The U.S. government is finalizing its strategy for measuring and reporting eco-investment or green finance, the financial activities undertaken to support environmentally responsible products or practices.
From the 1990s on, as the problems stemming from the lack of sustainability in the practices of many companies became evident, more and more private and institutional investors began to prioritize companies that showed consistently better practices than their competitors with respect to their environmental impact. This approach by investors gave rise to a set of practices, so-called greenwashing, as a form of misleading propaganda to try to promote the perception that a company’s products, objectives or policies were environmentally friendly, so as to increase its profits.
Practices such as the systematic purchasing of carbon offset certificates without doing anything to actually reduce emissions, or relocating polluting activities to countries with more lax environmental legislation, the so-called carbon leakage, have unfortunately been common currency in many corporate environments for a long time. The government has largely ignored the way that compliance with these environmental, social and corporate (ESG) objectives is reported, and standards are often voluntary and do not apply universally. Such seemingly unambiguous terms as net-zero, for example, can today be used for all sorts of practices, such as financial compensation, reforestation or forest protection programs, while the processes that generate the real emissions remain completely unchanged.
Joe Biden, who made the gesture of signing on his first day in the White House the re-entry of the United States into the Paris Agreement, could change the way these types of initiatives are monitored and reported. The acting director of the Securities and Exchange Commission (SEC), Allison Herren Lee, has announced, preparing the ground for the arrival of her expected successor, Gary Gensler, the beginning of public consultations to try to bring about changes in the reporting practices of these types of environmental policies, with the idea of preventing the way in which companies “embellish” many of their activities to try to disguise them as environmentally positive.
The goal is to define terms ahead of the UKCOP26 climate summit in Glasgow in November, which will try to set international standards and thus start calling things by their proper name and in a consistent manner. For too long, we have allowed companies to use confusing terms and unsubstantiated assertions to report their supposed efforts to set environmental targets, and the result has been companies claiming to be greener than a frog’s back selling us products that falsified their metrics and emissions by more than 50 times, without the slightest scruple. Greenwashing means that nobody believes anything anymore, and everyone in every industry — competitors, authorities and consumers — assumed that everyone was constantly lying, and environmental objectives were reduced to declarations of good intentions.
Adopting a unified, standardized approach, rather than relying on voluntarism that has proven not to work, is a good first step. Thereafter, a horizontal and unequivocal approach by all institutions about the climate emergency must be ensured, making it possible to address issues and priorities based on universally agreed terms and standards. Above all, what is needed is an unequivocally international approach, which will enable decisions, or possibly sanctions, to be taken at the supranational level.
Much remains to be done. But this is the most important global task we face.
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March 23, 2021 at 03:24PM
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It's Time To Bring Greenwashing Under Control - Forbes
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