‘Integrity matters’: UN expert group moves to stamp out net-zero greenwashing at COP27
A UN-convened group has launched a major new report at COP27 to crackdown on corporate greenwashing around net-zero claims, outlining key recommendations to ensure non-state actors are actively working towards decarbonisation.
The High Level Expert Group on Net Zero Emissions Commitments of Non-State Entities was set up by UN Secretary-General António Guterres in March 2022 in order to develop stronger standards and scrutiny of net-zero pledges from non-state entities such as businesses, investors, cities and regions.
At COP27, the High Level Expert Group has outlined a new set of key recommendations to help these entities develop and deliver net-zero targets in a way that negates cases of greenwash.
The new report aims to build on the Race to Zero and Science Based Targets initiative by providing corporates and investors with time-based frameworks to deliver net-zero, based on short, medium and long-term targets.
The recommendations aim to crackdown on greenwashing and “weak” net-zero pledges that the Group warns could undermine efforts to deliver the ambitions on the Paris Agreement by reducing emissions in line with 1.5C.
It calls on non-state actors to commit to immediate reductions in absolute emissions across the entire value chain, backed by short, medium and long term science-based targets. These entities should also draw up and publish transition plans that showcase how immediate emissions reductions will be achieved and how spending will be reorientated and aligned with science-based targets.
The report also offers steps to avoid greenwash and recommends that non-state actors should no longer claim to be net-zero if they continuously build or invest in new fossil fuel supply, support deforestation and other environmentally destructive activities that should be branded “disqualifying”.
Additionally, firms should avoid purchasing cheap carbon credits instead of reducing emissions. The report does state that “high-quality” carbon credits can be used, but only to balance out remaining emissions once short and medium-term science-based targets have been met.
Organisations should stop focusing on reducing the intensity of emissions, rather than absolute measurements across the value chain.
Finally, entities should stop lobbying or associating with groups that attempt to undermine government climate policies, namely through trade associations. Instead, the report calls that organisations align their advocacy and governance with their climate commitments. This would include linking executive compensation to climate action and proven results.
Commenting on the report, Catherine McKenna, chair of the UN-appointed expert group and former Canadian Minister of Environment and Climate Change as well as Minister of Infrastructure, said: “After consulting with hundreds of individuals and organizations and incorporating the latest research and science, we have a roadmap to ensure that net zero commitments by industry, financial institutions, cities and regions are ambitious, transparent and credible.
“This is about cutting emissions, not corners. Our roadmap provides clear standards and criteria that must be followed when developing net zero commitments. Right now, the planet cannot afford delays, excuses, or more greenwashing.”
The report is based on seven months of work and consultations across the 17 experts appointed by the UN Secretary-General. Its overarching message is for non-state actors to move away from voluntary initiatives to disclosure that is regulated through requirements to reach public net-zero targets. The report notes that nations should engage with large corporate emitters to require them to ensure that pledges are reported against annually.
The timing of the report doesn’t just coincide with COP27, but also at a time when cases of corporate greenwash are rife.
One in every five cases of corporate risk incidents linked to environmental, social and governance (ESG) issues stems from greenwashing and misleading communications, new research has found.
RepRisk, a leading ESG data science firm, analysed ESG risk incidents, ranging from a potential violation by a company or specific project of global standards and frameworks. RepRisk found that, over a two-year period, one in every five of these risks was linked to greenwash.
Lobbying and offsetting were identified as two of the major contributors to cases of greenwashing. While the role of offsets and potential greenwashing side effects are well documented, lobbying is much harder to uncover and isn’t often included in self-disclosure.
On the other side of the investor corporate relationship, a survey of 325 investors with more than $14trn in assets under management collectively has revealed that more than half (60%) do not trust the information they get through ESG rating frameworks.
Conducted by PwC, the survey found that just one-third (33%) of the investors think the quality of ESG reporting they are seeing is good. A similar proportion (29%) said that current reporting adequately considers how ESG performance will impact a business’s bottom line.
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