SIGWATCH’s head of research, Charlotte Moore, explains how companies are likely to be exposed to allegations of greenwashing if they are perceived to be responding cynically to public pressure to improve their environmental credentials.
Accusations of corporate hypocrisy have been a well-established weapon in the arsenal of environmental and other NGOs for some time, but in recent months, activist groups have been harpooning leading companies and sometimes entire industry sectors with ever more frequent accusations of ‘greenwashing’ – the promotion of small-scale green initiatives and policies to deflect attention from more substantial environmental harms. It goes without saying that this should be a significant concern for industry and investors. Well-substantiated criticisms do not just expose unsavoury or unsustainable practices, they also risk undermining trust and sowing doubt about the sincerity of climate and CSR pledges in general.
As increased public awareness of environmental issues in key markets drives companies to make bolder claims around their green credentials, organizations from a range of industries have found themselves in hot water over attempts to capture the environmental mood. Given the serious and escalating risk posed by anti-greenwashing campaigns, it is vital that industry actors stand ready to steer their ship away from any greenwashing icebergs. To do so, it is essential that business leaders can spot greenwashing in their organisations – in all its varied forms.
When asked to define greenwashing, many would point to efforts by companies to knowingly mislead customers about the environmental friendliness of their products or operations. Indeed, this is a key focus of campaigning on greenwashing – the finance industry is regularly criticized by activists for including fossil fuel-linked investments in funds labelled ESG. Meanwhile, oil majors and meat producers have been condemned for making “disingenuous” commitments to tackle climate change and deliberately “underreporting emissions” by focusing on emissions intensity rather than absolute emissions. Recent damning claims by US NGO Institute for Agriculture and Trade Policy that meatpacking group JBS has doubled its total emissions since 2017 were followed by condemnation of the group for its simultaneous attempts to “paint itself as an ally in the fight against climate change”.
Corporate sleight of hand
A less well recognised trigger for greenwashing accusations comes in the form of corporate attempts to redirect public attention toward green activities, while keeping quiet on continuing dirty operations. The energy industry, in particular, has been the target of this strain of greenwashing campaigning, with activists claiming that major energy companies are spending more time talking about climate change than taking action on climate change.
In 2019, ClientEarth, a legal NGO, filed a complaint against BP with the OECD which, amongst other accusations, lambasted the energy company for its Possibilities Everywhere and Keep Advancing advertising campaigns. They pointed out that, despite the campaigns’ focus on BP’s clean energy investments, 96% of BP’s annual expenditure still went to oil and gas. While it was true that BP was making some investments in the energy transition, the activists’ objection was to the corporate sleight of hand used to place BP’s clean energy investments on a pedestal, while sweeping its major fossil fuel operations under the carpet. TotalEnergies has faced similar criticism for its 2021 name change and net zero rebranding campaign. This presents something of a headache for marketing professionals looking to highlight the ‘good deeds’ of their company, as even the most genuine attempt to publicise small steps in the right direction could bring greater attention to a trailing load of missteps.
Another key vulnerability for high-emissions sectors is the perceived over-egging of companies’ carbon neutrality claims, also considered by activists to be an egregious form of greenwashing. The main objects of their ire on this issue are carbon offsetting programmes and Carbon Capture and Storage (CCS) technology, both of which they label as false solutions to climate change.
Carbon offsetting – described by Greenpeace as “bizarre” and the “most popular and sophisticated form of greenwashing around” – refers to corporate schemes to offset their own emissions by absorbing carbon, preventing emissions or environmental degradation elsewhere, or purchasing carbon credits. Activist objections to carbon offsetting are multifarious, ranging from concerns around the efficacy of the technology, land grabbing, Indigenous rights, and impacts on biodiversity. The main argument, however, is that offsetting schemes allow major polluters to keep polluting for longer, maintaining their social license by claiming to have reduced emissions. Criticism for overreliance on carbon offsetting has targeted the usual suspects – Shell, Total, and BP – as well as food retailers Nestle and Unilever, and tech companies Amazon and Microsoft.
On Carbon Capture and Storage, activists hold to the argument, also acknowledged by various climate scientists, that CCS was intended as a “backstop” technology and should not be a significant aspect of emissions reduction plans. Drax Group, a UK-based power generation company, has received heavy criticism on this issue. Multiple activist groups submitted a greenwashing complaint to the OECD contesting Drax’s claims that its new UK biomass plant could become ‘carbon negative’ using CCS. They allege that this messaging falsely implies low gross emissions, and is misleading to an under-informed public.
To greenwash or not to greenwash
As pressure grows on industry to play its part in the green transition, greenwashing accusations are becoming a serious risk for businesses across all sectors. For decision makers to nip greenwashing in the bud before condemnation blooms, it is vital to recognise that campaigners are not only criticising deliberate attempts to mislead. There is an overarching demand for business to ensure that its actions line up with its words, and that it is not relying on what are perceived to be quick and easy fixes to environmental issues. Activists are urging industry to stop pulling the wool over the public’s eyes, and to remove the blinkers from its own.