Most companies are exposed to greenwashing risk, survey of 3,500 of them finds

A greenwashing survey of more than 3,500 companies with climate commitments has found that a huge majority — 96 percent of the sample — fall short on at least one risk indicator.

The study, which the authors say is the largest of its kind, paints a bleak picture of corporate climate pledges and comes after a string of legal defeats for companies accused of greenwashing. But it also offers some relatively easy remedies.

“We don’t want it to be about calling out companies for doing something wrong,” said Elizabeth Brown, a Ph.D. student in the Data-Driven EnviroLab at the University of North Carolina and an author of the study. “It’s less of an attack and more of an invitation to show how easy it would be to demonstrate a little bit more credibility.”

The seven-point test

Greenwashing is notoriously hard to define, so the study team drew on industry-standard sources, including credibility criteria developed by the United Nations-backed Race to Zero campaign, to identify seven indicators that could be flags for the practice:

• Lack of an interim emissions target
• Target does not include Scope 3 emissions
• Company has not developed a plan for achieving its target
• Target relies on offsets without specifying how those offsets will be used
• Target covers carbon dioxide but not other greenhouse gases
• Company engages in lobbying that undermines climate action
• Company is failing to make meaningful progress towards its target

Using data about company commitments and emissions assembled by three non-profit initiatives — CDP, Net Zero Tracker and InfluenceMap — the researchers then scored 3,574 companies that had made some kind of climate pledge.

The most problematic issue was Scope 3: 70 percent of the companies excluded value-chain emissions from targets, even though such sources typically constitute the largest fraction of corporate footprints. Other common flags included questionable use of offsets (40 percent), missing interim targets (21 percent) and a lack of meaningful progress toward targets (20 percent). After results were combined, just 4 percent of the companies had zero flags. (Restrictions on use of the CDP data prevented the researchers from sharing company names.)

The high number of flags could be seen as a consequence of the high number of indicators considered by the researchers. But Brown notes that in each case the team did set a deliberately low bar to clear. 

Businesses that provided any level of detail on how they intend to use offsets avoided that flag, for example, regardless of their plan’s credibility. One consequence is that companies can lessen greenwashing risk by implementing what many experts say are table stakes measures, such as taking a first pass at creating a policy for offset use, or including a broader range of greenhouse gases in a target.

Gaps in voluntary standards

The study also raises questions about how companies monitor their pledges. “The existing voluntary guidelines for frameworks are not really incentivizing companies to avoid the full scope of greenwashing issues,” said Brown.

The Science Based Targets initiative’s existing Corporate Net Zero Standard, for example, requires the inclusion of Scope 3 emissions and greenhouse gases other than carbon dioxide. Transition plans and lobbying disclosures, on the other hand, are encouraged but not required. 

An updated version of the standard, which is in the final stages of consultation, requires large companies to create transition plans. That said, though the language on lobbying has been tightened to state that “all public policy engagement, lobbying activities, and advocacy efforts are consistent with and supportive of [the company’s] net-zero ambitions,” it remains a recommendation not a requirement.