How to check if a company’s environmental claims match reality: A Toolkit

There has been huge environmental momentum in Australia, with hundreds of our largest companies committing to protect the environment. While this is great news, it’s important to separate fact from fiction to ensure we are not creating a culture of greenwash.

Greenwashing is when a company makes misleading and unsubstantiated claims that deceive consumers into believing their products, aims and policies are environmentally friendly.

If you’re ever curious to understand if an organisation’s environmental claims match reality, I’d recommend asking the following questions and referring to the resources below. (Note, this is not a comprehensive list).

What is the ideal environmental performance?

Ideally, in 2022, Australian companies with revenue over $10m should have:

1. A credible science-based Net Zero target validated by the Science Based Targets Initiative . This needs to be aligned with the Paris Agreement (to limit global warming to preferably to 1.5 degrees Celsius, compared to pre-industrial levels). They should be addressing emissions across their entire value chain (this means ‘scope 1’, ‘scope 2’, and ‘scope 3 ’ emissions).? Scope 3 emissions often make up the largest portion of a company's carbon footprint and are generally the largest source of a companies emissions.

• Scope 1 definition: covers direct emissions from owned or controlled sources;? ie. Fuel combustion, Company vehicles, Fugitive emissions
• Scope 2 definition: covers indirect emissions from the generation of purchased electricity ie. Purchased electricity, heat and steam, cooling consumed
• Scope 3 definition: includes all other indirect emissions that occur in a company's value chain. ie. Purchased goods and services, Business travel

2. Clear and transparent disclosures of their environmental impact (including across their supply chain), such as:

• Their short term, medium term and long term targets to achieve Net Zero GHG emissions by 2050 (preferably sooner)
• Their greenhouse gas emissions (methane and carbon dioxide in particular), including across their value chain
• The use of renewable and/or non-renewable energy consumption and production, water use, amount of waste sent to landfill, and air pollution.
• The deforestation and land clearing activities in their supply chain and a record of species impacted as a result of their activities
• Their lobbying practices (has a Paris-Agreement-aligned climate lobbying position and all of its direct lobbying activities are aligned with this)
• How they plan to track, reduce and achieve their targets, with time frames, milestones and regular reporting against targets
• A benchmark of their environmental performance against their industry peers a
• Be validated by a credible external source
• Use clear language that is not intended to confuse or mislead. ie. make distinctions between “recyclable”/“recycled” and “degradable”/“biodegradable”

3. A sustainability strategy that covers climate change, nature (biodiversity), cultural heritage, water and waste management considerations, across the entire value chain and includes the voices and input of diverse stakeholders, particularly First Nations people, local communities and women, who are often most heavily impacted by environmental crises while simultaneously excluded from decision-making mechanisms.

4. A plan to move beyond 'offsetting' and focus on processes to reduce their own emissions across the value chain. In the meantime, they should have a credible offsetting program. See article here and here.

Currently, there very, very few companies who meet the above.

How to check if a company’s claims match reality:

Do they have a science-based Net Zero target??

You can view the ‘companies taking action’ below. If it doesn't have ‘targets set’ next to their name, it means they haven’t been validated by the Science Based Target initiative:

https://sciencebasedtargets.org/companies-taking-action

https://www.climateactive.org.au/what-climate-active/how-it-works

?Are they climate active?

Climate Active certification is awarded to businesses that have credibly reached net zero emissions.

https://www.climateactive.org.au/

Do they publicly disclose their climate-related activity and impact?

Climate Action 100+ is an investor-led initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change. You can view company assessments here:

https://www.climateaction100.org/whos-involved/companies/

Are they publicly committed to 100% renewable electricity?

RE100 is the global corporate renewable energy initiative bringing together hundreds of large and ambitious businesses committed to 100% renewable electricity. You can view member companies here:

https://www.there100.org/re100-members

Do they have a Reconciliation Action Plan?

Since 2006, Reconciliation Action Plans (RAPs) have enabled organisations to sustainably and strategically take meaningful action to advance reconciliation. See who has a RAP here:

https://www.reconciliation.org.au/reconciliation-action-plans/who-has-a-rap/

What is their Environmental, Social, Governance ESG rating?

An ESG rating measures a company's exposure to long-term environmental, social, and governance risks. Some useful tools:

https://www.sustainalytics.com/esg-ratings

https://www.msci.com/our-solutions/esg-investing/esg-ratings

Do they lobby against the climate?

InfluenceMap is an independent think tank that provides data and analysis on how business and finance are affecting the climate crisis.

https://influencemap.org/

https://lobbymap.org/filter/List-of-Companies-and-Influencers#3

Some other questions to ask:

• Do they engage First Nations People in their land management practices and protect Indigenous cultural heritage? Are their practices including the right voices in decision-making? Do they engage local communities, First Nations people, women, and populations who are most heavily impacted by environmental crises?
• Are they solely focused on “offsetting” emissions, or do they plan to go beyond offsetting to actually decarbonise? How credible are their offset programs?
• Do they have plans to develop (or support) new oil and gas fields, as well as new coal mines or mine extensions (ie. new fossil fuel developments)?
• Do they incentivise climate friendly activity through their executive remuneration or employee packages?
• Do they transparently report and disclose their environmental impact (such as total emissions across their entire value chain, ie. Scope 1, 2 and 3 emissions)?
• Do they use internationally recognized GHG accounting standards, such as the GHG Protocol, to create a full accounting of their carbon footprint?

I would love further contributions to this piece. Please reach out if you would like me to add to this growing list.