Red flags over ‘greenwashing’ at COP27 — what is it?

Greenwashing

There is a growing tendency among firms and governments to mark all kinds of activities as climate-friendly, as something that would lead to emissions reduction, or avoidance of emissions. Many of these claims are unverifiable, misleading, or dubious. While they help in boosting the image of the entity, sometimes even helping them garner benefits, they do nothing in the fight against climate change.

While Guterres spoke against greenwashing in the context of net-zero targets being pursued by many corporations and sub-national governments, greenwashing is prevalent across a whole range of environmental activities. Developed countries, for example, are often accused of greenwashing their normal business investments in developing countries, or their bilateral aid, by highlighting climate co-benefits of the financial flows, sometimes with very little justification.

The Volkswagen scandal, in which the German car company was found to have been cheating in emissions testing of its supposedly green diesel vehicles, was a case of greenwashing. Several other multinational corporations, including oil giants like Shell and BP, and Coca Cola have faced accusations of greenwashing.

Greenwashing presents a false picture of the progress being made on the climate change front, thereby pushing the world towards disaster, while at the same time rewarding entities for irresponsible behaviour.

Fairly widespread

The processes and products that can potentially cut emissions are so many that it is practically impossible to monitor and verify all. There is lack of regulation and standardisation in most of these spaces. The processes, methodologies and institutions to measure, report, create standards, verify claims and grant certifications are still being set up.

In the meanwhile, large number of organisations have sprung up claiming expertise in these areas and offering their services for a fee. Many of these organisations lack integrity and robustness, but their services are still availed by corporations because it makes them look good.

As Arjun Dutt, Senior Programme Lead at Delhi-based Council on Energy, Environment and Water, said, sometimes, corporations make genuine mistakes.

“Many times, it is not clear whether the project a company wants to invest in is really green. If a company is investing in a solar project, for example, it is fairly straightforward. But in many other cases, it is not that clear. The investing company then looks for third party entities which claim to know whether a particular project is green. Several such entities do not have the expertise. But the corporation goes along, mainly because they don’t know better. This can be a case of a genuine mistake. But there are many other instances when companies deliberately mislead, or lie,” Dutt said.

Credits and offsets

The trade in carbon credits comes under the scanner in any discussion on greenwashing. Carbon trade is a legitimate exercise. In fact, it is officially encouraged. Countries or firms that reduce emissions beyond their mandate are granted carbon credits, which can then be bought for money by entities that need it to achieve their targets. There was a carbon market under the Kyoto Protocol, and a new one is being created under the Paris Agreement as well.

But the scope of carbon markets has increased manifold since it was first conceptualised. Informal carbon markets also exist. There are now credits available for all kinds of activities — for growing trees, for planting a certain kind of crop, for installing energy-efficient equipment in office buildings. Basically, any activity that has the potential to reduce or avoid emissions can earn credits. The credits are often certified by unofficial third party companies and sold to others. Such transactions, particularly in informal, bilateral or voluntary markets, have been flagged for lack of integrity and double counting.

Even the official market is not immune to charges of double counting and greenwashing. Countries like India or Brazil had accumulated huge carbon credits under the Kyoto Protocol and wanted these to be transitioned to the new market being set up under the Paris Agreement. But many developed countries resisted this, questioning the integrity of the credits and claiming they did not accurately represent reductions in emissions. Carbon offsets from forests are one of the most controversial.

The way forward

An expert group formed by the UN Secretary General last year to suggest remedial actions on this front submitted its report Tuesday. Among other things, it recommended that corporations pursuing net zero targets must not be allowed to make fresh investments in fossil fuels, must be asked to present short-term emission reduction goals on the path to achieving net zero, and must bring an end to all activities that lead to deforestation. In addition, the corporations have been advised not to use offset mechanisms at the start of their journey to net-zero status.

The expert group has also recommended the creation of regulatory structures and standards as soon as possible.

While the measures are likely to curb these activities to some extent, it is also true that the entire architecture of global fight against climate change is based on trust. There are elements of measurement, reporting and verification, but as mentioned earlier, the vast array of activities makes it extremely difficult, if not entirely impossible, to police every process and product.