More realistic targets and clear, consistent comms are the only route out of greenwashing

By Paul Noonan, Content and Insights Director

The recent rise in climate-related greenwashing raises the question of why businesses continue to publish false climate change information in their ESG comms despite growing regulatory and reputational repercussions. Greenwashing is often portrayed solely as a deliberate effort by corporations to conceal and continue their environmental excesses. Yet this ignores the fact that greenwashing often arises from good intentions built on flawed data and poorly devised targets.

The road to greenwashing is often paved with good intentions-and bad data

Many companies inadvertently set overly optimistic climate targets because they lack a clear picture of their ‘baseline’ emissions. A recent survey found widespread executive concerns that poor internal measurement is causing ‘accidental greenwashing’ with 87% of executives wanting better measurement of current performance to guide more realistic future targets.

The survey also found 72% of companies want to improve their sustainability “but no one knows how to do it”, partly due to difficulties measuring and monitoring progress. For example, many estimates of Scope 3 emissions reductions rely on data of dubious quality from third parties such as suppliers. This means that far from deliberately misleading others, many companies are themselves at the mercy of misleading internal and external data.

Poor forecasting and pie-in-the-sky promises

Greenwashing is also frequently seen as a case of companies under-delivering, yet this is often because they are over-promising. A tendency to make big-ticket climate commitments without factoring in the potential costs can leave firms exposed to new economic headwinds which force a sudden change of course and communications.

For example, BP intended to make massive cuts in oil and gas production by 2030 and then dramatically U-turned when the Ukraine war changed the equation from a narrow focus on sustainability towards energy security and affordability. The problem was their failure to anticipate and communicate the potential pitfalls of such rapid and radical decarbonisation at the outset, and the resulting inconsistency in their messaging. Global demand for gas is now expected to grow until 2030-2040 even under ambitious decarbonisation scenarios, which may cause other energy majors to similarly row back on climate commitments. And when lofty climate rhetoric clashes with real-world demands, some may hide behind spin which only compounds the original error.

A perfect storm

A perfect storm of poor baseline measurement and forecasts and unrealistic goals means that less than 60% of companies are now on track to meet their net zero targets. To break this cycle of false promises and failed delivery, companies should consider a three-pronged approach combining better internal data, more realistic targets, and honesty about the likelihood of hitting them. This is the key to enabling more transparent and consistent corporate climate messaging.

Improved measurement and benchmarking

More realistic targets and consistent communications start with better data. Central governance and clearer climate accountability would drive improved measurement of each company’s baseline environmental footprint. Companies should also overhaul data management capabilities by digitally integrating emissions data, and benchmarking climate performance against their peers. Consistent carbon measuring sticks should be adopted, and the relevant skills spread throughout the company. Emissions targets could be included in employee KPIs and quarterly reports to shareholders. Improving climate accountability, data and skills will help reduce accidental greenwashing.

Only make promises you can keep

As it becomes clear that many companies may have overreached in promising impractical immediate CO2 reductions, some are scaling back their 2030 commitments. While this has triggered a wave of criticism, more pragmatic short-term targets are a good sign if matched with practical implementation and consistent communication.

Targets should be built on comprehensive measurements of baselines and honest assessments of all the costs and benefits of decarbonisation. Armed with better data, firms can set more achievable goals while standing up to the critics and communicating the costs of a rushed, disorderly transition. For example, footwear giant Crocs recently publicly lowered its 2030 carbon target following a fuller evaluation of its baseline emissions.

Some companies are further bucking the greenwashing trend and refusing to set targets they consider unrealistic in the first place. TotalEnergies recently broke with convention and decided not to set any immediate Scope 3 target for gas, making the plausible argument that more gas will be needed in the short term to fill in for fluctuations in renewable power and that replacing coal with gas reduces global emissions even if it increases their Scope 3 emissions. While the company has drawn criticism, this kind of honesty and willingness to engage the critics makes a refreshing change from firms making false green promises festooned with dodgy data. Pragmatic promises grounded in good arguments and data allow companies to combine transparency with consistent messaging, boosting public trust.

Level with the public

Companies also need to be transparent with the public when they fail to achieve their ambitions as exemplified when Rio Tinto publicly admitted it may miss its own 2025 climate target. This kind of honesty is commendable if accompanied with a clear explanation of the reasons for missing the target, and a credible alternative timeline.

As John Maynard Keynes said “When the facts change, I change my mind”. Adjusting timelines to new economic realities is not necessarily a weakness, as long as these adjustments are rare, limited and justified by reliable evidence. This could involve publishing new evidence of unacceptable transition risks, such as recent modelling showing how a rushed, poorly-planned energy transition could cause dramatic job losses in Aberdeen.

Reliable data, realistic targets, and honesty

Amidst growing cynicism’ around corporate climate pledges, customers and investors prefer moderate, measurable strategies to moonshot goals and hard truths over headline-grabbing aspirations. Pragmatic targets matched with good data, practical action and transparent, consistent communication is the key to rebuilding public trust in climate pledges.

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