From Greenwishing to Greenwashing – A Growing Business Risk?

October 17, 2019, by Mark Trexler

I recently wrote about an article by investment manager Duncan Austin, in which he coined the term “greenwishing.” Austin argues that the sustainable business community’s climate rhetoric sounds great and is well-intended — but that it is not having a meaningful impact on climate change outcomes. He characterizes that rhetoric as greenwishing, and suggests that the community should instead actively engage in advocating for policies that would contribute to climate change mitigation goals.

Greenwishing is a compelling term. It lacks the pejorative connotations of “greenwashing,” and reflects the good intentions of many business initiatives. I believe its applicability is considerably broader than Austin suggests. I suggest that the term greenwishing can apply to any business or organizational initiatives motivated by or attributed to concern over climate change that lack any causal link to climate change mitigation, or which are unlikely to be able to scale to the point of meaningfully influencing climate change. The term greenwishing reflects the fact that, despite good intentions, not every action has an impact when it comes to tackling climate change.

I would also argue that greenwishing can turn into greenwashing over time. Initially, well-meaning company CEOs who are thinking about climate change might begin with low-cost and low-risk responses based on the concerns of employees, investors, and customers. These well-intentioned actions might fall into the category of greenwishing. At some point, those CEOs should become aware that their largely aspirational measures will not materially contribute to substantive climate change mitigation. At that point, continuing to promote those aspirational measures as evidence of corporate concern and action on climate change becomes greenwashing.

Austin’s coining of the term greenwishing has helped to shine a spotlight on a significant problem for businesses and other organizations responding to climate change. That there are few internal mechanisms in place for spotting, and stepping beyond, greenwishing initiatives before they turn into greenwashing. In fact, many such initiatives can become a trap. The longer the problem goes unseen, the harder it becomes for companies and other organizations to move beyond greenwishing without risking accusations of having intentionally engaged in greenwashing all along. In other words, aspirational rhetoric can ensnare even the most well-intentioned organizations and help set the stage for being accused of greenwashing.

Let’s take a look at a few examples of business and organizational responses to climate change that are at different stages along the greenwishing to greenwashing transition:

Green Energy Purchasing. Renewable energy certificates (RECs) were invented in the USA many years ago as a way for electric power utilities to track their compliance with government Renewable Portfolio Standard (RPS) mandates for wholesale electricity purchases. RPSs failed to take off nationally and initially in many states. Green energy entrepreneurs then began to repurpose and market RECs directly to electricity consumers as a low-cost way to claim being “green.” Renewable energy advocates hoped that making it cheap and easy for corporations to take initial green steps via RECs would catalyze the renewable energy conversation and increase support for expanded RPS legislation. Advocates also hoped that if enough companies bought enough RECs, demand for RECs might eventually drive additional renewable energy investment.

That turned out to be greenwishing. While voluntary REC markets and sales increased significantly over time, driven by low REC prices, it became evident that voluntary RECs were having no impact on the amount of renewable energy generation being built or the amount of renewable energy being generated. It also became clear they never would.

There is no longer any valid environmental rationale for promoting voluntary RECs as a means of “going green.” However, many companies continue to rely on voluntary RECs to claim that they are utilizing 100% renewable energy or that they are “carbon neutral.” Companies would know better if they wanted to. That’s greenwashing.

It’s greenwashing with an interesting twist. NGOs such as the World Resources Institute (WRI) and the Union of Concerned Scientists (UCS), who wanted to push companies into accepting and advocating for renewable energy, went along with voluntary RECs. It became a slippery slope. Now, WRI, UCS, and others find it difficult to step away from advocating for voluntary RECs, even as RECs have transitioned from greenwishing to greenwashing. This example illustrates the need to recognize greenwishing initiatives for what they actually are and to have an exit strategy in place before becoming trapped into defending greenwashing.

Carbon Offsets. About 30 years ago, the first carbon offset project was estimated to cost about two U.S. cents per metric ton of CO2 reduced. Carbon offset projects quickly proliferated as a way for companies to inexpensively “do something” about climate change, even if early offsetting initiatives reflected greenwishing in terms of having an impact on climate change.

From the standpoint of climate advocates, getting companies to engage through low-cost and low-risk carbon offset projects helped promote the “business and climate change” conversation. As with RECs, offsets encouraged companies to more actively engage on climate change. First, you get companies to do a carbon footprint and look for internal emissions reductions. Second, you make offsets available as a low-cost next step to enable more aggressive mitigation targets and commitments.

It became clear over time, however, that many offset projects left much to be desired, in terms of environmental integrity.  It has proven difficult to reliably differentiate “additional” tons of emissions reductions and carbon sequestration from the “non-additional” tons that have to be kept out of offset markets to maintain environmental integrity.

As with voluntary RECs, there is no longer any environmental rationale for using cheap and unreliable carbon offsets as the basis for corporate climate change claims and commitments. Yet many companies still buy low-cost offsets, while higher-quality—and more expensive—offsets go unsold or are never brought to market in the first place. Companies relying too much on poor quality offsets as a climate change mitigation strategy, instead of pushing for stronger climate policies that might make a difference, are arguably greenwashing. It’s a problem that could get much worse as the aviation sector enters offset markets in a big way to justify that sector’s rapidly growing emissions.

Science-Based Targets. Science-based targets are a more recent business response to climate change than voluntary RECs and carbon offsets. In the absence of progress on the global policy front toward achieving a 2oC temperature target, some companies bought into the idea of companies adopting science-based targets. After all, if every company everywhere agreed to a science-based target, it would be a huge step towards limiting climate change to 2°C.

Science-based targets reflect greenwishing. Even a leading proponent of science-based targets noted (when such targets were first being discussed): “nothing else is working, we have to try something!” But very few companies will ever take on such targets, and it is difficult to envision that science-based targets could influence climate change outcomes. At some point, arguably it could become greenwashing for companies to tout their science-based targets while not engaging in the public policy advocacy that might actually make a difference to climate change outcomes. Companies should be alert to the risk.

Carbon Pricing Advocacy. Many CEOs have signed onto calls for pricing carbon to mitigate climate change. Most of these calls, however, have been vague. They do not specify the desired level, timing, or form of carbon pricing. Many CEOs probably are unaware of the levels of carbon pricing that would be required to achieve a 2°C global target, much less a 1.5°C target. Their calls for carbon pricing most likely fall into the category of greenwishing. At some point, arguably, calling for carbon pricing at levels far below what is needed to have an impact on climate change will be seen as greenwashing. (It could even be worse, if companies condition their calls for carbon pricing on abandoning other policy tools.)

Conclusion

What’s notable about these examples of corporate greenwashing risk is that they are self-inflicted. Think about Exxon Mobil, an extreme case perhaps, but a useful example. Exxon’s most significant legal troubles today are not due to its past GHG emissions or its obfuscation of climate science for almost 50 years. Instead, Exxon’s current difficulties are due to an initiative that probably started out as greenwishing when the company announced years ago that it was voluntarily implementing a robust internal carbon price as a risk management strategy. Great idea, in theory. According to New York state prosecutors, however, Exxon did not utilize its internal carbon price in the way the company publicized. As a result it was not managing its climate risks the way it was telling investors. Exxon Mobil did not have to adopt an internal carbon price at all; but once it did, it may have become legally liable for failing to follow through.

Many companies and investors are characterizing climate change greenwishing initiatives as key elements of their climate change risk management strategies. If they let those initiatives transition to greenwashing, they, too, could end up in trouble.


This guest blog post is authored by Mark Trexler, a regular advisor to the GHG Management Institute and is the Director, Climate Change Knowledge Systems, The Climatographers.


7 responses to “From Greenwishing to Greenwashing – A Growing Business Risk?”

  1. Tom says:

    Great post Mark. Would love to see a version for government greenwishing.

    • Mark Trexler says:

      Well, that’s the whole field of implementation theory! Unfortunately, almost all government policy reflects a significant amount of greenwishing. What’s particularly relevant here is that private decision-making is being suggested as helping to fill in for absent or non-performing government action, but with much less critical analysis.

      • Michael Gillenwater says:

        There is a history here in terms of internal investigations of some of USEPA’s voluntary programs. Some of which have been very successful, some successful but less than the program touts, and some of which are greenwashing.

  2. Yes, great post. Another part of the problem for organizations is the lack of implementing, managing and tracking operational outcomes. While it’s alluded to in the final summary re Exxon Mobil and its internal carbon pricing scheme, the failure of organizations to operationalize sustainability pronouncements is widespread. When push comes to shove, it never really becomes a part of peoples’ day job. I like the use of the term ‘greenwishing’ as it is more expansive and hence more encompassing. And you artfully tie it back to its ultimate outcome, ‘greenwashing.’ I would suggest more overt advocacy of ‘Operational-based’ targets as well as Science-based targets to help keep organizations more honest.

    • Mark Trexler says:

      Grant, the lack of tracking operational outcomes is what makes greenwishing so easy. But Science-based targets are particularly relevant here. What if a company successfully implements science-based targets. It’s still greenwishing if that success doesn’t actually have any real link back to climate change mitigation.

  3. Daniel D. Scholz says:

    Dear Mark,

    Thanks a lot for your thought-provoking contribution. I fully agree: Too often we lack the correct terminology. And with the wrong one at hand we naturally get lost in wrong assumptions and concepts. Could the culprit for the dilemma be some type of privat actor hybris?

    Actually just this week I attended a financial market stakeholder session in Frankfurt. Without any doubt the meeting assembled the best informed and knowledgeable professionals in the market on ESG accounting in Germany. Can they help define the standards for the future that may eventually allow the financial market (at best voluntarily) deliver the contributions for the decarbonization as we need it? Believe me – the participants in the conference had and have the best intentions to contribute to a better world.

    But still the exercise proves difficult – if not futile… as the elephant in the room was and is a reasonable carbon price, something the regulator/government in Germany is unwilling to deliver. Only with a reasonable price tag will the carbon footprint of assets really matter. Only then will the ecological ambition fall into one with the economical practices of our markets and its metrics that steer investments.

    And only at the sidelines of the conference participants acknowledged that the real actor we need is in the first place the regulator (to send the correct market signals). In this function the private sector may only be the fox that is by definition unable to guard the henhouse.

    Too often I see us trapped in conference meetings and fora where the wrong people are meant to find a solution they cannot deliver. This seems generally true for a private sector willing to generate an outcome – that would require him to act against the market rules that define his basic quality or where he is best, i.e. the maximization of profits and efficiency.

    In its song „consequence“ the wonderful band „the notwist“ has lyrics that describe the best fate possible for those who do not like to change the direction as they stick to the wrong concepts and expectations:

    Fail with consequence
    
Lose with eloquence
    
And smile

    It is time for the private sector to hand over the regulators tasks to the regulator – without compromise. This is my belief as it is now in 2019 after some 12 years in supporting the Sisyphean task.

    Thanks again, Mark!
    Daniel

  4. Mark Trexler says:

    Daniel, I agree with you, which is why I think the work of InfluenceMap in the UK is so important. We need to think a lot less about our carbon footprints, and much more about our policy footprints. By the way, if you’re not familiar with the work Christopher Wright you might want to check it out (collected here https://bra.in/2j3gbE His thesis is that business is inevitably going to be the fox guarding the hen house, no matter protestations to the contrary.

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