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UN Panel Calls Out ‘Greenwashers’ and Seeks Net-Zero Regulation

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Expert panel lays out scenario to show how net-zero claims can be forcefully policed.

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(Bloomberg) — A UN-appointed group has defined a series of tests that determine whether net-zero pledges are genuine or “dishonest.”

The expert group, which was appointed by United Nations Secretary General Antonio Guterres and chaired by Canada’s former environment minister Catherine McKenna, laid out recommendations “to prevent net zero from being undermined by false claims, ambiguity and ‘greenwash,’” according to a report published Tuesday by a group of academics, government and business leaders chosen by the UN to explore the credibility of net-zero pledges from non-state actors.

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The goal is to sniff out “dishonest climate accounting and other actions designed to circumvent the need for deep decarbonization,” the group said. That’s as the number of firms committing to net-zero goals proliferates in response to pressure from consumers, investors and regulators.

The world’s biggest corporations, from Apple Inc. to JPMorgan Chase & Co., and even fossil-fuel giants like ExxonMobil Corp., have pledged to eliminate emissions. But the quality and transparency of climate plans vary widely, raising concerns that not all are equally credible.

“This is about cutting emissions, not corners,” said McKenna. “The planet cannot afford delays, excuses, or more greenwashing.”

Climate scientists estimate that in order to achieve the Paris Agreement’s stretch goal of limiting warming to 1.5C above preindustrial levels, every nation must cut its carbon-dioxide emissions in half by 2030—and neutralize them by 2050. Yet as things stand now, emissions are on course to increase by close to 11%, McKenna said.

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The prospect of governments leading a breakthrough on tackling climate change is low, as world leaders meet in Sharm El Sheikh for the COP27 climate summit (BloombergNEF puts the chance of success at 37%). That means the role of companies and financial firms in pushing down emissions is set to come under increasing scrutiny. 

Among corporations, “a critical mass” of global commitments to net zero has now been achieved, the UN-convened expert panel said. So it’s time to “zoom in on the quality and implementation of plans,” from measurement to reporting, transparency and accountability, it said. It’s also clear that some who made pledges “may have underestimated the task or interpreted net zero differently,” while others “may never have intended to achieve their stated goals, aiming only to benefit from the positive press abounding at the time.”

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To prevent greenwashing and help firms deliver on their targets, the expert group has put forward a series of recommendations. Commitments should be made public, and include interim targets that align with climate science and cover the “entire value chain” of emissions, it said. And a key metric should be absolute emissions rather than the intensity of their emissions.

In addition, the panel said “there is no room for new investment in fossil-fuel supply and there is a need to decommission and cancel existing assets.” Companies should also “prioritize urgent and deep reduction of emissions” rather than buying cheap carbon credits “that often lack integrity.” High integrity credits in voluntary markets can be used for “beyond value chain mitigation” but they can’t be counted toward a non-state actor’s interim emissions reductions required by its net zero pathway, the expert group concluded.

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What’s more, net-zero commitments should no longer be relegated to voluntary organizations, but become obligatory, the expert group said. That means regulators need to develop rules and standards starting with high-impact corporate emitters and financial institutions. And the group urged governments to launch a new Task Force on Net-Zero Regulation to convene regulators across borders to “drive reconfiguration of the ground rules of the global economy to align to the goals of the Paris Agreement.”

“What happens in the next decade will be decisive, and those with the power to do so must act now,” said McKenna. “Leaders everywhere must join the drive to net zero.”

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