Greenhouse gas reduction targets and carbon status disclosures. Do yours stand up to the spotlight?

After time away to have her first child, Amy Hamilton returns to find that greenwashing is still posing a risk to trust and confidence and the level of interest in climate-related disclosures is on the rise.

I am back! The last time I prepared one of these Climate Project blogs, I was preparing to flip my life upside down and take on the most rewarding job of becoming a mother. Although it feels like a lifetime ago, some things have stayed the same while others continue to rapidly evolve.

The OAG has issued a new guidance document called Carbon targets and ambiguity: The scrutiny to expect from an auditor. This blog is an introduction to that guidance and discusses why it might be important for your organisation.

Last year, Auditor-General John Ryan noted “that there was a significant opportunity to improve transparency and accountability for climate information” and that “public organisations should approach their climate reporting with integrity and avoid any “greenwashing” of their achievements or activities in their reporting...”.

The principles behind these statements have not changed. Greenwashing is still and will continue to be a significant risk to trust and confidence. What has changed is the level of interest in these disclosures and the risks that come with that.

Status statements

In the last 12 months, we’ve seen a complaint laid with the New Zealand’s Advertising Standards Authority due to an entity’s use of the phrase “Climate Positive”. This issue arose predominately due to two different interpretations of what this means. Some interpreted this as covering the full value chain (scope 1, 2, and 3 emissions, or categories 1-6 if using ISO), while others have defined this term as covering only a subset of that information.

Therefore, without a globally accepted and applied definition of this term, we want to remind public organisations to ensure that they are transparent and disclose how they have defined terms such as Climate Positive, Net-zero, and Carbon Neutral.

Carbon reduction targets

Carbon reduction targets such as “carbon neutral by 2030” are also in the spotlight. This Integrity Matters: Net Zero commitments by Business, Financial Institutions, Cities and Regions report, launched at COP27, sums up the risk and provides context on why these targets are increasingly being looked at under a microscope:

In the years since [the Paris Agreement, which came into force on 4 November 2016], many corporations, cities, states and regions have made voluntary commitments to reach net zero. This is commendable, but in the absence of regulation, too many of these pledges are not aligned with the science, do not contain enough detail to be credible, and use the terms “net zero” or “net zero aligned” (as well as many other similar terms) inconsistently. Deceptive or misleading net zero claims by non‑state actors not only erode confidence in net zero pledges overall, they undermine sovereign state commitments and understate the work required to achieve global net zero. Ultimately, to ensure consistency, rigour and enforceability, regulation will be needed…

The risk is clear. If greenwash premised upon low-quality net zero pledges is not addressed, it will undermine the efforts of genuine leaders, creating both confusion, cynicism and a failure to deliver urgent climate action. Which is why, ultimately, regulations will be required to establish a level playing field and ensure that ambition is always matched by action.

Our guidance is in response to concerns about greenwashing and public organisations potentially misleading stakeholders about their commitment to, or progress on, greenhouse gas emissions reduction. We can’t just say we will take action, we need to be held accountable for what we actually do.