Last week, a New York Times article came out alleging Crocs has a “trick for dodging taxes.” The trick is as follows: open an entity in Malta, appoint local tax accountants as board members of that entity, and then shift income out of the high-tax markets where Crocs actually sells shoes and into Malta, driving the tax rate on those profits to near zero. Investors have reaped the rewards: shares have gone up 54% in 2026.
It seems that Crocs’ modus operandi is accounting tricks — not only to evade responsibility financially, but also environmentally. In fact, in order to claim reduced carbon emissions, Crocs has been using another loophole: the “Malta office” of climate reporting, mass balance accounting. This accounting trick essentially allows Crocs to claim that it is using low-carbon materials and achieving related emissions cuts, even if they’re not physically present in its products.
In the same way that Crocs has a vested interest in reducing its taxes, it also has a vested interest in reducing its reported emissions. Its shoes are made mostly with fossil fuels, meaning it faces high risk of future legal scrutiny, greenwashing penalties and carbon taxes — especially in regions like the EU. But it’s also a brand built on an image of progressiveness. It wants, apparently, “a more comfortable world for all.”
And so, Crocs has committed to reducing the carbon footprint of its flagship product, the Classic Clog, by 50% by 2030. Its main strategy to achieve this goal is to replace fossil fuel materials with low-carbon alternatives. This is an ambitious goal to have, but genuinely lowering your materials’ carbon footprint is expensive and complicated: it takes investment in both supply chain infrastructure and detailed materials tracing. Instead, Crocs chooses to use mass balance accounting.
Here’s how it works: Crocs buys “bio-circular”, low-carbon materials from giant petrochemical producer Dow Chemical. Instead of investing in the infrastructure and technology necessary to trace and meaningfully increase the low-carbon content in each shoe, it uses an accounting trick. Through non-proportional mass balance accounting, Crocs can buy material that may have almost no “bio-circular” content in it, but that has been allocated “bio-circular” credits from elsewhere in the supply chain. This means that Dow may have used a small amount of low-carbon inputs across different production batches, turned those inputs into credits and moved them across outputs and products — even products from batches made with 100% fossil fuels.
Through this method, Crocs claimed 25.8% “bio-circular” content in the Classic Clog in 2025. This claim is counting towards reporting progress on its Net Zero by 2040 target, as well as its SBTi-approved emissions reduction targets.
There are various problems with this: 1) mass balance presents Crocs products as greener than they actually are, 2) it inflates emissions reductions, and 3) it Crocs to benefit legally, financially and reputationally from these claims while not having to put in the investment and work that actually accelerates a real-world low-carbon transition.
Major corporations have a responsibility to track, disclose and actively lower their emissions, not as an image-building exercise or a simple regulatory box to tick. They have this responsibility because they contribute massively to global emissions, and they also have the power, influence and money to accelerate the development of the technology and markets necessary for the transition to happen at the rate we need. Mass balance accounting, in this instance, is used as a figurative emissions-reporting-haven that sidesteps this responsibility.
After news broke about Crocs’ tax-evading practices, its shares slid. Clearly investors want Crocs to act with integrity. If Crocs continues to rely on dodgy accounting tricks that sidestep its responsibilities as a major, profit-reaping corporation, the trust it has worked so hard to build with investors and customers will be further at risk.
Read more about Crocs’ use of mass balance accounting in our latest report, From Offsets to Insets: new developments in corporate climate greenwashing.
Find out more about mass balance accounting here.
