In 2018, record droughts and major crop failures forced 8,000 farmers to apply for emergency aid in Germany. In 2019, mid-summer heatwaves resulted in the deaths of 1,435 people in France. In 2020, freak storm Dennis left 1,650 homes flooded in the UK. The consequences of climate change are upon us and will continue to threaten the resources that we take for granted every day in Europe, such as food, water, and shelter. The devastation the future could hold stresses the importance of limiting global warming below 1.5℃. To remain below 1.5℃ we need to turn our backs on fossil fuels and relentless extraction, and walk towards renewable energy and sustainable living. Stepping in this new direction and continuing down this pathway will, however, require large amounts of green investment.
Urgent need for change
The urgent need for change is indisputable, however change is counter to some businesses’ interests, due to the enormous profits they gain under the current system. Yet, with mounting pressure from governments, NGOs and citizens, to maintain their legitimacy they must appear to conform to the demand for change. The tension between business interests and the demand for change has resulted in unchecked greenwashing, whereby businesses apply deceptive tactics to make it appear that they are complying. In practice, seeing through the lies is not always easy. Greenwashing can be applied at the product or firm level, with the purpose of both selling to consumers, and attracting investment. This can come in many forms; from using green imagery in advertising, to pledging to reach net zero emissions through carbon offsetting, to developing so-called sustainable products made from carbon intensive materials manufactured half-way across the world. Greenwashing is varied, but what these promises do have in common is that they are merely symbolic acts with no substance and act as a barrier to tackling climate change.
Climate Action 100+, an investor-led initiative that ensures corporations are taking necessary action on climate change, reaffirms the prevalence of greenwashing. They found that only 23% of the 127 companies they assessed have carbon reduction targets that align with limiting warming below 1.5℃. They further exposed that a mere 5% of focus companies have a strategic plan of how their expenditure will be utilised to fulfil their promises of decarbonisation. The findings of Climate Action 100+ are not only disappointing, but are extremely worrisome. If businesses are not committed to a robust roadmap detailing how their investment expenditure will reduce emissions or have a positive environmental impact, then their pledges to their promises cannot be substantiated.
Greenwashing as a barrier to tackling climate change and the fight to counter it
In this regard, greenwashing as a barrier to tackling climate change is two-fold: it enables companies to continue their environmentally harmful operations, and simultaneously diverts green investment away from sustainable businesses that truly will bring change. This deception and ambiguity presents a challenge for green investors in sifting the genuine from the greenwashers; but Green Angel Syndicate has practical and effective steps within its due diligence process to expose the greenwashing offenders. Investment experts Magali, Surakat and Federico have a keen eye for identifying greenwashing companies that are applying for funding from Green Angel Syndicate. Whilst there are many avenues to be explored, they pinpoint three key questions to ask within this investigative process.
- What is the primary goal of the company?
Tackling climate change should be the primary goal of the company, not merely a by-product of a business focused predominantly upon making profit. This is evidenced through how the business model and environmental impact to date links with a reduction in emissions. - Does the company operate entirely in a green space?
A company should not have diverse business activities operating in spaces that do not support, or are counterproductive to, fulfilling their promises of sustainability and climate change mitigation. - What are the core values and motivations of the company’s management team?
The management team drives the business strategy forward and thus its environmental impact, therefore their professional background and personal motivations should align with building a future decoupled from fossil fuels.
There is no doubt that greenwashing as a means to maintain environmentally harmful business interests and attract green investment has become rampant in the face of demanding climate change mitigation. However, similar to the fight against climate change, we are seeing advances in the fight against greenwashing. Green Angel Syndicate, like many other businesses, NGOs, and green investors, have seen through their deceit and are actively working to tear down the greenwashing barrier. Our efforts have made visible progress: Climate Action 100+ have found a positive trend in the quality of carbon reduction targets and the strategies to fulfil them. We must continue to promote this positive trend, sending a message that greenwashing is something that we will not, and cannot afford to tolerate.
Photo by Ksenia Chernaya: https://www.pexels.com/photo/person-painting-wall-in-apartment-5691592/