Green washing and decarburization
an important report New York Times Advocacy and advocacy by the Environmental Protection Fund (EDF) has given us insight into the complexities of decarbonization and the need for caution when auditing companies’ climate disclosures.according to Times’ Hiroko Tian Yuan:
“Last year, when Royal Dutch Shell sold its stake in Nigeria’s Umuechem field, on paper it was a step towards the company’s climate ambitions: Shell could clear its holdings and raise money to invest in cleaner technology, and progress toward its goal of achieving net-zero emissions by 2050. However, after Shell left, the oil field changed so dramatically that it was discovered from space: combustion, or waste burning excess gas in towering plumes of smoke and fire. Burning releases Earth-warming greenhouse gases, as well as soot, into the atmosphere. ”
Tabuchi reports on an Environmental Protection Fund (EDF) study that shows the practice is widespread, calling into question the seriousness of fossil fuel companies’ decarbonization efforts. While this deserves careful study, the problem is not simple. Any company with a sellable asset is expected to generate the highest possible price for that asset. It’s a logical step, and it has value for decarbonization goals if it provides capital that enables companies to move to a low-carbon future. The question raised, however, is what responsibility does the company have for the carbon it generates from fields it no longer owns?
Russia’s brutal invasion of Ukraine and the impact of Russia’s energy supply on the world economy has made many of us deeply aware of our dependence on fossil fuels. in my opinion, Influence The halt to Russia’s energy exports is another sign that renewable energy technologies still cannot replace fossil fuels. It’s getting there fast, but not there yet. The behavior of fossil fuel companies seeking to decarbonize may be influenced by disclosures such as the EDF study, but the ultimate answer is to make oil and gas wells as close to worthless as possible. This is a process that takes a generation to complete. Over the next two decades, we will reduce but not eliminate the use of fossil fuels.
Advances in renewable energy and battery technology are needed as well as the public infrastructure needed to support electric vehicles and buildings. This process is well underway as we see power companies investing in grid modernization and car companies investing billions in electric vehicles and battery technology. Battery technology is advancing rapidly, in part because of the motor vehicle industry.recent New York Times This article on GM CEO Mary Barra highlights her strategy to build and dominate the EV market by building lower-priced, non-luxury electric vehicles (EVs).According to Neil E. Boudette in era:
“…GM’s strategy should allow the company to build EVs that are more affordable than most of its competitors and ultimately win over many of the tens of millions of mainstream car buyers who have yet to buy an EV. Last year, sales in the U.S. Electric vehicles make up about 3 percent of the 15 million cars and trucks in the world. As that share grows, GM expects this cost advantage will allow it to outperform most competitors within a few years, and by the end of the century Challenging Tesla’s lead in electric vehicle sales.”
GM is investing heavily in innovative battery technology and production, arguing that it is in its own corporate interest to move away from its historical reliance on fossil fuels. While I know that EVs are still mostly powered by a grid powered by fossil fuels, eventually things will change and EVs will be powered by renewable energy. Billions of dollars of private and public money are pouring into this transition. While I see progress and movement in the right direction, I wouldn’t be surprised if the last generation of the fossil fuel business is dominated by bottom breeders and unscrupulous speculators who don’t care if their profits depend on plundering the planet. The key ways to minimize the damage done by these perpetrators are to promote public policy for renewable energy and battery technology, and to incorporate environmental risks more fully into the financial reporting of public companies.
If you really want to reduce the lure of green decarbonization, make it a financial fraud. If a company’s public financial disclosures intentionally misstate income or expenses, and an audit firm hired by a certified public accountant fails to detect the lie, there are legal and financial penalties. If the SEC’s proposed rules on climate risk disclosure are finalized, greening your carbon footprint will no longer only damage your image, it could cost you money and, in extreme cases, even put you in jail. The rule faces opposition from Senate Republicans as well as Democratic Senator Joe “Coalmine” Manchin. In early April, Kellie Lunney Bloomberg Law That:
“Senate Republicans are urging the SEC to withdraw a proposal that would require companies to disclose greenhouse gas emissions, arguing that the move goes beyond the agency’s mission… The SEC announced a proposal in March proposed rule This will guide public companies for the first time in including emissions information and other climate-related risks in their registration statements and reports. The program aims to standardize metrics for corporate climate disclosures to enhance enforcement and reliability. [SEC Chief] Gensler said last month that enhanced disclosure is necessary because climate risks could pose a significant financial threat to companies and investors should have reliable information to make informed decisions. ”
How do the SEC rules relate to the EDF’s questions about Royal Dutch Shell’s carbon disclosures? Perhaps the final version of the proposed rule could require publicly owned fossil fuel companies to also disclose emissions from facilities they sell over a specific period. The EDF may raise this point during the SEC’s public comment period on the GHG disclosure rule.Companies selling assets do not always Avoid the cost of repairing damage to these assets. For example, the liability provisions of the toxic waste law Superfund are designed to ensure that companies retain liability long after the company sells a facility or site. Someday, similar rules could be attached to the damage caused by greenhouse gases.
In any case, the best way to avoid greenwashing decarbonization is to:
- Make renewable energy the most reliable and cheapest form of energy;
- Require companies to disclose their carbon emissions in the SEC-regulated annual corporate reporting process.
Better renewable energy technologies will make greenwashing a silly strategy, and clear, audited disclosure rules will make carbon-related greenwashing illegal. I know a lot of people who advocate corporate social responsibility and want companies to internalize environmental values. Because of corporate altruism, this won’t happen. When profit and an internal culture that promotes legitimate operations make it a smart and prudent strategy, companies will internalize environmental values. The financial disclosure rules mandated by the SEC for nearly nine years help to internalize good financial management practices into good corporate governance. The SEC Carbon Disclosure Rule will begin the process of developing generally accepted metrics for environmental sustainability. This will lead to the internalization of effective environmental sustainability management into effective organizational management. At that point, greenwashing will be seen as a hype akin to Donald Trump’s exaggeration of the number of floors in Trump Tower: stupid and a little pathetic.
