Carbon neutrality and greenwashing are terms that are getting increased attention from nations, companies and media. Still, there is a clear lack of an international regulatory framework to tackle these challenges. 2021 is a decisive moment for business sustainability. Something akin to a gold rush. The need for more sustainable products, services and infrastructure are clearly identified. Companies are now aware of the worth of sustainability, for better and for worse. This has triggered both a fast-paced transformation of businesses and a rapid rise in voluntary or involuntary bad practices. What has come to be defined as greenwashing?
To end corporate greenwashing, Plan A launches the “Make 2021 Count” movement, with a petition to the European Union Parliament. The petition aims to make it mandatory for companies claiming carbon neutrality to disclose their carbon footprint publicly.
Visit the Make 2021 Count Website to learn more on how you can #EndGreenwashing.
How does the petition to end greenwashing go beyond the status quo?
We are well aware that many petitions for change exist out there. As a company working in the carbon accounting field, we believe that being aware of corporate sustainability’s barriers and addressing them, is an integral part of our mission. As part of a collective effort of conscious companies and individuals, we join forces to try and take the matter into our own hands.
The problem is huge and ongoing. According to recent research, more than 83% of consumers feel mislead by the sustainability claims of corporations. In parallel, no less than 89% of business leaders would like to see clearer regulation on greenwashing.
We can bridge this gap by linking claims of sustainability to the public disclosure of carbon emissions. If the same company is claiming carbon neutrality, it would need to demonstrate proof to the public and to the authorities (e.g total carbon footprint, reduction plan, what has been offset). In another scenario, if the company’s claims are false or misleading, it would result in sanctions, and ultimately losing its credibility.
Now, how can we make this action go beyond a petition?
The European Commission is our best forum to engage with lawmakers and draft a proposal to end greenwashing. We will follow the procedure as set by the Chair of the Petitions Committee of the European Commission. The petition is straightforward: to make it mandatory for businesses to disclose their emissions when they claim carbon neutrality or net-zero emissions. If the petition is accepted by the Chair, we will be able to support its implementation through the different capabilities of the European Union, such as lawmaking or directive setting.
The petition will enable a common understanding of greenwashing and carbon neutrality. It aims to set a European carbon accounting framework for companies and best sustainability practices. The petition could be integrated as an article in the EU Green Deal, and support the EU Taxonomy. Also, the petition will bridge the existing gap in the current legislation. Together we can influence the legislation and add greenwashing as a crucial topic, to spark the conversation between different stakeholders.
What are the existing legislation on carbon neutrality and greenwashing?
Here is an overview of the current European regulatory framework behind greenwashing and carbon neutrality:
- The Paris Agreement: legally binding international treaty on climate change.
- The European Green Deal: The European Union becoming net-zero GHG emissions by 2050.
- The EU Taxonomy: Supporting the green deal, entered in force on 12 July 2020, and companies’ disclosure only applies after 31 December 2021.
- The Tax Force on Climate-Related Financial Disclosure (TCFD) (UK): guidelines for voluntary climate-centred financial disclosures across industries.
The EU Taxonomy in brief
The European Union Taxonomy is arguably the most ambitious text aiming to give a non-financial overall score covering all facets of sustainability, from ESG to biodiversity and pollution treatment. The EU taxonomy is a classification system establishing a list of environmentally sustainable economic activities. For investors, companies and financial institutions—the regulation defines which economic activities qualify as sustainable and evaluate their environmental performance.
Go deeper: What Does the European Green Recovery Mean for Business Sustainability?
The EU Taxonomy defines what is sustainable
The taxonomy aims to provide appropriate definitions to companies, investors and policymakers on which economic activities can be considered environmentally sustainable. Besides, the EU taxonomy assesses activities that contribute to the transition, not activities that could be less harmful than they are today.
Sustainability criteria definitions under the EU taxonomy:
- Sustainably contribute to one objective: climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and the protection and restoration of biodiversity and ecosystems.
- The activity must not do single harm to other ecological objectives.
- Compliance with social and governance safeguards (e.g. International Bill on Human rights).
- Comply with certain ‘technical screening criteria.
The European Commission recognises greenwashing as an increasing issue, as it impeaches real climate action and a sustainable economy. To undertake this challenge, the European Green Deal states, “companies making ‘green claims’ should substantiate these against a standard methodology to assess their impact on the environment”. It is this exact part of the Green New Deal the Make 2021 Count petition aims to enforce and transform into legislative reality.
There are other directives and initiatives at play in the complex European system. On the national level, a variety of countries have launched popular assemblies to draft laws to limit carbon emissions and act against climate change.
In France for example, “La Loi Climat“, drafted by a random assembly of citizens is now being discussed in Parliament. Article 4 of the climate law defines “greenwashing” as a deceptive commercial practice that is sanctionable under the law. The amount of the fine incurred can reach 80% of the cost of the promotional campaign, and the penalty will have to be advertised. So far, however, these best practices are still being debated.
Where does the legislation fall short today?
The EU Taxonomy represents a great step forward to define the criteria for sustainable investment and activities. Though, only two groups are subject to mandatory reporting: financial institutions offering financial products within the EU and the UK and large public interest companies ( with over 500 employees with a balance sheet over €20 M or €40 M in turnover). This leaves many companies without reporting obligations, enabling greenwashing and delaying our achieving of the zero emissions targets.
Secondly, companies are still not subject to reporting standards that oblige them to be accountable for their sustainability claims. If a company today in Europe says that it is carbon neutral or net-zero, there is no way for a consumer to verify this claim, enabling greenwashing.
Read also our guide: How to spot greenwashing?
Why does it matter now?
In 2021, goal setting is on the rise, with a majority of companies setting goals, but often unaligned the Science Based Targets initiative. More than 76% of businesses disclose carbon reduction goals. However, the action and reduction numbers are still opaque. That is why we need to take action now, ask for transparency and stronger legislation. These years are our only and last opportunity to transform our societies and economy to limit climate change to the science-based target of 1.5°C.
What’s next? We aim to reach a maximum number of signatures to spark the conversation on greenwashing and integrate these as regulatory articles on national and international levels. Plan A will then carry our petition and weigh in on the conversation to represent this common objective of ending greenwashing. You can help. Sign the petition, share it to friends, family and coworkers (organizations can sign too) to build together a livable, truly sustainable world.