Greenwashing is the practice of overrepresenting your climate actions to reap the benefits of good publicity without intending to make meaningful change.
Greenwashing is one of the main critiques of Private Climate Governance. Several studies show that greenwashing is real and prevalent. Just 14% of companies with carbon reduction pledges have met their targets in the past five years; meanwhile, several mutual funds that brand themselves as “ESG” regularly vote against pro-environmental policies. Similarly, many banks that have established net-zero targets and advertise their climate policies heavily still underwrite substantial loans to fossil fuel companies, despite the International Energy Agency’s insistence that there are “no new oil or gas fields approved for development in our [net-zero] pathway.” In spite of their own net-zero goals, the largest 60 banks in the world committed $347 billion in 2023, and $3.3 trillion since 2016, to companies with plans to expand fossil fuel production.
Though concerns about greenwashing are legitimate and necessary, it is important to encourage greater private engagement in climate efforts. Since most commitments in the U.S. are voluntary at this point, it is important not to scare companies off from making good faith efforts to decarbonize. The challenge lies in identifying which companies are, in fact, acting in good faith.
