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Those of us who grew up with Kermit the Frog and his song are likely to think of “being green” as a binary state — either you are or you aren’t. But when it comes to corporate claims of good environmental behavior, and especially those with respect to climate change, there are many shades of green. Like the challenge in distinguishing shades of gray at dusk, it isn’t always easy to tell when a company’s claims to going green are credible. As such claims are appearing with increasing frequency, the following are some facts behind corporate claims to be environmental heroes that will prove useful in assessing the claims that are being made.

Here they are — some ugly, others merely bad, some that may turn out ok, and a few actually good (at least by current standards).

The Ugly

1. We promised to do good before and it didn’t work — but this time we really mean it. The classic example is the Plastics Industry Association and claims they will recycle a high percentage of their products. Investigation has documented that most plastics labeled recyclable end up polluting the oceans, exported to developing countries, and even burned releasing toxic pollution. Industry representatives admit past claims to recycle largely failed but claim they will do a better job now despite significant economic disincentives.
2. We’re doing something good — just don’t ask about most of what we do. Exxon and Chevron are good examples as they advertise some relatively modest investment in climate change related technologies while continuing to invest enormously greater amounts in exploration and extraction of oil and gas. Many large banks including Citi and JP Morgan Chase are in a similar position, boasting about their clean energy portfolio while continuing to make large investments in fossil fuel operations.
3. We’re dumping our climate polluting activity — by selling it to someone else who will keep it going. For example: the French utility Engie SA, which sold four coal plants in 2019 making it look greener — while the emissions continued with new ownership.

The Bad

1. We support climate policy such as carbon taxes — as long as it isn’t likely to be adopted and allows us to avoid policies we don’t like. This clever ploy is the strategy recently adopted by the American Petroleum Institute (API), the primary trade association of American oil companies and historically a significant source for funding opposition to climate policies. The French oil company Total resigned from API in January due to opposition to its stance on climate change.
2. We take responsibility for bad things we do in making our products, but not for the emissions upstream (from suppliers) or downstream (from customer use or waste). These supply chain emissions are typically more than 5 times larger than those from company production and admittedly are more difficult to estimate. A few companies including automakers Daimler and Ford are pledging to take responsible for these emissions. However, efforts to count and take responsibility for the full value chain of company products “remains fragmented and limited”.
3. We will do better going forward but say nothing about responsibility for past behavior. This is the explicit or implied meaning of most corporate climate targets, which promise only “net zero” at some future date without significant interim targets much less doing anything to redress past emissions. Given that CO2 can last in the atmosphere for centuries, this is a significant omission.

The Maybe Good (promises of potential benefit but still to be proven)

1. We’re going to do a lot of good things several decades from now (net zero by 2050) but won’t commit to anything in the near term (a variation on number 6). An example: Morgan Stanley’s announcement in September 2020. An ambitious goal for 2050 is a good start, but to meet the Paris targets for limited warming to no more than 2oC — and ideally 1.5oC — will require commitments to substantial emission reductions by 2030.
2. We’re going to keep doing bad things but we will offset them with good things (or at least ask our customers to do so). For example, American Airlines primary short-term response to climate change is to offer their customers a voluntary option to buy carbon offsets, while others promote their consideration of biofuels and carbon removal technologies still to be proven feasible and effective. Shell claims it will achieve offsets by massive tree planting schemes that as one authority notes “beggar belief”. (In contrast, not nearly enough attention is being given to keeping trees in the ground.)

The Good

Companies that are not energy intensive begin in a better position to make promises to reduce their greenhouse gas emissions and some have shown real leadership. One example:

1. Microsoft may be the gold standard among major company climate pledges to date, promising to be carbon negative by 2030; remove historical emissions (all those since the company was founded in 1975) by 2050; and contribute $1 billion to a climate innovation fund.

On the other hand, while their operations are not energy intensive, banks and pension funds have been among the most criticized companies insofar as they continue to finance fossil fuel companies and carbon intensive agricultural practices. There are some noteworthy exceptions most notably:

10. CalPERS, the California agency that manages pension funds for 1.6 million state employees, has an impressively aggressive climate change policy with multiple elements including research, advocacy, engagement with investee companies, and partnerships with other like-minded financial institutions and civil society organizations. In the latter category, CalPERS has partnered with over 500 investors with $52 trillion in assets to form the Climate Action 100+,an organization that identified the 100 companies responsible for the bulk of greenhouse gases — and thus most in need of shareholder pressure to reduce their emissions.

“Good” is also relative to what others are doing and not necessarily good enough, much less perfect. Microsoft’s climate commitments have been described by one critic as “halfway” since the company continues to work with oil companies to use AI for exploration. By this measure, to be truly good, this critic asserts, companies will need to “leave some money on the table for the good of society.” Even companies with products explicitly designed to be better for the climate like plant based alternatives to meat have not been immune from attack. Meanwhile the opposite argument is being made by some climate advocates who point to good financial outcomes from divesting from shares in fossil fuel assets. A recent review of divestment actions by hundreds of funds worldwide for BlackRock, the largest asset manager in the world, found no negative financial impacts — in fact such portfolios “outperformed their benchmarks”.

What to do? As this brief review indicates, identifying “brighter shades of green” can be surprisingly complicated. I address this challenge in Part 2 of this blog.

Alan S. Miller is co-author with Durwood Zaelke and Stephen O. Andersen of the forthcoming book Cut Super Climate Pollutants Now! He is a consultant on climate finance and policy who has worked on global environmental issues for more than 40 years, including 16 years in the World Bank Group.