Study Shows How Corporations Are Deceiving the Public to 'Greenwash Their Brand'

A detailed study published Monday finds that the climate pledges of some of the world's largest companies are often highly misleading, lack transparency, and fall well short of what's necessary to avert catastrophic warming, casting further doubt on the viability of global emission-reduction plans that depend on voluntary corporate action.

The latest edition of the Corporate Climate Responsibility Monitor, released by the NewClimate Institute for Climate Policy and Global Sustainability and Carbon Market Watch, closely examines the climate commitments of two dozen large global companies, from Apple to Walmart to Mercedes-Benz to Samsung.

While such companies often tout their net-zero-emissions commitments and support for the Paris climate accord as proof that they're helping lead the way to a more sustainable future, a closer look shows that their plans are "wholly insufficient and mired by ambiguity," the new study argues, spotlighting the misleading tactics that businesses deploy to make their pledges appear more ambitious than they are.

"Overall, we find the climate strategies of 15 of the 24 companies to be of low or very low integrity," the analysis states. "We found that most of the companies’ strategies do not represent examples of good practice climate leadership. Companies' climate change commitments do not add up to what their pledges might suggest."

"Their combined emission-reduction commitments," the study continues, "are wholly insufficient to align with 1.5°C-compatible decarbonization trajectories; targets and potential offsetting plans remain ambiguous; and the exclusion of emission scopes severely undermines the targets of several companies."

According to the new research, companies' stated emission-reduction targets for 2030 can't be trusted because they "address only a limited scope of emission sources, such as only direct emissions (scope 1) or emissions from procured energy (scope 2), and only selected other indirect emission categories (scope 3)," even though the last category accounts for more than 90% of the greenhouse gas pollution for most of the examined corporations.

"For the 22 companies with targets for 2030, we find that these targets translate to a median absolute emission-reduction commitment of just 15% of the full value chain emissions between 2019 and 2030," the study estimates.

One of the report's authors, Thomas Day of the NewClimate Institute, said in a statement that "in this critical decade for climate action, companies' current plans do not reflect the necessary urgency for emission reductions."

Sabine Frank, the executive director of Carbon Market Watch, told the Wall Street Journal that "at a time when corporations need to come clean about their climate impact and shrink their carbon footprint, many are exploiting vague and misleading 'net zero' pledges to greenwash their brand while continuing with business as usual."

The report, which offers an in-depth examination of the 24 companies' climate pledges, points specifically to "offsetting" as a tactic companies use to overstate the scope of their climate action.

Offsetting involves making up for carbon emissions by funding carbon pollution cuts elsewhere. According to the new study, Nestlé, PepsiCo, and other prominent corporations are guilty of using offsetting to make it appear as though they're on track to meet their 2030 emission-reduction commitments.

As the NewClimate Institute and Carbon Market Watch explain:

Half of the companies we assessed—including Apple, Deutsche Post DHL, Google, and Microsoft—make carbon neutrality claims today, but these claims only cover 3% of those companies' emissions on average.

The vast majority of emission sources are excluded from these claims, but this critical information is not clear in the marketing materials displayed to consumers. At least three-quarters of the companies we assessed plan to heavily rely on offsetting through forestry and land-use-related projects in the future.

This is problematic for two key reasons: the non-permanence of biogenic carbon storage makes such projects fundamentally unsuitable for offsetting emissions; and the scale of carbon credit demand implied by these companies’ plans would require the resources of 2-4 planet Earths, if followed by others.

Lindsay Otis, a policy expert at Carbon Market Watch, said that "by making such outlandish carbon neutrality claims, these corporations are not only misleading consumers and investors, but they are also exposing themselves to increasing legal and reputational liability."

"Instead, they should implement ambitious climate plans to reduce their own emissions, while financing action outside of their own activities, without claiming that this makes them carbon neutral," said Otis.

The report concludes that, based on the growing evidence of deceptive corporate practices, regulators can't "rely on existing voluntary initiatives to ensure compliance with the necessary standards for credible and transparent corporate climate action."

"Companies' plans for the period up to 2030 fall far short of the efforts needed in this crucial decade for climate action to stand a reasonable chance of limiting global warming to 1.5°C," the report states. "Forthcoming regulation, for example the E.U.'s Corporate Sustainability Reporting Directive entering into force in 2023, will introduce tighter requirements for corporate climate strategies, but their final implementation will need to be closely monitored to ensure a high standard of compliance."