Global UN efforts and initiatives to combat environmental fraud
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Global UN efforts and initiatives to combat environmental fraud

Greenwashing: Global Efforts and UN Initiatives to Combat Deceptive Environmental Claims

“Greenwashing” Coined by environmentalist Jay Westerveld, it’s a term that’s recently entered the lexicon. What does greenwashing actually mean? Simply put, it means making a product, policy, or practice seem more environmentally friendly or less harmful to the environment than it actually is. It’s a deceptive marketing ploy used by companies to exaggerate their environmentally friendly efforts, with the intention of misleading consumers.

“Climate disinformation” best defines greenwashing as the process of conveying a false impression or misleading information about how environmentally friendly a company’s products are. Greenwashing is therefore a major obstacle to combating climate change. By misleading people into believing that a company or other entity is doing more to protect the environment than it actually is, greenwashing promotes false solutions to the climate crisis.

The United Nations describes greenwashing as deceptive tactics that hide behind environmental claims. Greenwashing, it says, manifests itself in several ways—some more obvious than others. These tactics include claiming that a company is on track to reducing its emissions to net zero when it has no credible plan, and deliberately being vague or unspecific about a company’s operations or the materials it uses.

This also includes the use of deliberately misleading labels such as “green” or “ecological”, which have no standard definitions and can be easily misinterpreted, as well as emphasizing a single environmental attribute while ignoring other impacts.

The role of the United Nations in the fight against greenwashing

Since the Paris Agreement was adopted in 2015, a growing number of companies have committed to reducing their greenhouse gas emissions to net zero – a level at which any remaining emissions would be absorbed by forests, oceans or other “carbon sinks”.

However, these claims are often based on questionable plans rather than actual emission cuts. The transparency and integrity of such claims themselves remain critically low and contribute to a lack of urgent climate action.

In response to the growing incidence of greenwashing in net-zero commitments, the UN Secretary-General has established a High-Level Group of Experts to develop stronger and clearer standards for net-zero commitments from businesses, financial institutions, cities and regions and to accelerate their implementation.

The expert panel, in its report entitled Integrity Matters, put forward ten recommendations for credible and accountable net-zero emissions commitments and detailed the essential issues to consider at each step towards achieving net-zero emissions and addressing the climate crisis.

In response to the report, the United Nations Office on Climate Change published a Recognition and Accountability Framework and a Draft Implementation Plan to begin implementing the expert group’s recommendations, increase transparency and maximize the credibility of climate action commitments and plans and progress towards transition.

To further accelerate action and listen to the views of “first movers and shakers”, the UN Secretary-General has convened a Climate Ambition Summit at the UN in New York in 2023, which will follow three tracks – ambition, credibility and implementation, thus leaving “no room for regressors, greenwashing, blame shifting or rehashing previous announcements”.

In his thought-provoking speech on World Environment Day 2024, the UN Secretary-General called for a global ban on fossil fuel advertising and urged creative agencies to stop helping fossil fuel companies greenwash.

The term greenwashing was first used in 1986 by American ecologist and researcher Jay Westerveld. Since then, it has caused confusion in the sustainability strategies of corporate entities, which often face enormous regulatory pressure to improve transparency and disclosure standards about their environmental performance and use of environmentally friendly products.

There was quite often a discrepancy between verbal claims and actual performance of sustainable practices, both at the company and product level. This may be related to selective disclosure of product and service information.

The UK Advertising Standards Authority (ASA) recently banned adverts from various international air carriers accused of greenwashing, which involves allegedly misleading consumers by falsely claiming that flights are environmentally friendly and downplaying the environmental impact of air travel.

A well-known German car company was found to have cheated on emissions tests for its supposedly clean diesel vehicles, a case of greenwashing. Similarly, several other international corporations, including oil giants and soft drink producers, have faced accusations of greenwashing.

Greenwashing can distort markets by creating an uneven playing field where those who engage in deceptive practices gain an unfair advantage over those who honestly comply with genuine environmental standards. The lack of comprehensive regulations and standards for environmental claims allows greenwashing to flourish.

The practice of greenwashing challenges the integrity of carbon credit systems, particularly in informal markets, where the expansion of credit sources and certification by unofficial entities raise concerns about transparency and reliability. A carbon credit is equivalent to one metric ton of carbon dioxide or equivalent greenhouse gases removed from the atmosphere. The Kyoto Protocol introduced the concept of carbon credits, and countries or companies that exceed emission reduction mandates are rewarded with carbon credits.

There have been some important global initiatives related to greenwashing. During the 27th Conference of the Parties (COP27), the UN Secretary-General declared zero tolerance for greenwashing, calling on private corporations to correct their practices.

Interestingly, in October 2023, the European Union approved the world’s first green bond standards to combat greenwashing. The “European Green Bond” label mandates transparency, directing 85% of funds to sustainable EU activities. The legislation aims to support the EU’s transition to climate neutrality.

Greenwashing Regulations in India

Greenwashing is considered an unfair trade practice under the Indian Consumer Protection Act, 2019. The Act prohibits all fraudulent claims and prescribes penalties and remedies for consumers who are adversely affected by these deceptive practices.

The Securities and Exchange Board of India (SEBI) issued guidelines for green debt issuers in February 2023 to ensure transparency and avoid greenwashing. The guidelines are aimed at protecting investors, promoting the development of the securities market and its regulation.

Advertising Standards Council of India (ASCI) plays a regulatory role in monitoring advertising practices and has some jurisdiction over allegations of greenwashing. ASCI, a voluntary self-regulatory body, ensures that advertisements are legal, fair and equitable, protecting the interests of consumers and promoting fair competition.

The way forward

To hold companies accountable for their environmental actions and omissions, consumers should demand that they disclose their environmental policies and practices, as well as their progress and challenges; and support green businesses and initiatives that have a track record of environmental and social responsibility performance. They should also implement comprehensive regulations and standards for environmental claims to ensure transparency and accountability.