott Galloway, Professor of Marketing at New York University Stern School of Business, points out, “keep reading the fine print and you find a base fee of 0.5%”.

Galloway notes that this is more than you’d pay for other better-performing funds. And you might end up paying significantly more. In June 2017, in an interview with Inc. CEO Cherny said 90% of customers choose to pay at least something.

Aspiration’s Redwood Fund focussed on sustainable investing, aiming to invest in socially responsible companies and to avoid fossil fuel and weapons companies.

But Galloway found that the Redwood Fund owned shares in several companies that are large consumers of fossil fuels, or in the fossil fuel industry itself. Such as Southwest Airlines and MSA Safety which sells safety equipment to the oil and gas industry.

UBS runs the Redwood Fund for Aspiration. And UBS is one of the biggest fossil fuel financiers in the world.

Galloway writes that most of the Redwood Fund “consists of stocks that are prevalent in every portfolio, such as Microsoft and Starbucks”.

Aspiration raised almost US$600 million, from investors that include the actors Leonardo DiCaprio, Orlando Bloom, Cindy Crawford, and Robert Downey Jr., the musician Drake, Jeffrey Skoll of the Skoll Foundation, basketball coach Doc Rivers, and Steve Ballmer, the former-CEO of Microsoft.

By mid-2021, Aspiration claimed that more than five million people had “signed up as Aspiration members”. But the reality was that the company had five million registered emails. Only 12% of that number actually had customer accounts with Aspiration.

In 2021, Aspiration announced plans to go public, using a special purpose acquisition company (SPAC) called InterPrivate III Financial Partners Inc. (Here’s the investor presentation.) The deal was anticipated to bring in more than US$400 million. And the company would be valued at US$2.3 billion.

The company planned to spend US$149 million on marketing in 2021, although its anticipated revenue for the year was just US$98 million.

But in 2022 the stock market fell and the financial technology or “fintech” market crashed. 180 SPACs were cancelled. Aspiration’s plans to go public have been postponed several times.

Aspiration’s growth slowed. In August 2022, the company’s app was downloaded 30,000 times, only 10% of the number of downloads in August 2021.

In October 2022, Cherny was replaced as CEO of Aspiration by Olivia Albrecht.

Aspiration’s tree planting claims

Since 2020, Aspiration has promised to plant a tree with the leftover change from customers’ purchases. The company claims to have “one of the largest tree-planting programs in the world”.

The company doesn’t plant the trees itself, but partners with tree-planting organisations, such as Eden Reforestation Projects, Arbor Day Foundation, and One Tree Planted.

On 18 August 2021, in a webcast, Andrei Cherny announced that, “In the past year, the Aspiration community has planted over 35 million trees.” He added that, the company plants “as many trees every day as there are in Central Park”.

Carson Kessler, a journalist with ProPublica, investigated Aspiration’s claims about the number of trees the company had planted. It turned out that Cherny’s number of tree planted was actually the “cumulative total of to-be planted trees”. Kessler writes that, “that 35 million figure included millions of trees that had not actually yet been planted”.

Cherny acknowledged as much in a written response to ProPublica’s questions:

“The Aspiration community has supported the planting of more than 35 million trees, an amazing accomplishment we’re really proud of. Over 12 million of those trees are already in the ground, with more being planted every day.”

Eden Reforestation Projects told ProPublica that “The current total of trees planted for all project sites that Aspiration sponsors is 16 million trees.”

Arbor Day Foundation said it had planted 6,000 trees for Aspiration between early 2019 and 1 August 2021.

And One Tree Planted cited “confidentiality/non-disclosure commitments” and declined to comment beyond confirming that Aspiration supported one reforestation project with them.

Nevertheless, in its 2021 report to the World Economic Forum’s one trillion tree initiative, Aspiration claimed that by the end of 2021 it had planted “39,694,995 trees across Kenya, Mozambique, Madagascar and Honduras and funded an additional 10 million trees to be planted the following year”.

In February 2023, Aspiration claimed to have planted more than 101 million trees. Cherny repeated the claim in a video launching his campaign to run for congress:

Cherny: “And to fight the climate crisis, we planted over 100 million trees here in Phoenix, across the country, and around the world.”

In a press statement, Olivia Albrecht, Aspiration’s CEO, said,

“Working with high-quality partners like Eden not only helps Aspiration deliver on our commitment to plant 1 billion trees by 2030. . . .

“As of December 2022, Aspiration has already funded the future planting of over 140 million trees.”

Forrest Fleischman, associate professor in the Department of Forest Resources at the University of Minnesota, told ProPublica that successfully growing a tree and making sure it survives is a 20-to-50-year proposition.

Fleischman added that,

“It’s easy to tie tree-planting to a transaction. But if someone says they are planting a tree every time X happens, it doesn’t really tell you they’re doing a meaningful activity, and it very well could be a method of greenwashing. . . .

“This focus on the number of trees planted is not a meaningful measure of your impact on the ecosystem.”

Enter carbon credits

In recent years, Aspiration has increasingly focussed on profiting from carbon markets. In 2021, sales of carbon credits raised US$56 million in revenue, almost twice what the company got from digital banking.

In October 2021, Aspiration launched a credit card called “Aspiration Zero” which the company claimed was “the world’s first credit card built to combat the climate crisis”.

In a 2021 press release, then-CEO Andrei Cherny said,

“Aspiration Zero is more than a credit card — it is one of the only products of any kind that will offset the average person’s entire carbon footprint just by using it once a day. Millions of Americans are joining the fight against the climate crisis in their home, in their car, in the grocery store. Now, for the first time ever, they can bring that fight to their wallet.”

The company’s website was relaunched to feature the slogan, “Empowering business to change climate change”.

In June 2022, Olivia Albrecht joined Aspiration as the company’s Chief Sustainability Officer. She was head of Aspiration’s carbon markets desk.

In a June 2022 press statement, Albrecht said,

“The carbon credit markets are poised to play an increasingly important role in corporate strategy, capital allocation and consumer engagement as the world presses forward into climate action.”

And within five months she was Aspiration’s CEO.

In August 2022, when Aspiration joined the International Finance Corporation’s Carbon Opportunities Fund, the company claimed on its website that buying offsets would “Automatically neutralize the climate impact of every mile you drive.” This has now been changed to “Reduce the impact of every mile you drive”.

Screenshots from Aspiration’s website. Left, 29 January 2024. Right, 18 August 2022.

In May 2023, in an interview with the New York Stock Exchange, Albrecht described the company as follows:

“Aspiration is a leader in climate finance. Our objective is to drive capital into large scale, high impact, high quality, carbon projects, largely focussed on the nature-based side of the equation, in the voluntary carbon market. So we are mission driven to drive capital at scale with impact to really important projects that are being broken on ground all around the world.”

In January 2023, Aspiration announced that it was investing in Compassionate Carbon, a subsidiary of Eden Reforestation Projects. Compassionate Carbon was launched in 2021 to develop landscape-scale afforestation, reforestation, and revegetation and REDD projects. The projects are to generate carbon credits.

But Aspiration seems to be struggling, despite Albrecht’s claim that the company is a “leader in climate finance”.

In December 2022, Aspiration sacked 100 people. In March 2023, the company sacked another 180 people - more than half of its staff.

Aspiration is involved in litigation over US$30 million that the company allegedly paid for a proposed carbon credit project in Brazil that didn’t go ahead.

And Joe Sanberg is involved in a lawsuit over US$145 million that he borrowed in 2021 and allegedly failed to repay. He used almost all his shares in Aspiration as collateral for the loan.

According to Olivia Albrecht’s LinkedIn profile, she left Aspiration Partners in October 2023. In September 2023, she incorporated a new company in the tax haven of Delaware, called Artemis Climate, LLC. The company “advises public and private enterprises on decarbonization pathways, including climate investments and capital deployment”.

Aspiration’s carbon credits

Little information is available on Aspiration’s website about where the company buys its carbon credits. Aspiration’s website states that,

Aspiration Partners’ enterprise carbon business is now Catona. You can find their high-quality carbon credits on the Catona website.

Catona’s website includes very little information about the company, but a footnote on the website’s privacy page states that “Catona Climate is a d/b/a [doing business as] of Aspiration Partners, Inc., a Delaware corporation.”

In a recent post on the company’s blog, Aspiration lists three projects that it buys carbon credits from:

• Renewable Wind Power Project by Adani, Gujarat, India

• Northern Kenya Improved Grasslands, Samburu County, Kenya

• Mai Ndombe REDD+ Project, Mai Ndombe Province, Democratic Republic of Congo

Let’s look at each one in turn:

Renewable Wind Power Project by Adani, India

Carbon credits from renewable energy projects are extremely controversial. As Climate Home wrote recently,

Experts have long written off the vast majority of credits produced from renewable energy as junk because they often already provide the cheapest sources of power in most of the world and selling offsets to fund them does not have any additional impact on emissions.

Wind power is one of the cheapest forms of electricity generation currently available.

In 2021, CESifo, a Munich-based research network, produced a report into wind power and the clean development mechanism in India. They found that at least 52% of the carbon offsets were generated by projects that would very likely have been built without carbon funding. They conclude that “global emissions will have increased by 28 million tonnes of carbon dioxide emissions” as a result of these junk carbon credits.

Aspiration sold carbon credits from this wind project to Salesforce. On its website, Salesforce includes the ratings of this project given by the ratings agencies BeZero and Calyx Global.

BeZero gives the project a carbon rating of B which means that BeZero considers that “the credit issued by the project has a low likelihood of achieving 1 tonne of CO₂e avoided or removed”.

Calyx Global gives the project its lowest possible score: E. This means that “Calyx Global has Low Confidence that he carbon credit reliably represents a unique and permanent metric tonne of emission reduction or removal”.

Northern Kenya Improved Grasslands, Kenya

This project is run by Northern Rangelands Trust and covers an area of more than two million hectares. A 2023 report published by Survival International found serious problems with the project.

More than 100,000 people live inside the project area, including Indigenous Samburu, Maasai, Borana, and Redille communities. The project breaks down their traditional grazing systems and replaces them with a centrally controlled system. Survival International points out that this system is actually closer to commercial ranching.

The changes are culturally destructive, and could endanger livelihoods and food security by preventing migration during seasonal droughts.

Among the problems highlighted in Survival International’s report are that the project is not additional, relies on an inflated baseline, monitoring of leakage is “little more than guesswork”, and no adequate process of free, prior and informed consent was carried out with the Indigenous Peoples living in the project area.

In March 2023, as a result of the report, the carbon certifying company Verra suspended the project pending a quality control review of the project. Verra published the outcome of its review in November 2023 and stated that it had found “no non-conformities”.

But as Survival International points out, Verra’s review addressed “none of the major challenges that Survival raised” about the project. Instead of investigating the fundamental problems with the project, Verra’s review focusses only on the most recent audit of the project.

As such, Verra simply ignored the critical problems with the project that are raised in Survival International’s report.

Mai Ndombe REDD+ Project, Democratic Republic of Congo

The Mai Ndombe REDD+ project started 11 years ago. In 2012, researchers from Forest Peoples Programme and Cercle pour la defense de l’environnement travelled to the project area and held meetings with the customary leaders from six communities in the project area. They found that the project had started without the free, prior and informed consent of the people living there.

The project area consists of two former logging concessions. In 2008, these two logging concessions were cancelled - three years before the REDD project started. Since 2002, the Democratic Republic of Congo has had a moratorium on the allocation of the new logging concessions. Nevertheless, the project developer argues that without the REDD project, the forest would be heavily logged.

To justify this argument, Wildlife Works Carbon, the project developer, relies on a reference area about 600 kilometres away from the project area. The reference area has been almost completely deforested.

But the reference area is much closer to the capital, Kinshasa, and to shipping harbours, and there is a much higher population density in Bas-Congo province, where the reference area is, than in the project area.

In 2016, Alain Karsenty, an environmental economist at the French research institute CIRAD, co-wrote a paper published in the International Forestry Review. The paper described the choice of the reference area as “dubious”.

To make matters worse, deforestation actually increased after the project started.

The ratings agency BeZero gives Mai Ndombe a score of BB, which means that “the credit issued by the project has a moderately low likelihood of achieving 1 tonne of CO₂e avoided or removed”.

Calyx Global gives the project a score of E, which means that, “Calyx Global has Low Confidence that the carbon credit reliably represents a unique and permanent metric tonne of emission reduction or removal”.

In 2022, Jonas Gerding, a journalist with the German newspaper Die Zeit, visited the Mai Ndombe project area. He found that as well as the dubious claims of what would have happened without the project, and the lack of free, prior and informed consent, local communities have seen few, if any, benefits from the project.

Aspiration’s response to the CFTC investigation

In a statement about the CFTC investigation, Aspiration said,

[W]e take our work in the climate-action category seriously, and are openly and transparently engaging with the government regarding our company and market standards.

Aspiration added that it has already delivered carbon credits to the Clippers since 2021 and the company is under contract to continue to supply carbon credits until 2043.

And in a statement to The Arizona Republic, Cherny said,

“I have spent more than 25 years working to combat the climate crisis and am proud of the work I did to promote cutting-edge solutions at Aspiration. The carbon removal credit industry is an emerging industry and deserves to be regulated and scrutinized to ensure it is as effective as possible.

“I have no knowledge whatsoever of any wrongdoing at Aspiration and will fully cooperate with this inquiry.”

But Cherny’s company, Aspiration, sold carbon credits to companies looking to meet “net zero” targets. And the reality is that offsetting emissions is just not the same thing as preventing those emissions in the first place.

As the Dutch advertising watchdog ruled in 2021, Shell could not prove that the carbon offsets it had bought made car driving “CO₂ neutral”.

The Dutch watchdog concluded that,

[T]he suggestion that by paying an additional cent per litre for the carbon credits, motorists neutralise the damage is incorrect: it is scientifically certain that a measurable CO₂ pollution is released during the production and use of fossil fuels that is permanently included in the carbon cycle of the planet, thereby damaging the climate. By contrast, the activities touted as offsetting do not physically extract any additional amount of CO₂ from the carbon cycle, let alone do so in a permanent, measurable and scientifically certain way. There is therefore no actual equivalence between CO₂ pollution from fossil fuels and the activities that are advertised as so-called compensation for this CO₂ pollution: those activities cannot actually compensate for the pollution.

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