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Green Is The New Black

Greenwashing Alert: Firms Like BlackRock Are Not Our Allies

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greenwashing green is the new black

Major corporations like BlackRock want us to think they care about the environment and are leading divestment efforts and sustainability practices. Spoiler alert: they don’t and they aren’t.

A litany of broken climate promises

58%. That’s how many executives across the world admitted (in this recent survey) that they are guilty of greenwashing. Among leaders in the US, that number rose to 68%. And two-thirds of executives globally questioned whether their company’s sustainability efforts were even genuine.

Measuring progress on pledges is one challenge we’ve covered in detail—in the survey, only 36% of executives said that their companies had measurement tools in place to track their sustainability efforts. How are people trying to fix the problem? Two ways: Firstly, the new Securities and Exchange Commission (SEC) rule that forces all public companies to report their carbon emissions could be a possible solution. That said, there’s only so many imposed regulations that can mitigate. (Reporting in itself is a multi-million dollar business – it thrives on non-standardised and incomparable metrics which, on such a global scale, will remain inevitable.) But this is a start. Secondly, the UN just put together a team to address the inconsistencies of “greenwashing” – more on that in a bit.

The vast majority of public companies in the U.S. don’t voluntarily disclose their greenhouse gas emissions

But that would change under the landmark new rule proposed last month by the SEC, which would make it mandatory for all publicly traded businesses to publish standardized reports of their emissions and climate risk for the first time.

And it’s not all about direct emissions. Companies will also have to report on indirect, or so-called “Scope 3,” emissions in their supply chains—typically the greatest source of emissions for an average company. Almost all emissions at Apple, for example, come from the suppliers providing parts for its phones and other products.

Fewer than one-third of public companies in the U.S. voluntarily disclose their emissions now, and even those that do, don’t report their data the same way, making it difficult to compare practices between businesses (we see you, ESGs). But other countries are already making similar disclosures mandatory: In the UK, new climate-disclosure laws will come into effect next month. 

The public will have 60 days to comment on the proposed rule, and then the agency will vote on a final version within the next several months. If enacted as is, large companies would have to start disclosing climate risks next year.

“That’s window-dressing, that’s greenwashing.”

The NewClimate Institute, a nonprofit, recently assessed 25 large companies with goals to reach net-zero emissions and found that they were exaggerating their progress and are on track to reduce their emissions by only 40%, not 100%.

Many of the world’s biggest companies are failing to meet their own targets for tackling climate change (Google, Amazon, Ikea, Apple and Nestle are among those failing to change quickly enough.) Relatedly, in the UK, the number of ads banned for greenwashing tripled in the last year. The European Commission is now considering new regulations that would ban vague environmental claims that can’t be proven, along with other misleading claims in reports. 

For instance: Yannic Rack wrote recently for Wired, in order to appear green, many have “sold some of their most polluting power plants” and “big oil companies have . . . been getting rid of oil and gas fields to reach emissions targets.” There’s still a huge market for these assets. So now, energy firms in the EU are going ‘green’ by offloading dirty coal plants (aka paying someone to take over and keep them running.)

In response, Larry Fink, chair and CEO of BlackRock, the world’s largest asset manager, criticized energy companies for selling their assets instead of winding them down during last year’s COP26 climate summit in Glasgow. “That doesn’t change the world at all,” Fink said. “That’s window-dressing, that’s greenwashing.” 

Plot twist: who is the single largest investor in coal?

BlackRock: talking about how they pledge to support the regenerative economy. Also BlackRock: leading investments in support of the extractive economy. Ironically, Larry Fink wrote in his 2022 Letter to CEOs titled The Power of Capitalism: “We focus on sustainability not because we’re environmentalists, but because we are capitalists and fiduciaries to our clients.” Read: while BlackRock might support policies that benefit the company and benefit society, it will not support policies that are good for society but bad for BlackRock.

According to a recent report by more than 25 NGOs, BlackRock remains the single largest institutional investor in coal, with nearly $109 billion invested in the industry, as of 15th Feb 2022. In fact, the two largest institutional investors in the coal industry are the US investment giants BlackRock and Vanguard, with share and bond holdings of respectively US$109 billion and US$101 billion.

In January of this year, in response to efforts by Texas policymakers and industry leaders to punish companies that divest from fossil fuels, BlackRock’s head of external affairs wrote a letter emphasizing the firm’s ongoing interest in oil and gas, noting that BlackRock is “perhaps the world’s largest investor in fossil fuel companies,” and promising to “continue to invest in and support fossil fuel companies.”

As the BlackRock 2022 letter/report notes, the determination to continue to support the fossil fuel industry is strong: “We will continue to invest in and support fossil fuel companies, including Texas fossil fuel companies. Importantly, we believe that the experience, expertise, and scale of fossil fuel companies will be integral to future energy solutions. As such, we have not and will not boycott energy companies.

This cycle of climate-driven profitability is all the more tragic because BlackRock, by virtue of the size of its portfolio and the scope of its political influence, has a rare and remarkable opportunity to drive real action on climate change.

But let’s return to Fink’s own words—“That’s window dressing, that’s greenwashing.”—What does greenwashing entail? And how do we identify it?

 

greenwashing green is the new black 2

IMAGE VIA: Guardian | IMAGE DESCRIPTION: Two masked police officers are escorting an activist whose back is facing the camera, wrists locked together. The activist’s shirt reads: “STOP FUNDING FOSSIL FUELS” and the three are standing outside the BlackRock office building. 

 

This just in: a new UN panel is rising up to the challenge.

On 4 April, the Intergovernmental Panel on Climate Change’s Working Group III report was published, evoking a strong reaction from the United Nations’ Secretary General António Guterres. The report, he said, “is a litany of broken climate promises. It is a file of shame, cataloguing the empty pledges that put us firmly on track towards an unlivable world.”

Consequently, on May 9th, 2022, António Guterres, launched the High-Level Expert Group on the Net-Zero Emissions Commitments to push for more stakeholder accountability for climate pledges. But can a new UN panel really simplify net-zero emission standards and cut through the fog of pledges and plans? There have been many disappointments on more occasions than we can count. But this project is still a WIP. We’ll just have to wait and see.

Green capitalism won’t save us

Last year, Larry Fink said, “It is my belief that the next 1,000 unicorns — companies that have a market valuation over a billion dollars — won’t be a search engine, won’t be a media company, they’ll be businesses developing green hydrogen, green agriculture, green steel, and green cement.” 

Meanwhile, findings released by the Guardian show that big-money managers such as BlackRock, Vanguard, and State Street “used their votes to frequently oppose efforts to improve climate-related financial disclosures.”

This duplicity is harmful and terrifying to face, but the unwillingness to use their platform to spur the transition from fossil fuels is simple: they have huge investments in dirty energy companies. Our planet is being sacrificed so the global elite can keep their lavish lifestyles, while they take private jets to climate conferences so they can give the impression they care (hi, Richard Branson, Jeff Bezos and Elon Musk).

These billionaires assert that capitalism can solve the climate crisis, and their investments are helping to create a new form of “green capitalism” that will reduce emissions and usher in a sustainable future. 

Green capitalism will never facilitate the scale of action that is necessary to keep warming below 1.5ºC or even 2ºC because it refuses to take on the powerful people and industries that are fueling the climate crisis in the first place.

FEATURED IMAGE: via Pexels | IMAGE DESCRIPTION: Woman Standing Between Green Leafed Plant.

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