Influential oil company scenarios for combating climate change don’t actually meet the Paris Agreement goals, our new analysis shows

BP, Shell and Equinor all produce widely used scenarios of energy’s future. Christopher Furlong/Getty Images

by Robert Brecha, University of Dayton and Gaurav Ganti, Humboldt University of Berlin

Several major oil companies, including BP and Shell, periodically publish scenarios forecasting the future of the energy sector. In recent years, they have added visions for how climate change might be addressed, including scenarios that they claim are consistent with the international Paris climate agreement.

These scenarios are hugely influential. They are used by companies making investment decisions and, importantly, by policymakers as a basis for their decisions.

But are they really compatible with the Paris Agreement?

Many of the future scenarios show continued reliance on fossil fuels. But data gaps and a lack of transparency can make it difficult to compare them with independent scientific assessments, such as the global reviews by the Intergovernmental Panel on Climate Change.

In a study published Aug. 16, 2022, in Nature Communications, our international team analyzed four of these scenarios and two others by the International Energy Agency using a new method we developed for comparing such energy scenarios head-to-head. We determined that five of them – including frequently cited scenarios from BP, Shell and Equinor – were not consistent with the Paris goals.

What the Paris Agreement expects

The 2015 Paris Agreement, signed by nearly all countries, sets out a few criteria to meet its objectives.

One is to ensure the global average temperature increase stays well below 2 degrees Celsius (3.6 F) compared to pre-industrial era levels, and to pursue efforts to keep warming under 1.5°C (2.7 F). The agreement also states that global emissions should peak as soon as possible and reach at least net zero greenhouse gas emissions in the second half of the century. Pathways that meet these objectives show that carbon dioxide emissions should fall even faster, reaching net zero by about 2050.

Scientific evidence shows that overshooting 1.5°C of warming, even temporarily, would have harmful consequences for the global climate. Those consequences are not necessarily reversible, and it’s unclear how well people, ecosystems and economies would be able to adapt.

How the scenarios perform

We have been working with the nonprofit science and policy research institute Climate Analytics to better understand the implications of the Paris Agreement for global and national decarbonization pathways – the paths countries can take to cut their greenhouse gas emissions. In particular, we have explored the roles that coal and natural gas can play as the world transitions away from fossil fuels.

When we analyzed the energy companies’ decarbonization scenarios, we found that BP’s, Shell’s and Equinor’s scenarios overshoot the 1.5°C limit of the Paris Agreement by a significant margin, with only BP’s having a greater than 50% chance of subsequently drawing temperatures down to 1.5°C by 2100.

These scenarios also showed higher near-term use of coal and long-term use of gas for electricity production than Paris-compatible scenarios, such as those assessed by the IPCC. Overall, the energy company scenarios also feature higher levels of carbon dioxide emissions than Paris-compatible scenarios.

Of the six scenarios, we determined that only the International Energy Agency’s Net Zero by 2050 scenario sketches out an energy future that is compatible with the 1.5°C Paris Agreement goal.

We found this scenario has a greater than 33% chance of keeping warming from ever exceeding 1.5°C, a 50% chance of having temperatures 1.5°C warmer or less in 2100, and a nearly 90% chance of keeping warming always below 2°C. This is in line with the criteria we use to assess Paris Agreement consistency, and also in line with the approach taken in the IPCC’s Special Report on 1.5°C, which highlights pathways with no or limited overshoot to be 1.5°C compatible.

Getting the right picture of decarbonization

When any group publishes future energy scenarios, it’s useful to have a transparent way to make an apples-to-apples comparison and evaluate the temperature implications. Most of the corporate scenarios, with the exception of Shell’s Sky 1.5 scenario, don’t extend beyond midcentury and focus on carbon dioxide without assessing other greenhouse gases.

Our method uses a transparent procedure to extend each pathway to 2100 and estimate emissions of other gases, which allows us to calculate the temperature outcomes of these scenarios using simple climate models.

Without a consistent basis for comparison, there is a risk that policymakers and businesses will have an inaccurate picture about the pathways available for decarbonizing economies.

Meeting the 1.5°C goal will be challenging. The planet has already warmed about 1.1°C since pre-industrial times, and people are suffering through deadly heat waves, droughts, wildfires and extreme storms linked to climate change. There is little room for false starts and dead-ends as countries transform their energy, agricultural and industrial systems on the way to net-zero greenhouse gas emissions.

Robert Brecha, Professor of Sustainability, University of Dayton and Gaurav Ganti, Ph.D. Student in Geography, Humboldt University of Berlin

This article is republished from The Conversation under a Creative Commons license. Read the original article.

How greenwashing affects the bottom line

Read the full story from Harvard Business Review.

New research shows that when companies overcommit and/or do not deliver on promised socially responsible initiatives they damage their relationships with their customers. However, a company’s reputation for product quality or innovation may partially mitigate such a negative impact on customer satisfaction.

Aviation’s first greenwashing lawsuit takes off against Dutch airline KLM

Read the full story at Treehugger.

Environmental advocates have accused the airline of misleading the public about the environmental impact of flying.

SEC’s climate disclosure plan could be in trouble after a recent Supreme Court ruling, but a bigger question looms: Does disclosure work?

Factories can be large sources of greenhouse gas emissions. Joe Sohm/Visions of America/Universal Images Group via Getty Images

by Lily Hsueh, Arizona State University

The U.S. Securities and Exchange Commission is considering requiring publicly traded U.S. companies to disclose the climate-related risks they face. Republican state officials, emboldened by a recent Supreme Court ruling, are already threatening to sue, claiming regulators don’t have the authority.

While the debate heats up, what’s surprisingly missing is a discussion about whether disclosures actually influence corporate behavior.

An underlying premise of financial disclosures is that what gets measured is more likely to be managed. But do corporations that disclose climate change information actually reduce their carbon footprints?

I’m a professor of economics and public policy, and my research shows that while carbon disclosure encourages some improvement, it is not enough by itself to ensure that companies’ greenhouse gas emissions fall. Worse still, some companies use it to obfuscate and enable greenwashing – false or misleading advertising claiming a company is more environmentally or socially responsible than it really is.

I believe the SEC has an unprecedented opportunity to design a program that is greenwashing-resistant.

Disclosure doesn’t always mean less carbon

Although carbon disclosure is often held up as an indicator of corporate social responsibility, the data tells a more nuanced story.

I investigated the carbon disclosures made by nearly 600 companies that were listed in the S&P 500 index at least once between 2011 and 2016. The disclosures were made to CDP, formerly the Carbon Disclosure Project, a nonprofit organization that surveys companies and governments about their carbon emissions and management. More than half of all S&P 500 firms respond to its requests for information.

At first glance, one might think that a mandated, unified framework for reporting companies’ climate management and risk data and their greenhouse gas emissions, such as the one proposed by the SEC, is likely to lead to more efficient use of fossil fuels, lowering emissions as the economy grows.

I did find that companies that have proactively disclosed their emissions to CDP on average reduced their entitywide carbon emissions intensity by at least one measure: carbon emissions per capita of full-time employees. This means that as a company increases in size, it is estimated to reduce its carbon footprint on a per-employee basis. This does not, however, necessarily translate to a reduction in a company’s overall carbon emissions. Much of the decline involved large emissions-intensive companies, such as utilities, that were trying to get ahead of expected climate regulations.

Companies that received a “B” grade from CDP increased their entitywide carbon emissions on average over that time. Notably, those in the financial, health care and other consumer-oriented sectors that did not experience the same level of regulatory pressure as greenhouse gas-intensive firms led the increase.

About a quarter of the S&P 500 companies that completed CDP’s annual climate change survey undertook assessments of their business impacts on the environment and integrated climate risk management into their business strategy. Yet entitywide emissions still increased.

Earlier research found similar results in the first decade of the U.S. Department of Energy’s Voluntary Greenhouse Gas Registry. Overall, it found that participating in the registry had no significant effect on the companies’ carbon emissions intensity, but that many of the companies, by being selective in what they reported, reported emissions reductions.

Another study, which focused on the power sector’s participation in CDP’s surveys, found an increase in carbon intensity.

‘A-List’ may not be exempt from greenwashing

Even companies that made CDP’s coveted “A-List” of climate leaders may not necessarily be free of greenwashing.

A company earns an “A” grade when it has met criteria of disclosure, awareness, management and leadership, including adopting global best practices, such as a science-based emissions target, regardless of whether these practices translate into improved environmental performance.

Because CDP grades companies based on sustainability outputs rather than outcomes, an “A-list” company could be “carbon neutral” when it counts only the facilities it owns and not the factories that make its products. Moreover, a company that has earned an “A” could commit to removing all emitted carbon but maintain partnerships with oil and gas companies to “generate new exploration opportunities”.

An illustration of buildings with symbols of sustainability above each.
Companies often define sustainability in different ways to suit their needs. Narongrit Doungmanee via Getty Images

Retail and apparel giants Walmart, Target and Nike – all in the “B” to “A-minus” range in recent years – offer an example of the challenge.

They regularly disclose their carbon management plans and emissions to CDP. But they are also part of the industry-led Sustainable Apparel Coalition, which has controversially portrayed petroleum-based synthetics as the most sustainable choice above natural fibers in the Higgs Index, a supply chain measurement tool that some clothing companies use to show a social and environmental footprint to consumers. Walmart has been sued by the Federal Trade Commission over products described as bamboo and “eco-friendly and sustainable” that were made from rayon, a semi-synthetic fiber made using toxic chemicals.

Designing a greenwashing-resistant disclosure program

I see three key ways for the SEC to design a climate disclosure program that is greenwashing-resistant.

First, misinformation or disinformation about ESG – environmental, social and governance factors – can be minimized if companies are given clear guidelines on what constitutes a low-carbon initiative.

Second, companies can be required to benchmark their emission targets based on historical emissions, undergo independent audits and report concrete changes.

It’s important to clearly define “carbon footprint” so these metrics are comparable among companies and over time. For example, there are different types of emissions: Scope 1 emissions are the direct emissions coming out of a firm’s chimneys and tailpipes. Scope 2 emissions are associated with the power a company consumes. Scope 3 is harder to measure – it includes emissions in a company’s supply chain and through the use of its products, such as gasoline used in cars. It reflects the complexity of the modern supply chain.

Finally, companies could be asked to disclose a fixed deadline for phasing out fossil fuel assets. This will better ensure that pledges translate into concrete actions in a timely and transparent manner.

Ultimately, investors and financial markets need accurate and verifiable information to assess their investments’ future risk and determine for themselves whether net-zero pledges made by companies are credible.

There is now momentum across the globe to hold companies accountable for their emissions and climate pledges. Disclosure rules have been introduced in the United Kingdom, European Union and New Zealand, and in Asian business hubs like Singapore and Hong Kong. When countries have similar policies, allowing for consistency, comparability and verifiability, there will be fewer opportunities for loopholes and exploitation, and I believe our climate and economy will be better for it.

Lily Hsueh, Associate Professor of Economics and Public Policy, Arizona State University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Companies’ use of renewable energy certificates masks inaction on carbon emissions

Read the full story from Concordia University.

A new study argues that renewable energy certificates — a market-based tool that certifies the bearer owns one megawatt hour of electricity produced from renewable energy sources — generally do not reduce emissions and firms using them are overstating their climate mitigation claims. In one calculation, the researchers show how a sample of 115 companies between 2015 and 2019 reported a 31 per cent reduction in emissions. A closer analysis of that claim reveals that without including the purchase of ineffective RECs, the actual drop in emissions was roughly 10 per cent.

How fashion giants recast plastic as good for the planet

Read the full story from the New York Times.

An influential system overseen by retailers and clothing makers ranks petroleum-based synthetics like “vegan leather” as more environmentally sound than natural fibers.

New research points to bad math behind corporate renewable energy claims

Read the full story from The Verge.

Even though more companies than ever are proclaiming that they’re powered by renewable energy, those claims are usually exaggerated, new research shows. That disconnect between a company’s claims and reality could jeopardize global efforts to stop climate change.

The problem stems from companies’ reliance on Renewable Energy Certificates (RECs) to back up their green claims. A company receives a REC by paying to support renewable energy projects around the world. When brands say that they’re powering their business with 100 percent renewable energy, they’re typically still using electricity generated by fossil fuels; they’re just buying up renewable energy certificates to try to cancel out the environmental impact of their energy use.

Aviation giant KLM to face legal action in first major challenge to airline industry ‘greenwashing’

Read the full story at CNBC.

Environmental groups argue that KLM’s advertising campaigns and “compensation” schemes violate European consumer law by giving a false impression about the sustainability of its flights and its plans to tackle climate breakdown. The case is thought to be the first corporate lawsuit about airlines and net zero — and one of the first cases about carbon offsets. As a result, it has effectively put the global aviation sector on notice.

Bottled water giant BlueTriton admits claims of recycling and sustainability are “puffery”

Read the full story at The Intercept.

In ongoing litigation over the greenwashing of plastic recycling, the bottled water company BlueTriton made a revealing argument: its claims of being environmentally friendly aren’t violations of the law, because they are “aspirational.”

BlueTriton — which owns Poland Spring, Pure Life, Splash, Ozarka, and Arrowhead, among many other brands — is estimated to contribute hundreds of millions of pounds of plastic to U.S. landfills each year. BlueTriton used to be known as Nestlé Waters North America, which was bought by the private equity firm One Rock Capital Partners in March 2021. The company, which has a history of draining aquifers to get the water that it encases in polluting plastic, owns about a third of bottled water brands in the U.S. Yet with sleek, green — and blue — PR materials, BlueTriton markets itself as a solution to the problems of plastic waste and water.

License to Greenwash: How Certification Schemes and Voluntary Initiatives Are Fueling Fossil Fashion

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The fashion sector is awash with certification schemes, sustainability labels and multi-stakeholder initiatives all seeking to steer the industry onto a greener course. As public and political awareness of the high environmental and social toll of the fashion industry has climbed the agenda, and scrutiny on brands has intensified, so has the visibility of certification schemes and voluntary initiatives pitched as holding the solutions.

The existence of such schemes serves a dual purpose for the brands. As the fashion industry is one of the least regulated sectors in the world, these schemes partially exist as a genuine attempt to move towards sustainability in the absence of environmental legislation. But they also enable the proliferation of ‘greenwashing’ on a remarkable scale. Whether it is the use of certification labels on individual products – assuring customers that they can shop guilt free by putting their money where their values lie – or brands proudly communicating their membership of various fashion-related voluntary initiatives, the existence of these schemes and the inherent lack of accountability within them are a key part of the greenwashing machinery of the modern fashion industry. Moreover, the level of influence exercised by fashion brands in these initiatives and the lack of any independent oversight, inevitably means that they end up promoting industry interests.