Nov 8, 2022 - Energy & Environment

UN panel lays out red lines against greenwashing

Photo illustration of household products embellished with an eco-friendly symbol with a polluted shore in the background.

Photo illustration: Lindsey Bailey/Axios

A UN panel rolled out a host of guidelines that would define credible net zero emissions targets and set out checklists for companies and cities to meet.

The big picture: The report, which was delivered to UN United Nations Secretary-General António Guterres at COP27 Tuesday morning, aims to bring order and clarity to the murky and confusing world of net zero target-setting and avoid greenwashing.

Driving the news: Comprised of 17 environmental and finance experts and chaired by former Canadian environment and climate minister Catherine McKenna, the panel's report seeks to rein in practices that risk losing the trust of the public and failing to reduce greenhouse gas emissions.

Zoom in: The report sets out 10 main recommendations for net zero targets from non-state actors. These include committing to immediate cuts in absolute emissions across a company's value chain, including the end use of its products, also referred to as Scope 3 emissions.

  • It calls for non-state actors to publicly spell out transition plans that show both near-term emissions cuts and spending plans that are consistent with meeting their targets.
  • The disclosure of information that is comparable from one company or city to the next is key to preventing dishonest or incomplete carbon accounting, the report finds.
  • The report recommends using a UN portal to house company, city and state emissions plans.
  • The expert group also recommends that companies shift from voluntary net zero initiatives to a regulated process at the national level.

The big picture: In the past several years, companies, cities and states have raced to set net zero targets, but many have not fully aligned their budgets and practices with achieving those goals.

  • "The problem is that the criteria and benchmarks for these net-zero commitments have varying levels of rigor and loopholes wide enough to drive a diesel truck through," said Guterres, in prepared remarks. "We must have zero tolerance for net-zero greenwashing."

The new report sets out firm "red lines" aimed at preventing greenwashing.

  • For example, companies could not claim to be on their way to net zero while continuing to build or invest in new fossil fuel infrastructure, deforestation or other environmentally damaging activities.
  • "If fossil fuel companies think that they can expand production under a net zero target, they need to think again," stated expert group member Bill Hare of Climate Analytics, in a statement.
  • They also could not buy cheap emissions credits before cutting their own emissions.
  • In addition, companies could not lobby against government climate policies either on their own or through trade associations, the panel's guidance states. "They must align their advocacy, as well as their governance and business strategies with their climate commitments."

The intrigue: The group's recommendations would seem to contradict a forthcoming U.S. plan to have companies finance developing country transitions to clean energy via carbon credits.

  • However, it depends on how the credits are defined.
  • The expert group encourages multinational companies to participate in such partnerships through the use of "high-quality credits," and provided the companies have already taken certain actions on their own.
  • "High-quality credits should only be used to balance out all remaining emissions once a non-state actor is meeting its short and medium-term targets," the report says.
  • It notes a high-quality credit would be, at a minimum, in addition to what would have happened without the incentive and would have to result in permanent emissions cuts.

Reality check: The expert group's recommendations are just that, suggestions, and cannot be imposed on multinational corporations.

  • However, the recommended standards could find their way into C-suites through a combination of investor, customer, lawmaker and competitive pressures.

What they're saying: "We do need to be very clear about what's required, because people are saying they are carbon neutral, they are net zero, millions of other terms," McKenna told Axios. "They have to mean things."

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