As efforts to address climate change ramp up it is likely that efforts to scrutinize and criticize such efforts will also ramp up. The generic, though imprecise, term for environmental claims that fail to deliver on their promise, is ‟greenwashing.” Standard & Poor‛s defines greenwashing as companies perceived to be making exaggerated or misleading environmental claims, sometimes without offering significant environmental benefits in return.
NewClimate Institute for Climate Policy and Global Sustainability, a reputable non-profit European research organization, and Carbon Market Watch, another reputable Europe-based non-profit, have recently taken a look at the transparency and integrity of the climate pledges of 25 leading companies. The results of the research are worrisome: no company achieved a high integrity rating; one, Maersk, achieved a reasonable integrity rating; three, Apple, Sony and Vodafone, achieved moderate integrity; and, the remaining 21 were either low or very low integrity.
Companies identified with low or very low integrity assessed in the 2022 Corporate Climate Responsibility Monitor were surprising. Low integrity: Amazon, Deutsche Telekom, Enel, GlaxoSmithKline, Google, Hitachi, Ikea, Volkswagen, Walmart, and Vale. Very low integrity: Accenture, BMW Group, Carrefour, CVS Health, Deutsche Post DHL, E.ON SE, JBS, Nestle, Novartis, Saint-Gobain, and Unilever.
The strength of the NewClimate research is that in its two recent Corporate Climate Responsibility reports it presents not just a critique of corporate initiatives but also a set of guidance and assessment criteria for good practice in corporate emission reduction and net-zero targets.
In summary, NewClimate Institute recommends that companies making net-zero and similar commitments should:
1) Disclose full details on their GHG emissions on an annual basis, with a breakdown of the data to specific emission sources (including scope 1, 2, 3 and non-GHG climate forcers) and the presentation of historical data for each emission source. (Scope 1 are GHG emissions over which the company has direct control. Scope 2 emissions are indirect GHG emissions associated with the purchase of electricity, steam, heat, or cooling. Scope 3 emissions are the result of activities from assets not owned or controlled by the reporting organization, but that the organization indirectly impacts in its value chain.)
2) Explicitly state that their targets cover all scope 1, 2 and 3 emissions as well as any relevant non-GHG climate forcers. (Non-GHG forcers are gases, aerosols, and processes that change cloud abundance, leading to a change in the balance of radiation in the atmosphere which contributes to global warming. Emissions of non-GHG gases and aerosols from aircraft are one example.)
3) Set a specific emission reduction target that is independent from any offsetting, and aligned with 1.5°C compatible trajectories or benchmarks for the sector, as their main headline pledge.
4) Set interim targets that are aligned with the long-term vision in terms of depth and scope, with the first target on a timescale that requires immediate action and accountability (maximum five years).
5) Implement encompassing and deep decarbonization measures, and disclose details of those measures to support replication and the identification of new solutions.
6) Procure the highest quality renewable energy available, and disclose the full details of that procurement.
7) Provide an ambitious volume of financial support to climate change mitigation activities beyond the value chain, without claiming neutralization of the company’s own emissions.
8) Avoid misleading claims, and procure only high-quality credits that lead to an additional climate impact that is permanent and accurately quantified.
9) Avoid misleading pledges and commit to procuring only high-quality credits from high-hanging fruit projects, and ensure corresponding adjustments are applied to limit double counting risks.
These criteria, which are explained in much greater detail in the NewClimate Corporate Climate Responsibility Guidance and Assessment Criteria document, seem likely to be similar to those adopted by financial reporting regulators worldwide, including in North America. Hence companies that wish to demonstrate leadership on climate change mitigation and net zero would be well advised to familiarize themselves with the NewClimate work. Those which have already announced net-zero targets can use the criteria and assessment research to improve their performance so as to achieve a higher ranking in the 2023 and subsequent climate leadership reports.
The full report of the Corporate Climate Responsibility Monitor 2022 and the methodology report, which contains more information on the above criteria, are available here.
Colin Isaacs is a chemist with practical experience in administration, a municipal council, the Ontario Legislature, a major environmental group, and, for the last 33 years, as an adviser to business and government. He is one of the pioneers in promoting the concept of sustainable development for business in Canada and has written extensively on the topic in the popular press and for environment and business platforms.
Featured image credit: Getty Images, Hype Photography.