Tackling greenwashing claims, managing model risk and examining Google’s partnership with LevelTen

Investor activism tackles greenwashing at Kraft Heinz

Jan Dell, a chemical engineer, environmental advocate and Kraft Heinz investor, has launched a shareholder proposal to address Kraft Heinz's recycling label accuracy, directly targeting corporate greenwashing. Utilizing electronic trackers, she revealed that plastics labelled recyclable were landing in overseas landfills, highlighting recycling claim discrepancies. This initiative not only seeks to amend misleading claims but also aims to avert potential legal issues for Kraft Heinz. Keurig Canada incurred a $3 million fine for misrepresenting the recyclability of its K-Cup pods, and Kohl's and Walmart received combined fines of $5.5 million for falsely marketing products as made of bamboo when they were made of rayon and were not environmentally friendly. Much larger fines related to greenwashing were handed to Toyota – $180 million for concealing emission defects – and Volkswagen faced a monumental $30 billion penalty for emissions test fraud. In line with California's ‘Truth in Labelling’ law, Jan Dell’s action promotes transparency in recycling practices, ensuring corporate integrity, and safeguarding environmental and investor interests. Her efforts denote a growing trend in shareholder activism, advocating for ethical, sustainable business practices and increased corporate environmental accountability.

Mitigating model risk in climate risk management

In addition to physical and transition risks, there’s another risk that firms need to consider – model risk. This is the risk of relying on models that are not fit for purpose, misusing models or misinterpreting output. Unfortunately, these errors are easy to make when dealing with climate change. For instance, there is a lot of uncertainty in climate projections. Over-reliance on models could, therefore, lead firms to misestimate risk. Strategies for dealing with this type of model risk include identifying conditions that, when observed, trigger pre-defined adaptation actions. Model risk also emerges from the fact that climate data and models are complex. Without a good understanding of model limitations, firms are more likely to make misinformed decisions. Organizations should invest in climate expertise to ensure that they can draw valid, decision-relevant conclusions from climate data. Critically, firms must recognize that models, although useful, do not hold all the answers.

Google’s partnership with LevelTen helps it power ahead on PPA procurement

Energy-intensive data centres account for a vast proportion of Google’s emissions footprint – consequently Google has several targets to reduce its impact, such as achieving 24/7 carbon free energy by 2030. Google has already made significant progress towards this target, achieving 64% carbon free energy in 2022. A partnership with LevelTen, a renewable transaction infrastructure provider, has allowed Google to develop a more efficient RFP process for power purchase agreements (PPAs). LevelTen’s user interface was used to agree the project-specific terms for a 100-megawatt PPA with Cubico within a significantly shorter time period than expected. Additionally, the system was used to secure a contract with Kronos Solar EDPR within 82 days of the RFP launch and gave the provider the certainties needed to deploy capital for its photovoltaic project development.

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