Social Europe

politics, economy and employment & labour

  • Themes
    • Strategic autonomy
    • War in Ukraine
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter

Corporate greenwashing—misusing ‘net zero’ pledges

Lindsay Otis 9th March 2023

Companies are making ‘carbon neutral’ claims based on dubious emissions offsetting and ‘insetting’—rather than actual cuts.

greenwashing,carbon neutral,net zero
Corporations can give themselves a green facelift by buying into offsetting schemes such as avoided deforestation (Ivan Marc / shutterstock.com)

We cannot afford any more missteps if we are to achieve the goal set out in the Paris Agreement of limiting global heating to a maximum of 1.5C above pre-industrial times, so as to maintain a habitable planet. Society must collectively treat the climate crisis with the urgency it deserves, shifting to a green economy first and foremost by decarbonising production and consumption.

Such a seismic shift requires the full involvement of every segment of society, including governments, citizens and—given their huge economic impact and carbon footprint—corporations. Companies have been under increasing pressure to be part of the climate solution, instead of continuing to be part of the problem.

Greenwashing explosion

Many businesses have responded to these calls by unveiling ambiguous ‘net zero’ climate pledges and vague climate strategies. Rather than the greening of business practices, however, these have largely comprised an explosion of corporate greenwashing.

This was the overarching conclusion (again) of this year’s Corporate Climate Responsibility Monitor. Produced by the NewClimate Institute, in collaboration with Carbon Market Watch, the report analyses the transparency and quality of the climate strategies of 24 global corporations which sell themselves as ‘climate leaders’.


Our job is keeping you informed!


Subscribe to our free newsletter and stay up to date with the latest Social Europe content. We will never send you spam and you can unsubscribe anytime.

Sign up here

All these companies—which include such household names as Amazon, Google, H&M, Zara, Mercedes-Benz and Samsung—have set some form of ‘net zero’ target and many also make carbon-neutrality claims. Yet the report reveals that nearly all the current climate claims or future net-zero targets are misleading, exaggerated or false.

Dubious practices

Instead of committing to deep decarbonisation by setting credible pathways to reduce their own emissions, many companies are choosing to ‘neutralise’ them, through the purchase of carbon credits on the voluntary carbon market (offsetting) or, even more questionably, within their own value chain (so-called ‘insetting’). These dubious practices do nothing to cut current corporate emissions and the over-reliance on offsetting, or ‘insetting’, means that, together, the 24 companies analysed are committed to reducing their carbon footprint by only 36 per cent by the time they claim they will have attained ‘net zero’. To contribute their fair share to global climate goals, they would need to slash their actual emissions by at least 90 per cent by mid-century.

Claiming to compensate for emissions and ‘cancel out’ all associated climate harm is a highly problematic corporate practice, often based on poor-quality carbon credits and flawed science. For example, credits for avoided deforestation are some of the most widely used on the market but they lack one of the most important foundations of a carbon credit—permanence.

Trees and other biological carbon sinks are susceptible to natural disasters, such as wildfires, which can quickly destroy a forest and release all the stored carbon dioxide into the atmosphere. Any carbon-neutrality claim a company made based on purchase of such carbon credits would no longer be applicable.

Yet, in spite of carbon credits literally going up in smoke, these companies can continue to make carbon-neutrality claims in perpetuity. This is because they use a questionable form of insurance, called a ‘buffer pool’, in which some credits created by forestry projects are set aside to compensate for such reversals.

Imprecise accounting

Furthermore, carbon credits and measurements of carbon footprint are prone to huge uncertainties, which can result in imprecise climate accounting. One carbon credit, for example, is supposed to equal one tonne of CO2 emitted, but this cannot be quantified to the certainty necessary to claim something as absolute as ‘carbon neutrality’.

Not only that, but the threat to forests has been found to be grossly overstated, leading to significant overestimation of the climate impact of forest projects. This can be seen in the Guardian’s recent investigation of Verra, a leading carbon standard.

Despite all the problems associated with offsetting, about half of the analysed companies made some form of carbon-neutrality claim related to their current activities, even though these only covered on average 3 per cent of their total emissions. In particular, Microsoft, Apple and Deutsche Post DHL made carbon-neutrality claims which in fact covered less than 2 per cent of emissions. This is disingenuous and highly misleading.


We need your support


Social Europe is an independent publisher and we believe in freely available content. For this model to be sustainable, however, we depend on the solidarity of our readers. Become a Social Europe member for less than 5 Euro per month and help us produce more articles, podcasts and videos. Thank you very much for your support!

Become a Social Europe Member

Confused consumers

Corporate net-zero and carbon neutrality claims tend to be misleading because they can be vague or distorted and their foundation obscured from full public view. This makes it difficult for non-experts to understand what they mean—and even for experts to get to the bottom of them.

Climate-related marketing often targets consumers, who, studies show, often do not understand what such claims really entail. If they are confused and misled about the real climate impact of their purchases, they may see no reason to change their behaviour and may even reward companies making outlandish claims. Why buy local when shipping companies offer ‘carbon neutral’ overseas options?      

Consumers need to be given the opportunity to embrace their role as a driving force behind a societal shift to a green economy and decarbonise their consumption. For this to occur, however, we need to strengthen legislation and regulations to protect consumers and ensure that they are provided with clear, reliable information so they can make more informed choices.

Unique position

The European Union is in a unique position to address this pervasive greenwashing, as policy-makers are in the midst of updating consumer-protection legislation. All tendentious and misleading climate-related neutrality or compensation claims or marketing—‘carbon neutral’, ‘CO2 neutral’, ‘CO2 compensated’, ‘climate positive’ and so on—should be banned.

The EU also needs to restrict more tightly claims relating to future environmental performance, such as ‘net zero by 2050’. Specifically, climate-related future performance claims should be prohibited when they involve offsetting, ‘insetting’, or any other method purporting to ‘neutralise’ or counter-balance emissions, rather than cutting them. 

Instead of peddling false or gimmicky carbon-neutrality claims, companies must be persuaded to communicate accurately about their climate-financing activities. They should be encouraged to advertise that they have made a donation to particular climate-related projects. This would not stop the flow of corporate revenue into mitigation projects, with real-world environmental benefits. It would simply facilitate truthful disclosure.

Judicial rulings

Not only would this protect consumers from misleading marketing and better prepare them for a green transition; it would force companies to take real and verifiable climate action if they wish to retain public confidence. It would also help them avoid the growing reputational and legal risks associated with questionable claims.

Indeed, there has been an uptick in enforcement actions and corresponding judicial or regulatory rulings, including a recent one in Sweden. In that case, the court prohibited the dairy company Arla Foods from making misleading climate-related claims which implied that no harmful climate impacts were associated with its activities or that these impacts had been neutralised or compensated.

The climate crisis is rapidly accelerating and we cannot wait any longer to take action. As some of the world’s greatest emitters, corporations must take their responsibility to tackle the crisis seriously. And governments and the EU must make sure they cannot greenwash their way out of that obligation.

Lindsay Otis
Lindsay Otis

Lindsay Otis is an expert on global carbon markets at Carbon Market Watch.

You are here: Home / Ecology / Corporate greenwashing—misusing ‘net zero’ pledges

Most Popular Posts

meritocracy The myth of meritocracy and the populist threatLisa Pelling
consultants,consultancies,McKinsey Consultants and the crisis of capitalismMariana Mazzucato and Rosie Collington
France,pension reform What’s driving the social crisis in FranceGuillaume Duval
earthquake,Turkey,Erdogan Turkey-Syria earthquake: scandal of being unpreparedDavid Rothery
European civil war,iron curtain,NATO,Ukraine,Gorbachev The new European civil warGuido Montani

Most Recent Posts

global south,Ukraine Winning in Ukraine, losing the global south?Werner Raza
imperial,Europe,Russia,Africa,Asia From imperial paternalism to genuine partnershipJérémy Lissouba
global south,Federal Reserve,debt,interest rates Where is the global south’s rescue brigade?Vera Songwe
corporate sustainability,gender,value chains Corporate sustainability needs a gender lensCarolina Rudnick Vizcarra, Sylvia Obregon Quiroz and Andriana Loredan
industrial policy,wellbeing,care Beyond industrial policyAnne-Marie Slaughter and Elizabeth Garlow

Other Social Europe Publications

front cover scaled Towards a social-democratic century?
Cover e1655225066994 National recovery and resilience plans
Untitled design The transatlantic relationship
Women Corona e1631700896969 500 Women and the coronavirus crisis
sere12 1 RE No. 12: Why No Economic Democracy in Sweden?

Foundation for European Progressive Studies Advertisement

Let’s end involuntary unemployment!

What is the best way to fight unemployment? We want to know your opinion, to understand better the potential of an EU-wide permanent programme for direct and guaranteed public-service employment.

In collaboration with Our Global Moment, Fondazione Pietro Nenni and other progressive organisations across Europe, we launched an EU-wide survey on the perception of unemployment and publicly funded jobs, exploring ways to bring innovation in public sector-led job creation.


TAKE THE SURVEY HERE

Hans Böckler Stiftung Advertisement

The macroeconomic effects of re-applying the EU fiscal rules

Against the background of the European Commission's reform plans for the Stability and Growth Pact (SGP), this policy brief uses the macroeconometric multi-country model NiGEM to simulate the macroeconomic implications of the most relevant reform options from 2024 onwards. Next to a return to the existing and unreformed rules, the most prominent options include an expenditure rule linked to a debt anchor.

Our results for the euro area and its four biggest economies—France, Italy, Germany and Spain—indicate that returning to the rules of the SGP would lead to severe cuts in public spending, particularly if the SGP rules were interpreted as in the past. A more flexible interpretation would only somewhat ease the fiscal-adjustment burden. An expenditure rule along the lines of the European Fiscal Board would, however, not necessarily alleviate that burden in and of itself.

Our simulations show great care must be taken to specify the expenditure rule, such that fiscal consolidation is achieved in a growth-friendly way. Raising the debt ceiling to 90 per cent of gross domestic product and applying less demanding fiscal adjustments, as proposed by the IMK, would go a long way.


DOWNLOAD HERE

ILO advertisement

Global Wage Report 2022-23: The impact of inflation and COVID-19 on wages and purchasing power

The International Labour Organization's Global Wage Report is a key reference on wages and wage inequality for the academic community and policy-makers around the world.

This eighth edition of the report, The Impact of inflation and COVID-19 on wages and purchasing power, examines the evolution of real wages, giving a unique picture of wage trends globally and by region. The report includes evidence on how wages have evolved through the COVID-19 crisis as well as how the current inflationary context is biting into real wage growth in most regions of the world. The report shows that for the first time in the 21st century real wage growth has fallen to negative values while, at the same time, the gap between real productivity growth and real wage growth continues to widen.

The report analysis the evolution of the real total wage bill from 2019 to 2022 to show how its different components—employment, nominal wages and inflation—have changed during the COVID-19 crisis and, more recently, during the cost-of-living crisis. The decomposition of the total wage bill, and its evolution, is shown for all wage employees and distinguishes between women and men. The report also looks at changes in wage inequality and the gender pay gap to reveal how COVID-19 may have contributed to increasing income inequality in different regions of the world. Together, the empirical evidence in the report becomes the backbone of a policy discussion that could play a key role in a human-centred recovery from the different ongoing crises.


DOWNLOAD HERE

ETUI advertisement

The four transitions and the missing one

Europe is at a crossroads, painfully navigating four transitions (green, digital, economic and geopolitical) at once but missing the transformative and ambitious social transition it needs. In other words, if the EU is to withstand the storm, we do not have the luxury of abstaining from reflecting on its social foundations, of which intermittent democratic discontent is only one expression. It is against this background that the ETUI/ETUC publishes its annual flagship publication Benchmarking Working Europe 2023, with the support of more than 70 graphs and a special contribution from two guest editors, Professors Kalypso Nikolaidïs and Albena Azmanova.


DOWNLOAD HERE

Eurofound advertisement

#AskTheExpert webinar—Key ingredients for the future of work: job quality and gender equality

Eurofound’s head of information and communication, Mary McCaughey, its senior research manager, Agnès Parent-Thirion, and research manager, Jorge Cabrita, explore the findings from the recently published European Working Conditions Telephone Survey (EWCTS) in an #AskTheExpert webinar. This survey of more than 70,000 workers in 36 European countries provides a wide-ranging picture of job quality across countries, occupations, sectors and age groups and by gender in the context of the Covid-19 pandemic. It confirms persistent gender segregation in sectors, occupations and workplaces, indicating that we are a long way from the goals of equal opportunities for women and men at work and equal access to key decision-making positions in the workplace.


WATCH HERE

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us

RSS Feed

Follow us on Facebook

Follow us on Twitter

Follow us on LinkedIn

Follow us on YouTube