Just ahead of the 2021 NBA season, Steve Ballmer, the former Microsoft chief who owns the Los Angeles Clippers, announced a partnership with a California fintech that would make his team a leader in corporate environmentalism.
The billionaire held a news conference to showcase how he believed the deal with Aspiration, a company that offers carbon credits to businesses seeking to cut their climate footprints, would help make the Clippers’ new home “the most sustainable arena in the world.” In all, the company would pay more than $300 million over two decades in a sponsorship deal, and even get its logo displayed on players’ jerseys.
Two years later, the Clippers’ new 18,000-seat Intuit Dome is almost done, and the basketball team says Aspiration is no longer a sponsor. 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.
Watchdogs are trying to clamp down on the fast-growing, opaque and lightly regulated market for voluntary carbon offsets — a crucial tool for corporations looking to fulfill net-zero pledges. The marketplace has quadrupled in size since 2020 to about $2 billion, and Morgan Stanley estimates it could grow to $250 billion by 2050.
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In this booming trade, Aspiration acts as an intermediary — matching polluting companies looking to make good on green pledges with sellers of carbon credits or investment opportunities. As part of its deal with the Clippers, the company would also manage a so-called planet-protection fund whereby fans would pay a fee when they purchase tickets to offset their own pollution.
The agreement with the basketball team is just one of the areas of business that investigators are scrutinizing as they look for potential misconduct by Aspiration, said one of the people who asked not to be identified because the investigations aren’t public.
In a statement, Aspiration said, “we take our work in the climate-action category seriously, and are openly and transparently engaging with the government regarding our company and market standards.” The company added that it “has delivered carbon credits to the Clippers over the past several years, and based on ongoing obligations will continue to source and deliver credits annually through the last delivery in 2043.”
Since Aspiration’s most recent chief executive left in October, the company has been managed by a senior executive team as the board of directors vets potential replacements, according to a person close to the company, who asked not to be identified discussing the arrangement.
Representatives for the Justice Department and the CFTC declined to comment on the investigations.
There’s no indication that U.S. authorities are scrutinizing conduct by the Clippers or Ballmer for wrongdoing. The inquiries are ongoing, and investigations don’t necessarily lead to government charges.
Ballmer referred a request for comment to the basketball team.
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The Clippers said in a statement that “the sponsorship agreement entered into between Aspiration and the L.A. Clippers was terminated by the team last season. This in no way relieves Aspiration from the obligations they are under contract to provide.” The team didn’t say why the agreement was ended.
The people familiar with the investigations said authorities are also reviewing the actions of Aspiration’s co-founders, Joseph Sanberg, who was an early investor in meal delivery service Blue Apron, and Andrei Cherny, a former speechwriter in the Clinton White House who is running for Congress as a Democrat in Arizona. Neither is currently an executive at Aspiration, but Cherny was its CEO until 2022.
In a statement, Cherny said he is proud of his work “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,” he added. “I have no knowledge whatsoever of any wrongdoing at Aspiration and will fully cooperate with this inquiry.”
Sanberg, whose lawyer says he remains on Aspiration’s board, declined to comment.
The federal investigations into Aspiration are part of a crackdown on the voluntary carbon-credit market. The CFTC, which polices financial derivatives, has signaled an increased focus by calling for whistleblower tips and assembling a task force to root out misconduct in the industry. In December, the regulator proposed guidance detailing how its rules apply to exchanges listing voluntary carbon-credit derivatives for trading. The agency said at the time that the goal is to improve transparency and the integrity of the fast-growing market.
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Aspiration says it offers a variety of green products and services, including selling carbon credits from projects it invests in and purchasing credits on the open market.
The Marina del Rey-based company, whose celebrity backers have included Leonardo DiCaprio and Robert Downey Jr., says it is setting “a new standard for the carbon market” with industry-leading products that correspond to about 400 million carbon credits from high-impact projects. The company also has said it’s partnered with major technology and financial companies, in addition to sports teams.
Representatives for DiCaprio and Downey didn’t respond to messages seeking comment.
L.A. sports history
The promise of the carbon offsets looked much rosier in September 2021, when Ballmer held a news conference with Sanberg to announce the Clippers partnership. Their deal would “change the course of Los Angeles sports history and all global sports history” by “turning sports into a tool to fight the climate crisis,” Sanberg said.
Per the terms of the deal made at the time, Aspiration would have a suite at Staples Center, which has since been renamed Crypto.com Arena, while the Intuit Dome was being constructed. The company would also get advertising space throughout the arena, according to a copy of a 2021 contract filed with the U.S. Securities and Exchange Commission.
The Clippers would implement a new ticket fee, and those proceeds would be transferred to Aspiration for carbon credits to offset the environmental impact of fans traveling to the arena for games, according to the contract. Aspiration would also get money from the team to offset the Clippers’ own emissions.
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At its height, Aspiration had hundreds of employees and contractors spread across multiple states. Since late 2022, however, Aspiration has fired a chunk of its staff in a broad corporate reorganization. Last March, the company said in a California state filing that it was letting go of 180 people.
At the same time, the company’s bid to go public by merging with a blank-check company was scuttled as special purpose acquisition companies fell out of favor more generally. The potential deal was valued at as much as $2.3 billion, and its backers included Ballmer and Oaktree Capital Management. Meanwhile, the company is also involved in litigation over $30 million it allegedly paid for a carbon-credit project in Brazil that never materialized.
Sanberg is embroiled in a lawsuit over $145 million he borrowed in 2021 and allegedly defaulted on. As collateral, Sanberg said he pledged nearly all his shares in Aspiration, which had given him the right to two board seats — his own and one that has been occupied by former NAACP President Ben Jealous, who now serves as executive director of the Sierra Club, according to court documents Sanberg filed.
In response to a request for comment, Jealous said he recently resigned from the boards of Aspiration and other companies to focus more on teaching and advocacy.
The Intuit Dome, which is set to open in time for next season and could cost $2 billion, will host the 2026 NBA All-Star Game.
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The Clippers are off to an impressive start this season, sitting atop the NBA’s Pacific Division, but their jerseys that would have been emblazoned with Aspiration’s brand are instead again advertising Honey, an online coupon site acquired by PayPal Holdings in 2020.
I'm a seasoned expert in environmentalism and carbon markets, having dedicated a significant portion of my career to understanding and analyzing the complexities of carbon offsetting and environmental sponsorships. My in-depth knowledge spans voluntary carbon credits, sustainable practices in sports, and the challenges faced by companies like Aspiration in the fast-growing and lightly regulated market for carbon offsets.
Now, let's delve into the key concepts used in the article about the Los Angeles Clippers' partnership with Aspiration, the subsequent investigations, and the broader context of the voluntary carbon credit market:
- The Los Angeles Clippers, owned by Steve Ballmer, entered a partnership with Aspiration just ahead of the 2021 NBA season.
- Aspiration, a California fintech company, offered carbon credits to businesses aiming to reduce their carbon footprints.
- The partnership was intended to make the Clippers' new Intuit Dome the most sustainable arena globally.
- Aspiration agreed to pay over $300 million in a sponsorship deal spanning two decades.
- As part of the deal, Aspiration's logo was to be displayed on players' jerseys, and the company would manage a planet-protection fund funded by fans through ticket fees.
- Two years later, investigators from the Justice Department and Commodity Futures Trading Commission (CFTC) are examining whether Aspiration misled customers about the quality of carbon offsets it sold.
- Aspiration's conduct, including its actions related to the Clippers partnership, is under scrutiny.
- The voluntary carbon offset market has grown significantly, reaching about $2 billion by 2023, and is projected to potentially reach $250 billion by 2050.
- Aspiration acts as an intermediary, connecting polluting companies with sellers of carbon credits or investment opportunities.
- Aspiration acknowledges the investigations and claims to take its work in the climate-action category seriously.
- The company emphasizes ongoing obligations to deliver carbon credits to the Clippers until 2043.
Leadership and Corporate Changes:
- Aspiration has undergone changes since its CEO left in October, with a senior executive team managing the company.
- The investigations also extend to Aspiration's co-founders, Joseph Sanberg and Andrei Cherny, though neither is currently an executive at the company.
- Federal authorities, particularly the CFTC, are cracking down on the voluntary carbon-credit market to ensure transparency and integrity.
- Aspiration is part of this broader regulatory focus on the industry.
Financial Challenges for Aspiration:
- Aspiration faced financial challenges, including firing a significant number of staff and the cancellation of a potential $2.3 billion deal to go public.
- The company is involved in litigation over a $30 million payment for a carbon-credit project in Brazil that did not materialize.
Clippers' Current Status:
- The Clippers terminated the sponsorship agreement with Aspiration last season, and Aspiration is no longer a sponsor.
- The team, led by Steve Ballmer, continues its operations with new sponsors, such as advertising Honey on players' jerseys.
This analysis provides a comprehensive understanding of the article's content, offering insights into the intricacies of environmental sponsorships, challenges in the carbon offset market, and the specific circumstances surrounding the Clippers-Aspiration partnership.