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Jheni Osman

2nd November 2020

Climate
Climate accountability

Greenwashing: the tipping point

This is the first in a series of articles and other creative pieces commissioned by ClientEarth to explore the debate around the most important environmental challenges we all face.

We asked science journalist, author and presenter on BBC Radio 4's Costing the Earth, Jheni Osman, to explore the issue of corporate greenwashing – why it happens, to what extent, and how companies are being forced to make big decisions about the future of 'green' marketing.

The global eco-awakening means former ‘green sheen’ business practices no longer work. Embracing sustainability is the key to future profit.

Global temperatures are nudging ever closer to the feared 1.5oC rise. Experts worry that this potential ‘tipping point’ could push Earth systems into irreversible climate change. But society is also at a tipping point where a relatively small change might trigger an outsized impact.

“A single loud noise can set off an avalanche,” says Dr Aoife Brophy Haney, Research Lecturer at the Smith School of Enterprise and the Environment at the University of Oxford. “‘Sensitive intervention points’ exist in social, political and economic situations. A lone Swedish schoolgirl can inspire climate action around the world.”

The Greta Thunberg-inspired eco-awakening has filtered its way to the dinner table. We’re now being quizzed by the kids at home about what we’re doing at work to look after the planet. E-marketing. Tick. Clean energy provider. Tick. E-scooters and electric pool cars. Tick. Tick.

What is greenwashing?

Gone are the days of profit eclipsing all else. Social responsibility is now high up the agenda. The pressure is on to ‘be green’ from customers, employees, shareholders. It’s no wonder that some companies exaggerate their green practises - and others run the risk of ‘greenwashing’.

"Greenwashing involves companies either misleading consumers about the green credentials of a product or service, or misleading consumers about the environmental performance of the company as a whole,” says Brophy Haney. "Historically, big business has been able to get away with greenwashing because there has been limited understanding of what ‘green’ means, and a plethora of different definitions and certifications with little standardisation."

Diversionary tactics

The day before, they sent a private memo to Members of Parliament to try to discredit me. If these experiences tell us anything, it's that the Exxon tiger hasn't changed its stripes.

A classic greenwashing tactic involves PR spin or deflection. Either a company will advertise a product with environmental achievements that are already mandated by existing laws, or a company doesn’t change their behavior, but just markets themselves as being green.

Take the case of oil giant ExxonMobil. An internal document from 1980, obtained by DeSmog, shows Imperial Oil Limited (Exxon’s Canadian subsidiary) was well aware that burning of fossil fuels increased carbon dioxide in the atmosphere. Initially, Imperial Oil and Exxon engaged in climate science programmes. But, by the late 1990s, Exxon and Imperial Oil were spreading doubt about climate change. (Exxon became a founding member of the Global Climate Coalition - an international lobby group that opposed action to reduce greenhouse gas emissions and challenged the science behind global warming, but was disbanded in 2002).

A 2017 analysis by Harvard Research Associate Geoffrey Supran of ExxonMobil’s climate change communications between 1977 and 2014 gave an insight into the company’s greenwashing actions. The communications analysed ranged from internal company documents to paid for editorial-style newspaper or magazine advertisements (known as ‘advertorials’). What Supran found was that as documents became more publicly accessible, they increasingly communicated doubt about climate change. For example, 83% of peer-reviewed papers and 80% of internal documents acknowledged that climate change is real and caused by humans, but only 12% of advertorials did, with 81% instead suggesting doubt about the issue.

"Within hours of publishing our study, ExxonMobil responded with ad hominem attacks," says Supran. "I was invited by the European Parliament to testify about ExxonMobil's history of climate denial. The day before, they sent a private memo (which has now been leaked) to Members of Parliament to try to discredit me. If these experiences tell us anything, it's that the Exxon tiger hasn't changed its stripes."

The US-based Climate Investigations Centre claims that ExxonMobil’s latest greenwashing tactic is to promote weak carbon taxes and technologies that are unproven and known to be inadequate. ExxonMobil do support a carbon tax proposal, but one that would start the tax at about $40 per tonne, climbing by 2% to 5% each year, and reaching $65 per tonne by 2030. Critics say this won’t tackle the problem fast enough.

“ExxonMobil has been paying lip service to the concept of a carbon tax for some years, without putting any effort into getting one set up,” says Kert Davies, the Founder and Director of the Climate Investigations Centre. “They have spent millions advertising carbon capture technology that has not yet been deployed. The ads don't talk about climate change, but use the words ‘emissions’ and ‘CO2’. Those who care, get the meaning. But for those who don’t care, it goes over their heads.”

ExxonMobil is not alone. Internal documents uncovered by DeSmog in 2018 reveal that Shell was also aware of the impact of fossil fuels on climate change back in the 1980s. But the company’s marketing strategy changed following an internal document in 1999, which recommended that it should focus on promoting its eco-actions, such as its commitment to the Kyoto Protocol.

More recently, Shell has been vocal about calling for environmental action. In 2018, CEO Ben van Beurden said mass reforestation was needed to limit temperature rise to 1.5oC and hit UN targets. The same year, Shell said it would support calls to bring forward the UK’s 2040 ban on new petrol and diesel car sales. And, the previous year, Shell had bought NewMotion, the owner of one of Europe’s largest electric car charging networks. All steps in the right direction. But critics claim the core of the business hasn’t changed. In 2018, Shell approved a $12bn liquefied natural gas project in Canada, and a report in 2020 by the Institute for Energy Economics and Financial Analysis (IEEFA) revealed that fossil fuels still make up around 90% of Shell’s capital expenditure (the money spent on acquiring or maintaining fixed assets).

“Fossil fuel companies have done little to nothing to reduce emissions or modify their business models without significant pressure from regulation, litigation, shareholder activism, or environmental groups exerting pressure,” says Davies, “the free market approach to saving the planet simply does not work.”

Fossil fuel companies have done little to nothing to reduce emissions or modify their business models without significant pressure from regulation, litigation, shareholder activism, or environmental groups exerting pressure.
Kert Davies, Founder and Director of the Climate Investigations Centre

Chasing green points

In other industries, clever use of language has been used to layer a ‘green sheen’ on companies, products or services. Critics called it a PR stunt when Amazon purchased the KeyArena in Seattle and renamed it Climate Pledge Arena. Zara met with some opposition when it announced that by 2025 all of its clothes would be made from 100% 'sustainable fabrics’, as the definition of this term is still up for debate. And Coca Cola has been ridiculed for their ‘World without waste’ campaign: ‘a bold, ambitious goal: to help collect and recycle a bottle or can for every one we sell by 2030’… ‘To do that, we aim to invest our marketing dollars and skills to help people understand what to recycle, how to recycle, and where to recycle’ - which essentially boils down to encouraging consumers to recycle more.

66%

of consumers are happy to pay more for environmentally friendly products, according to a 2015 survey.

72%

of consumers under the age of 20 are happy to pay more for environmentally friendly products, according to the same survey.
We’re going to continue to be greenwashed, and to greenwash ourselves, because we want to do the right thing.

And it’s not just industry. Public service has come under the cosh too for chasing disproportionate green points. Take the case of South Tyneside council. Back in 2019, they got a bit of flack for their claim that local taxis were going green. An all-electric fleet? No. Fully biodegradable licence plates. Who knew licence plates could be made from biodegradable materials?

Even with the best intentions, when a company or institution can’t live up to its promises, it’s easy to slip into greenwashing in practice. And the problem is that greenwashing works because we want it to. Many environmental issues, such as climate change, are huge complicated beasts. It's easier to let others fix these big issues - we just want the problem to go away. So when a company appears to offer ‘sustainable’ solutions, we are sucked in by products and services that seem to be green. (A global survey in 2015 found that two thirds of consumers are happy to pay more for environmentally-friendly products. This rises to 72% for under 20s.) We’re busy people. We don’t want to read the small print.

As Dave Powell, co-presenter of Sustainababble podcast and the former Head of Environment at the New Economics Foundation, points out – "we're going to continue to be greenwashed, and to greenwash ourselves, because we want to do the right thing."

Joining the good guys

It’s wanting to do the right thing that makes us fall prey to another clever greenwashing trick - companies signing up to eco-initiatives which can mask the reality of their practices.

The Forest Stewardship Council (FSC) was set-up to provide a global tool for certifying sustainable wood. To qualify, a logging company needs to ensure harvesting maintains the forest's biodiversity, productivity and ecological processes, and they don’t generate financial profit at the expense of the forest resources, the ecosystem or affected communities. The FSC is an invaluable initiative - there are now over 200 million FSC certified hectares in 89 countries around the world. But, in the past, the FSC system has been abused. For example, in 2016, more than 90% of timber on two shipments from Peru to Mexico and the US was illegal in origin. The main exporter Inversiones La Oroza still has the FSC logo on its website, despite the FSC suspending its certification in 2017. There are other examples of illegal logging abuses.

There will always be some businesses willing to take advantage of sustainable initiatives. This is also the case with Sustainable Development Goals (SDGs). Four of the 17 SDGs laid out by the UN in 2015 focus directly on environmental issues: affordable and clean energy, climate action, life below water, and life on land. According to a 2018 report by the World Business Council for Sustainable Development, while 89% of companies analysed recognised the importance of SDGs, only 15% had done anything concrete about them, such as making sure their strategy tallies with specific SDG criteria and measuring their contributions to key SDGs. A 2018 KPMG report found similarly - while 40% recognised SDGs in their corporate reporting, only 8% reported a business case for action and only 10% had set specific and measurable business performance targets.

This all smells of greenwashing - or, more specifically, SDG-washing.

“SDGs and ‘net zero’ have kind of created an opportunity for a lot more greenwashing, because it allows you to describe yourself as a green company when you’re doing a thing that’s fundamentally not green,” says Powell. “You effectively buy your way out of trouble, for example, by promising to plant large numbers of trees.”

‘Net zero’ means not adding more greenhouse gases to the atmosphere than can be taken out. The UK government has committed to a legally-binding ‘net zero’ emissions target by 2050. Many countries have signed up, as have many companies.

There is still much work to be done in thinking about how far the environmental responsibility of companies extends into supply chains in different industries. Greenwashing works on topics where data is more difficult to come by. But there is increasing clarity on how to measure the environmental impacts of companies, products and services.

In 2020, AT&T committed to be carbon neutral across its entire global operations by 2035, signing up to net zero Scope 1 and 2 emissions. Microsoft went a step further, pledging to be carbon negative by 2030 and, by 2050, to remove from the environment all the carbon the company has put into the system since 1975 when it was founded. Shell laid out ambitious plans to hit net zero emissions by 2050, pledging zero Scope 1 and 2 emissions by 2050 or sooner, and slash the emissions intensity (emissions per unit of energy) of its Scope 3 energy products by 30% by 2035 and by 65% by 2050. In the UK supermarket sector, Sainsbury’s is aiming for net zero across its own operations by 2040, Tesco and Waitrose are aiming for 2050. Steps in the right direction. But these targets don’t extend to supermarket supply networks, which account for a large portion of emissions.

"There is still much work to be done in thinking about how far the environmental responsibility of companies extends into supply chains in different industries. Greenwashing still works on certain topics where data is more difficult to come by. But there is increasing clarity on how to measure the environmental impacts of companies, and of products and services,” says Brophy Haney.

"As part of their climate strategies, many companies are relying on voluntary carbon offsetting. However, if not done well, offsetting can result in greenwashing. To mitigate this risk, government and society at large should support the use of best practice guidelines, such as the recently released ‘Oxford Principles for Net Zero Aligned Carbon Offsetting’, to help ensure offsetting is done in a rigorous and credible way that ultimately contributes to net zero goals."

The next steps

While a degree of scepticism is sensible in relation to green claims made by business, it is also important to give credit where it is due for companies that are sincerely trying to transition to low energy and low emission business models.

Where once this issue seemed black and white, now many forms of greenwashing are more shades of grey.

“We think of greenwashing as an act of deliberate deceit. Make no mistake it can be, but things have moved on a bit from 20 years ago,” says Powell. “One man’s greenwashing is often another’s ‘pragmatic response’. And sometimes there might be legitimate disagreement.”

Some companies are attempting to tackle this by being open about the challenges of ensuring profitability in this new green era. For example, outdoor clothing retailer Patagonia is trying to be transparent with customers. It admits to using chemicals to create its products and acknowledges its struggle to remain a responsible company. (Patagonia’s revenue has quadrupled in the last decade).

“While a degree of scepticism is sensible in relation to green claims made by business, it is also important to give credit where it is due for companies that are sincerely trying to transition to low energy and low emission business models,” says Ed Simpkins, a partner at strategic communications agency Finsbury. “Reputation is important for most businesses and can be a driver of real change, so recognition for genuine efforts is as important as calling out greenwashing.”

Simpkins points out that, in the past, there was no cost attached to being wasteful with resources. Today, legislation means that it can be more cost effective to invest in green practises than to not do so.

“I work with one business that specialises in buying companies that have a comparative advantage compared with others in their sector, because they produce fewer emissions. These days, ‘being green’ is compatible with running a business in a sensible and cost-effective way.”

Indeed, there are all sorts of economic benefits for businesses ranging from cost savings from reducing carbon emissions in a company’s direct operations, to managing supply chain risks in response to extreme weather events. Long-term the main economic benefits are associated with identifying new market opportunities and shaping the way new markets operate.

“The critical challenge we face now across many industries is connecting individual technologies in ways that fundamentally shift patterns of production and consumption,” says Brophy Haney. “This is where rethinking business models can help, not by focusing on the solution per se, but by stepping back and focusing on what customers actually need now and in the future. Big business can help best by mobilising resources, talent and creativity to develop visions of a better future. Across many industries and systems, there is a lack of a collective vision for how things could change. Mobilising collaboration within and across industries is critical to ensure that any changes we make now are radical rather than incremental. Initiatives like the Climate Emergency Playbook by B Lab UK encourage companies to develop their own plans, and to reach out by sharing best practices and influencing stakeholders.”

Wind turbines at sunset

That’s exactly what Unilever has been up to for the last few years. When Paul Polman became CEO of the company back in 2009, he brought in with him a (what was at that time) quite radical idea for the business world. The vision: ‘to double the size of the company while reducing our overall impact on the environment’. Unilever committed to do this across their entire value chain. Recognising that this ambition was only achievable over the long-term, the company abolished quarterly reporting. The share price did initially go down by 8%, but then eventually it went back up. And, in the last decade, shareholder return was up 300%. In the process, Unilever has helped to influence industries and governments around the world, such as creating coalitions for net zero and the Tropical Forest Alliance for sustainable palm oil.

"Companies that can show over time that they make a positive impact in the world are companies that are going to be around [for longer]. We need business as unusual to solve these issues," said Polman, when he spoke to Peter Drobac, Director of the Skoll Centre for Social Entrepreneurship, at the University of Oxford on the Reimagine podcast. Polman left Unilever in 2019 to co-found IMAGINE - a collective made up of chief execs committed to rapidly scaling up corporate social responsibility efforts. “The current projection is that we will achieve the sustainable development goals only by 2071. So we're now not trying to convince people of what needs to be done, but to move forward faster at speed and scale. IMAGINE’s premise is to get 20-25% of an industry sector together to create a tipping point. Once you create a tipping point, you accelerate the implementation of sustainable development goals.”

Sweeping change

In 2020, for the first time ever, a clean energy group overtook a major oil company. The world’s largest solar and wind power generator NextEra exceeded ExxonMobil in stock market value. Meanwhile, Cambridge University recently agreed to step away from all direct and indirect investments in fossil fuels by 2030.

Pressure is building from all angles from competitors to consumers, environmentalists to employees. Legislators are scrambling to keep up. The EU is currently looking at how to integrate sustainability considerations into its financial policy framework so that it can free-up cash for sustainable growth. One of the main aims is to clamp down on greenwashing by forcing asset managers to provide transparent information about the sustainability of their investments. The new legislative framework is due to come into force in March 2021 (although asset managers are now being given more time to comply with new disclosure requirements).

In the last few years, the world has woken up to the fact that a society with diverging wealth equality and dwindling planetary resources is not sustainable. Many employees are now not willing to work for companies who do not employ sound sustainable practices. This global green awakening is causing a seismic shift in how companies do business.

“Awareness of the crisis has now fully taken hold of a generation of people – that was not the case 10 or 20 years ago,” says Davies. “Climate change is a top tier issue 'politically' for the first time ever. It gives me hope that no-one will get elected without being asked what their plan is on climate change. It also means that the fossil fuel companies will double down in terms of greenwashing to try to gain access to the policy arena.”

Climate change is a top tier issue 'politically' for the first time ever. It gives me hope that no-one will get elected without being asked for their plan on climate change. It also means fossil fuel companies will double down in terms of greenwashing to try to gain access to the policy arena.
Kert Davies, Founder and Director of the Climate Investigations Centre

A word from the author...

Jheni Osman is a science journalist, author and broadcaster who presents on BBC Radio 4's Costing the Earth. We asked her to produce this piece exploring the issues around corporate greenwashing.

We sat down with Jheni to talk about her research process, and what she was most surprised to learn whilst wading through the murky world of greenwash.

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