Greenwashing should be tackled by establishing a new UK regulator with responsibility for ensuring climate goals are accountable, comparable and ambitious. That’s the view put forward in a new paper by UK progressive think tank the Institute for Public Policy Research (IPPR).

The lack of comparability is a key theme in the paper, with the IPPR saying: “Without comparability there could be perverse incentives for investors to divest from high emissions firms like steel to remove them from their portfolio, rather than help steward them through an evidenced path to decarbonise.”

Other key findings of the paper, The End of Greenwashing? Driving Decarbonisation in the Real Economy, are;

• Just 739 firms in the UK have signed up to the gold-standard Science-Based Targets initiative (SBTi), and only 551 are firms with more than 250 employees. Of that number, only 363 are developing targets meaning, says the IPPR, that “just 2.5% of UK large companies have science-based targets in place”.
• Different metrics are used to measure the same so-called green credentials and come to vastly different conclusions, and the situation is made worse by ESG ratings that cover more than just the environment;
• There are still issues with comparability even under SBTi – the paper gives the example of FTSE100 target years for initial reductions ranging from 2023 to 2036, while the baseline for emissions ranges from 1991 to 2020.

The main recommendation is for the establishment of an Office for Climate and Environment Targets (OCET). Its role would be to develop “consistent transition pathways across the UK economy’ which would “avoid the dizzying array of approaches produced by initiatives, task forces, consultancies, and industry groups”.

The IPPR argues the establishment of “a technically informed and rigorous approach through a statutory Office for Climate and Environment Targets” would end “the proliferation of conflicting third-party advice”.

Global leadership

The body also wants to see the UK “take global leadership, driving consistency and ambition in transition plans to make them applicable to the real economy”. The OCET would ensure initiatives had three components:

• consistent timelines – with uniform baselines and targets to ensure genuine comparability;
• continual progress – to ensure company targets are in line with sector reduction pathways and that information is available to enable markets, policymakers and the public to understand progress;
• beyond climate – measures for reducing wider environmental impacts should be included.

The IPPR is anxious to prevent greenwashing, and suggests a greenwashing blacklist be applied to companies whose plans:

• fail to include a uniform baseline, aren’t in line with sectoral reduction plans, and don’t include wider environmental impacts;
• are deemed incompatible with the Government’s net-zero target;
• have made no progress against set targets for a period of three years.

“The blacklist,” says the IPPR, “would be publicly available, helping the public to identify unsustainable companies and sending a powerful signal to investors. Blacklisting would also prevent companies entering government contracts, including procurement, or benefitting from higher rate ‘green’ tax incentives”.