News / 28-02-2022 / London

With companies racing to make sense of and take steps towards a net-zero future, an array of climate goals are being published at ever increasing speed; it remains to be seen how achievable many of these goals are without concrete plans in place. Accusations of ‘climate-washing’ are rife and statements have been legally challenged. Current investigations and actions show the direction of travel as pressure groups and public organisations seek to hold private sector companies to account.

What is climate-washing?

Climate-washing, or climate-related greenwashing, is the use of unsubstantiated or misleading claims about climate or environmental credentials, or the selective disclosure of climate performance.

Climate-washing is akin to the more familiar term ‘greenwashing’ and the two are often used interchangeably. However, ‘climate-washing’ is intended to encompass issues that go beyond simply the natural environment.

Part of a wider trend in climate change litigation, climate-washing litigants use consumer protection, civil or commercial legislation (whether as formal litigation or technically as administrative complaints or interventions) as a basis of claims intended to challenge and address climate-washing.

Such claims can be broadly grouped into three categories, challenging:

1. Commitments;

2. Descriptions; and

3. Disclosures.

Historically, much emphasis has been placed on challenging companies to fully disclose their climate-related activities and challenge product descriptions or attributes, with limited success.

However, since the publication of latest Intergovernmental Panel on Climate Change (“IPCC”) assessment concluded that zero or net-zero emissions were needed by 2050 to meet global climate goals, and the COP26 meeting in Glasgow in November 2021 and the publication of the Glasgow Climate Pact, there have been a flurry of climate pledges announced by a wide array of private companies and public bodies. Whilst sophisticated players in the market have made broad-ranging and extremely ambitious pledges, activists consider many to be vague and unsubstantiated public relations endeavours.

A 2021 report from the Energy & Climate Intelligence Unit and the University of Oxford reviewing climate pledges from 4,000 significant entities and public organisations, across a variety of industries found that 14% of the pledges did not specify whether their targets extended to only carbon dioxide emissions or to all greenhouse gasses. Less than 9% of the pledges reviewed included a published plan on how to achieve the stated net-zero targets.

While often made with the best of intentions, misleading statements on the impact of a company’s activities on the climate, or the viability of any path to net-zero can potentially breach a wide variety of different legislation, in a multitude of jurisdictions.

One of the most comprehensive studies to date on climate-washing and climate related claims was published in February 2022. The peer-reviewed study found a marked increase in the publication of strategies (and related messaging) relating to decarbonisation and the clean energy transition over the last decade, but also noted that such messaging was dominated by pledges rather than concrete actions.

The authors concluding that, in many instances, accusations of climate-washing appear to be well-founded; the magnitude of climate investments and actions does not match the discourse.

Climate commitment litigation

The Australian case of Australasian Centre for Corporate Responsibility v Santos Limited NSD858/202 is a recent example of legal action being taken to challenge climate-related claims. The Australasian Centre for Corporate Responsibility (“ACCR”) is pursuing Santos, one of Australia’s largest energy companies, in the Australian courts in relation to allegedly deceptive statements made in Santos’ annual report. The statements in question relate to Santos’ plan to achieve net-zero emissions by 2040 and their projected clean energy production.

The ACCR argues that Santos’ characterisation of natural gas as a "clean fuel" providing "clean energy" misrepresents the true effect of natural gas on the climate and that their reliance on projected future carbon capture and storage technologies as a cornerstone of its net-zero plans is misleading or deceptive conduct under the Australian Corporations Act 2001 and Australian Consumer Law. The decision by the Australian courts is pending.

Even if ACCR’s claim fails, it seems likely that this will be one of many cases where the veracity of a net-zero target is legally challenged and should serve as a reminder to companies to consider the content of such statements carefully and avoid a box-ticking approach. A brighter light has been shone on Santos’ climate-related activities than perhaps ever before.

Climate commitment investigations and interventions

It is not only private entities that are challenging climate commitments. While not litigation, investigations or interventions by governmental and trade bodies can be seen as part of the same trend in challenging climate-related statements, especially those made by carbon majors.

One of the most significant such investigations is that by the United States House Committee on Oversight and Reform (the “US House Committee”), which is continuing to probe alleged climate disinformation. However, none of the Oil & Gas company executives invited to the US House Committee’s latest round of interviews regarding climate change plans accepted the invitation to testify. The panel has scheduled a new hearing for 8 March to give time to board members to testify.

Comment

Both the Santos case and the US House Committee investigation highlight the risks to companies of rushing to adopt a climate conscious stance in the pursuit of positive headlines. They reiterate the need to ensure the content of public facing documents is not susceptible to climate-washing claims. Net-zero goals need to be ambitious enough to be meaningful and align with global objectives, but with sufficient attention paid to not over-claiming in a race for positive PR. In effect, an increased emphasis on challenging climate-washing means that companies cannot simply pay lip service to net-zero goals, but need to ensure that sufficient and achievable programmes are in place to reach these goals. It seems, unfortunately, that there is still much disparity between words and actions.

If you would like to keep up to date on the latest developments and trends in climate litigation, please see our recent articles, such as those here and here.

This article was co-written with Trainee Solicitor, Jack Maxted.