Many companies around the world are declaring tremendous progress in reducing their greenhouse gas emissions. Sometimes these claims are the result of actions that really do reduce emissions but other times they are the result of something called “market-based accounting”. Businesses buy credits from clean energy providers that allows them to say they are running on green power when they actually are not.
The market analysis firm Bloomberg Green analyzed almost 6,000 climate reports filed by corporations last year and found that over 1,300 of them employed market-based accounting to erase over 120 million tons of emissions from their records.
Some clean energy contracts do have major climate benefits. For example, companies like Amazon, Nestle, and Target have signed long-term power purchase agreements that ultimately help renewable developers finance new energy projects.
On the other hand, renewable energy credits are often short-term transactions with existing facilities and do little to stimulate investment or otherwise lead to greater use of green power. They simply shift around ownership of existing renewable energy without doing anything new for the climate.
Some companies have made meaningful cuts to their pollution by putting solar panels on their roofs, upgrading their lighting and air conditioning equipment, and so on. But many are reluctant to spend their capital in this way, even if it eventually saves money through lower electric bills.
Customers and shareholders want to see corporations do their part in reducing emissions. But too many are making grandiose claims enabled by market-based accounting while doing far too little to help the environment. Dubious claims of climate progress are not harmless; it is essential for the world’s companies to really do their share.
Photo, posted July 16, 2014, courtesy of Mike Mozart via Flickr.