Corporate climate responsibility: leadership or greenwashing?

CRS Trends  »  Sustainable reputation   »   Corporate climate responsibility: leadership or greenwashing?

Climate action is undeniably urgent, as the effects of climate change intensify and many environmental damages begin to provoke irreparable degradation to our ecosystems and biodiversity, which in turn negatively impacts social well-being and our overall livelihood. 

The urgency and complexity of the matter makes multilateral action the only type of action that can help alleviate the effects of climate change and move towards a sustainable future. In this regard, companies are (or should be) obviously part of these agreements, initiatives and target setting strategies. 


Against greenwashing


While stakeholders’ demands have helped accelerate many companies’ climate action pledges, without coordinated behaviors on the fight against climate change or enough regulatory measures, it is still rather difficult to distinguish between genuine climate leadership and greenwashing

The latest Corporate Climate Responsibility Monitor report points out exactly this issue by analyzing several major multinational companies, their climate pledges and the extent to which these are actually effective in leading corporate climate responsibility or simply well thought out marketing campaigns. It does so focusing on the integrity and transparency of the interconnection between pledges and actions.

The results, however, are quite frustrating, as they portray a rather vague scenario in the accuracy of climate pledges in contrast with the actions that follow. From the 25 companies assessed in the report, none of them achieved high integrity standards, and only three of them were found to meet reasonable integrity standards, meaning that net zero, carbon neutral or carbon positive promises and guarantees have, for the most part, fallen on deaf ears in a time when they are most crucial. 


But, why do we need companies to take on climate leadership?


With the current trend of greenwashing claims that falsely arouse hope in civil society, it is easy to think that we might be looking at the wrong actor when aiming for leadership in the fight against climate change, but there is an important argument in favor of corporate climate leadership. 

First and foremost, we cannot escape the fact that companies are, as for today, the actors/institutions in society that hold more trust among the people, standing before governments, NGOs and media. But most importantly, the mitigation of climate change depends on innovation, and companies hold a central role in coming up with solutions for decarbonization. 

And although both stakeholders and shareholders have a tremendous influence on what needs to be done, and have indeed proved to be a powerful driver for corporate climate responsibility, regulators cannot solely rely on this for taking effective decisions. Instead, they should hold companies to bigger scrutiny and accountability for their pledges and actions, helping distinguish between climate leadership and greenwashing and accelerate decarbonization.


Good practice


The increasingly accurate and clear scientific evidence pointing towards irreversible damage, and the catastrophic consequences of inaction, have rapidly shifted what constitutes good practices concerning corporate climate responsibility. Ever since the Paris Agreement set out precise objectives such as the need to limit global temperature to 1.5ºC increase, achieve net zero CO2 emissions by 2050, and net zero of all GHG emissions around 2060 and 2070, companies suddenly appeared to not be doing enough for the attainment of these targets. 

For example, we can no longer consider emission compensation elsewhere a good practice if it is not combined with the company’s own emissions’ reduction. The Corporate Climate Responsibility Monitor takes us through four stages of GHG emission reduction and disclosure that enhance bottom-up pressure from consumers and shareholders through transparency, and align with current international targets and efforts to achieve effective decarbonization: 


  1. Tracking and disclosure of emissions: A strong climate strategy is necessarily transparent, as this is the only way to understand what the GHG emission footprint is and where it is heading. Good practice includes annual disclosures and a breakdown of different emissions. 


  1. Setting specific targets: Both climate pledges and actions should be targeted towards specific objectives and commit to achieving decarbonization in a clear way, avoiding misleading consumers, shareholders and regulators. Good practices include setting specific reduction targets independent from offsetting practices.


  1. Reducing emissions: Implement deep emission reduction and decarbonization measures and disclose details of such measures in order to support others replicating the latter or identifying new and better solutions. Good practices include the sourcing of renewable energies.


  1. Climate contributions and offsetting: Climate leadership is characterized not only for ambitious emission reduction targets and actions, but also for taking responsibility for unabated emissions. Good practices include providing financial support to decarbonization initiatives outside the company’s value chain without claiming those results as one’s own emissions. 


Transparency, integrity and engagement


The Corporate Climate Responsibility Monitor focuses on transparency and integrity as key signs of genuine climate action that is clearly distinguishable from greenwashing or exaggerated climate action pledges that do not amount to the responsible or sustainable practices of the company.

We too believe and work for transparency to be one of the key values driving the fight for climate action, as it is the only way to understand what we are doing wrong, what we are doing right and what it is that we are not doing yet. 

Because being transparent is not only an externality to a company, or a given organization, to help build trust and reputation; it is in fact also a great learning and improvement mechanism. You cannot manage what you don’t understand. And so we advocate for transparency, integrity and precision as imperatives to the fight against climate change. 

In DoGood we are convinced of the need to understand and manage efforts to achieve a sustainable transition inside an organization for the correct and efficient functioning of the business and the community it operates in. We alone cannot achieve the substantial changes necessary, but we work on the basis of collaboration, transparency and accuracy in order to bring light to sustainable actions.  

In this regard, it is essential to our work to promote good corporate governance, meaning that the processes of disclosure and transparency are followed so as to provide regulators and shareholders as well as the general public with precise and accurate information about the financial, operational and other aspects of the company, including a more accurate definition of the ESG performance.

We have developed a corporate government tool that helps establish ESG impact objectives for employees in regards to the sustainability strategy of the company. Through our technology we are able to activate and track employees’ impact, creating engagement that translates into improved ESG metrics, reputational value and an overall positive impact for the environment and society. 

If you want to know more about how we work to create a positive social and environmental impact, click here.