Fighting Corporate Lies
Yes, there’s still a lot of greenwashing out there. But regulators and activists are on alert more than ever.
Have we hit peak greenwashing yet? Maybe not, but many regulators and activists are working to make it so.
Agencies from Australia to the United States have stepped up efforts to fight environmental deception in recent years, while activists have scoured corporate filings to expose whatever misleading claims they can find.
Greenwashing, in case you didn’t know, is when companies make false or exaggerated claims to fool consumers into thinking their products or services benefit the environment.
To be clear, experts say there is not nearly enough enforcement of truth-in-advertising rules today. But, in an effort to change that, many governments are working on, or have introduced, new regulations that can help to hold corporations accountable.
Today, I want to tell you about the results of some of those efforts. I’ll also explain how these new regulations may help governments and anyone harmed by misleading claims.
What’s already happening
In November last year, the multinational investment bank Goldman Sachs, which is based in New York, paid $4 million to the Securities and Exchange Commission to settle charges that the bank misled investors about investments marketed as environmental, social and governance funds. (The bank didn’t admit to any wrongdoing.)
A company in Australia, Black Mountain Energy, recently paid around $30,000 in fines linked to claims that a planned natural gas project would be net-zero.
And, this month, Britain’s advertising regulator, the Advertising Standards Authority, announced updated guidelines for claims related to environmental sustainability, including on the use of “carbon neutral” and “net zero.” It’s the same agency that recently banned two HSBC ads about the bank’s efforts to fight climate change. They found the bank had omitted information about its contributions to greenhouse gas emissions.
Truth in advertising and in corporate filings isn’t a new idea. The Goldman Sachs case, for example, was based on a rule from 1940. But government agencies have been on higher alert for greenwashing recently. The S.E.C. put together a task force to investigate misleading claims related to climate and environmental issues two years ago. (Here’s a link to submit tips and complaints.)
Still, experts say regulators are only scratching the surface.
“I think that there is probably under-enforcement as compared to the number of claims, environmental claims that we’re seeing in companies’ marketing,” said Sarah E. Light, a professor of legal studies and business ethics at the Wharton School who researches private environmental governance.
Rules are starting to change
One way to address the problem of misleading claims is to prevent them from happening in the first place.
Light told me she believed the best way to tackle greenwashing was to require companies to disclose more information, to explain what they mean when they present their climate plans or label a product in a certain way.
“There are limited resources for litigation, but requiring disclosure across the board is meaningful,” she said.
Still, even with better transparency, how do you decide if a claim is misleading? That can be hard, because there are no standard definitions for things like “green” or “low carbon.”
A new S.E.C. climate disclosure rule, which will require public companies to tell shareholders how their activities affect the climate, could help address that. It is expected to come into force in April. Other proposed rules are meant to make the meaning of E.S.G. investing clearer.
The Federal Trade Commission, the United States agency that watches over marketing claims, is also seeking to update its rules.
Moves like those can have a lot of impact. When Europe’s sustainable finance disclosure regulation went into force, for instance, a lot of funds were reclassified and lost their E.S.G. status.
What you can do about it
Watchdog groups have been very active in recent years trying to hold companies accountable for what they see as greenwashing. There are many strategies.
This month, for example, Global Witness submitted a complaint to the S.E.C. alleging that Shell has exaggerated the extent of its investments in renewable energy. Shell has denied misleading investors.
Last year, environmental groups sued KLM, the Dutch airline, over an advertising campaign they say misleads the public about how sustainable flying with the company really is. KLM denies this.
You can make a difference, too. I asked experts how.
Light told me you can tell your elected representatives that this issue matters to you. She said you can also strive to be an informed consumer, making “choices in the marketplace that are consistent with claims that are made with integrity rather than claims that are mere bluster.”
Madison Condon, a professor of law at Boston University who researches climate risk in financial institutions, told me you can put pressure on the financial institutions that manage your savings and on your employer, even if you aren’t part of a larger social movement.
But “people power has to intersect with government power,” she said. For you to make sure companies are doing what they say they are doing, it “does require some amount of regulation, which is hopefully where we’re going.”
Essential news from The Times
More expensive tampons: Heat and drought are driving up the cost of cotton products. It’s an example of how global warming is a “secret driver of inflation.”
Sustainable aviation fuel: Companies have started a $100 million fund to invest in jet fuel that produces lower emissions.
Stronger rules on mercury: The Biden administration has restored the legal foundation of an Obama-era regulation that was gutted under President Donald J. Trump.
Two new presidential aides: Biden has appointed a new economic adviser and a new regulations chief. Both have strong climate credentials.
Genetically modified trees: A biotechnology company is planting modified seedlings that it hopes can help manage climate change.
Stay optimistic: For people who work in fields like suicide prevention and climate science, the future can seem bleak. One thing that helps: Focusing on outcomes they can control.
From outside The Times
The BBC reported on how Scotland is paying Malawi for climate change loss and damage.
According to The New Republic, Norfolk Southern, the rail company involved in the Ohio derailment, has spent $100 million on lobbying and campaign contributions since 1990.
Whales are turning up dead along the New York and New Jersey shores. The cause? Unclear. But it’s getting political.
In observance of Black History Month, Yale Climate Connections discusses 12 new books on climate and environmental justice.
Before you go: How green is that electric pickup, really?
Electric vehicles are starting to look more like a lot like the rest of America’s automobiles: Big. But the bulking up of electric pickups and S.U.V.s has raised new questions over their environmental and safety impact. Here are the facts.
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Claire O’Neill and Douglas Alteen contributed to Climate Forward. Read past editions of the newsletter here.
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