Reducing Greenhouse Gas Emissions of Companies

By Ruth Kahn, GRC 2023 Global Essay Competition Top 30

Just 100 companies produce 71% of global greenhouse gas emissions, yet many of these same companies have made promises to be carbon neutral by a certain date. So how are these major polluters so quickly doing a 180 on their harmful practices? In many cases, they’re not. Through loopholes in emission reports and questionable carbon offsets, companies are able to appear more environmentally friendly than they actually are. If we want to make progress in reducing global emissions, governments need to start by forcing companies to be honest about their carbon footprint. In practice, this means requiring companies to report all emissions, regulating the carbon credit market, and excluding carbon credits and offsets from counting as carbon reductions.

Companies are able to avoid reporting some of their carbon emissions by excluding certain types of emissions from their reports and net zero goals. There are three types of emissions: scope 1, scope 2, and scope 3. Scope 1 includes direct emissions from sources the company owns directly, like emissions from Walmart delivery trucks. Scope 2 includes indirect emissions created from the energy the company uses, like emissions from electricity in Walmart stores. Scope 3 includes all other emissions that happen from the use and disposal of a company’s products, like emissions created from using and throwing away Walmart products. Despite being one of the top retailers in the world, in revenue and pollution, Walmart has promised to achieve net zero carbon emissions by 2040. One way they’re doing this is by excluding scope 3 emissions, which they estimated to be 95% of their total emissions in 2015, meaning their net zero promise is really only a 5% reduction. To hold companies like Walmart accountable, we need to pass laws that require companies to include all emissions in their reports and goals.

Transparency is only the first step. Next, we need to make carbon reduction attempts effective, and this means going after carbon offsets and credits. Carbon offsetting is simple: for the carbon you produce, you fund a reduction in carbon in another way, like planting trees or saving a nature preserve. Carbon credits follow the same process, but a third party company does the offsetting and sells “credits” certifying the amount of carbon they reduced. Carbon offsets have become popular: 36% of S&P 500 companies reported buying carbon credits.

However, many of these carbon credits do not have the promised impact. Lisa Song of ProPublica found that in case after case carbon credits failed to offset the amount they promised, companies didn’t accurately measure the offsets, or the offsets were quickly reversed. However, even if the majority of carbon credits worked, are carbon credits really the direction climate justice should be pushed towards? Carbon offsets don’t undo the damage these major companies create; it only gives them a “guilt-free pass.” Should major companies be allowed to pay to pollute? Carbon credit expert Larry Lohmann says no: “Offsets themselves are doing damage. While we’re sitting here counting carbon and moving it around, more CO₂ keeps accumulating in the atmosphere.” Experts are clear: carbon credits are not the solution. Why should they be advertised as such?

So what can we do? First, at the very least, carbon credits should do what they promise, so we start with regulation to ensure carbon credits’ efficacy, similar to the FDA’s job in deciding which drugs can be sold. However, as Lohmann points out, even credits doing what they promise are not reducing emissions. Second, carbon credits and offsets should not count as emissions reductions. Planting new trees or protecting forests are also environmentally beneficial, but these activities do not have the same impact of reducing emissions, like a company using renewable energy or recycled materials, so the two should not be conflated. Third, carbon neutral should mean truly carbon neutral. Companies should be required to include scopes 1, 2, and 3 in their reports and total emissions count. Carbon neutrality can only be achieved if a company is carbon neutral in all three scopes.

Lastly, to enforce the three rules above, we can closely scrutinize companies falsely advertising more environmental good than is happening. The Federal Trade Commission states that ads “must be truthful, cannot be deceptive or unfair, and must be evidence-based,” so the departments like the FTC should punish companies that exclude emissions from their reports or count carbon credits as a reduction. With the EPA keeping ineffective carbon credits off the market and the FTC enforcing honesty in advertising, we can prevent greenwashing and force companies to be honest about their environmental impact, pushing companies to actually try to reduce their carbon emissions.

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References

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Eloise Barry, “As More Companies Make Net-Zero Pledges, Some Aren’t as Good as They Sound,” TIME, last modified November 15, 2021, accessed Nov. 6, 2023, https://time.com/6117635/companies-net-zero-greenwash/.

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