Corporate greenwashing

The climate promises made by many large companies do not stand up to closer scrutiny

by Martin Auer

2019 has Amazon along with other large corporations The Climate Pledge founded, one of several mergers by companies that commit to becoming carbon neutral by 2040. But to date, Amazon hasn't spelled out in detail how it intends to achieve that goal. It is not clear whether the pledge covers only CO2 emissions or all greenhouse gases, and it is not clear to what extent emissions will actually be reduced or merely offset by carbon offsetting.

Ikea wants to be “climate positive” by 2030. Exactly what that means remains unclear, but it suggests that Ikea wants to do more than go carbon neutral by then. Specifically, the company plans to reduce its emissions by just 2030 percent by 15. For the rest, Ikea wants to count “avoided” emissions, among other things, i.e. emissions that its customers actually avoid when they buy solar panels from Ikea. Ikea also counts the carbon bound in its products. The company is aware that this carbon is released again after around 20 years on average (e.g. when wood products are disposed of and burned). Of course, this negates the climate effect again.

Apple Lossless Audio CODEC (ALAC), advertises on its website: “We are CO2 neutral. And by 2030, all the products you love will be too." However, this "We are CO2-neutral" only refers to the employees' own direct operations, business trips and commutes. However, they only account for 1,5 percent of the Group's total emissions. The remaining 98,5 percent occurs in the supply chain. Here, Apple has set itself a reduction target of 2030 percent by 62 based on 2019. That is ambitious, but still a long way from CO2 neutrality. Detailed intermediate goals are missing. There are also no targets on how to reduce energy consumption through the use of the products. 

Good and bad practices

Similar situations can be seen at other large companies. The think tank New Climate Institute took a closer look at the plans of 25 large corporations and analyzed the detailed plans of the companies. On the one hand, the transparency of the plans was evaluated and on the other hand, whether the planned measures are feasible and sufficient to achieve the goals the companies have set themselves. The overarching corporate goals, i.e. whether the products in this form and to this extent meet social needs at all, were not included in the evaluation. 

The findings were published in the Corporate Climate Responsibility Monitor 2022 report[1] together with the NGO Carbon Market Watch published. 

The report identifies several good practices against which compliance with corporate climate promises can be measured:

• Companies should track all of their emissions and report annually. Namely those from their own production (“Scope 1”), from the production of the energy they consume (“Scope 2”) and from the supply chain and the downstream processes such as transport, consumption and disposal (“Scope 3”). 
• Companies should state in their climate targets that these targets include emissions in scope 1, 2 and 3 as well as other relevant climate drivers (such as changed land use). They should set targets that do not include offsets and are consistent with the 1,5°C target for this industry. And they should set clear milestones no more than five years apart.
• Companies should implement deep decarbonization measures and also disclose them so that others can imitate them. You should source the highest quality renewable energy and disclose all the details of the source.
• They should provide ambitious financial support for climate change mitigation outside of their value chain, without masquerading as neutralizing their emissions. As far as carbon offsets are concerned, they should avoid misleading promises. Only those CO2 offsets should be counted that offset absolutely unavoidable emissions. Companies should only choose solutions that sequester carbon for centuries or millennia (at least 2 years) and that can be accurately quantified. This claim can only be met by technological solutions that mineralize CO100, i.e. convert it into magnesium carbonate (magnesite) or calcium carbonate (lime), for example, and which will only be available in the future that cannot be determined more precisely.

The report mentions the following bad practices:

• Selective disclosure of emissions, especially from Scope 3. Some companies use this to hide up to 98 percent of their entire footprint.
• Exaggerated past emissions to make reductions appear greater.
• Outsourcing of emissions to subcontractors.
• Hide inaction behind great goals.
• Do not include emissions from supply chains and downstream processes.
• Wrong targets: at least four of the 25 companies surveyed published targets that in fact do not require any reduction between 2020 and 2030.
• Vague or implausible information about the power sources used.
• Double calculation of reductions.
• Pick out individual brands and promote them as CO2-neutral.

No first place in the rating

In the evaluation based on these good and bad practices, none of the companies surveyed achieved first place. 

Maersk came in second (“acceptable”). The largest container ship shipping company in the world announced in January 2022 that it intends to achieve net-zero emissions for the entire company, including all three scopes, by 2040. This is an improvement over previous plans. By 2030, emissions from terminals should fall by 70 percent and the emission intensity of shipping (i.e. emissions per tonne transported) by 50 percent. Of course, if freight volumes increase at the same time, this amounts to less than 50 percent of the absolute emissions. Maersk would then have to achieve the bulk of the reductions between 2030 and 2040. Maersk has also set targets for a direct switch to CO2-neutral fuels, i.e. synthetic and bio-fuels. LPG as a temporary solution is not considered. As these new fuels pose sustainability and safety issues, Maersk has also commissioned related research. Eight freighters are scheduled to go into operation in 2024, which can be operated with fossil fuels as well as with bio-methanol or e-methanol. With this, Maersk wants to avoid a lock-in. The company has also lobbied the World Maritime Organization for a general carbon levy on shipping. The report criticizes the fact that, in contrast to the detailed plans for alternative fuels, Maersk presents few clear targets for scope 2 and 3 emissions. Above all, the energy sources from which the electricity for generating the alternative fuels will ultimately come will be critical.

Apple, Sony and Vodafone came third (“moderately”).

The following companies only slightly meet the criteria: Amazon, Deutsche Telekom, Enel, GlaxoSmithkline, Google, Hitachi, Ikea, Volkswagen, Walmart and Vale. 

And the report finds very little correspondence with Accenture, BMW Group, Carrefour, CVS Health, Deutsche Post DHL, E.On SE, JBS, Nestlé, Novartis, Saint-Gbain and Unilever.

Only three of these companies have drawn up reduction plans that affect the entire value chain: Danish shipping giant Maersk, British communications company Vodafone and Deutsche Telekom. 13 companies have submitted detailed packages of measures. On average, these plans are enough to reduce emissions by 40 percent instead of the promised 100 percent. At least five of the companies only achieve a 15 percent reduction with their measures. For example, they do not include emissions from their suppliers or from downstream processes such as transport, use and disposal. Twelve of the companies have not provided clear details for their greenhouse gas reduction plans. If you take all the companies examined together, they only achieve 20 percent of the promised reduction in emissions. In order to still reach the 1,5°C target, all emissions would have to be reduced by 2030 to 40 percent by 50 compared to 2010.

CO2 compensations are problematic

Of particular concern is that many of the companies include carbon offsetting in their plans, largely through reforestation programs and other nature-based solutions, such as Amazon is doing on a large scale. This is problematic because the carbon bound in this way can be released back into the atmosphere, for example through forest fires or through deforestation and burning. Such projects also require areas that are not available indefinitely and that may then be lacking for food production. Another reason is that carbon sequestration (so-called negative emissions) zusätzlich necessary to reduce emissions. So companies should definitely support such programs for reforestation or peatland restoration and so on, but they should not use this support as an excuse not to reduce their emissions, i.e. not include them as negative items in their emissions budget. 

Even technologies that remove CO2 from the atmosphere and bind it permanently (mineralize) can only be considered credible compensation if they are intended to offset unavoidable emissions in the future. In doing so, companies must take into account that even these technologies, if they are implemented, will only be available to a limited extent and that there are still great uncertainties associated with them. They must follow developments closely and update their climate plans accordingly.

Uniform standards must be created

Overall, the report finds that there is a lack of uniform standards at national and international level for evaluating companies' climate promises. Such standards would be urgently needed to distinguish real climate responsibility from greenwashing.

In order to develop such standards for the net-zero plans of non-governmental bodies such as companies, investors, cities and regions, the United Nations published one in March this year high-level expert group brought to life. Recommendations are expected to be published before the end of the year.

Spotted: Renate Christ

Cover image: Canva/postprocessed by Simon Probst

[1]    Day, Thomas; Mooldijke, Silke; Smit, Sybrig; Posada, Eduardo; Hans, Frederic; Fearnehough, Harry et al. (2022): Corporate Climate Responsibility Monitor 2022. Cologne: New Climate Institute. On-line: https://newclimate.org/2022/02/07/corporate-climate-responsibility-monitor-2022/, Access to 02.05.2022.