Carbonwashing: A New Type of Carbon Data-Related ESG Greenwashing

25 Pages Posted: 21 Sep 2021

See all articles by Soh Young In

Soh Young In

Global Projects Center, Stanford University; Precourt Institute for Energy, Stanford University

Kim Schumacher

Tokyo Institute of Technology - School of Environment and Society; University of Oxford - School of Geography and the Environment

Date Written: April 25, 2021

Abstract

Despite the increased attention and capital incentives around corporate sustainability, the development of sustainability reporting standards and monitoring systems has been progressing at a slow pace. As a result, companies have misaligned incentives to deliberately or selectively communicate information not matched with actual environmental impacts or make largely unsubstantiated promises around future ambitions. These incidents are broadly called “greenwashing,” but there is no clear consensus on its definition and taxonomy. We pay particular attention to the threat of greenwashing concerning carbon emission reductions by coining a new term, “carbonwashing.” Since carbon mitigation is the universal goal, the corporate carbon performance data supply chain is relatively more advanced than that of the entire sustainability data landscape. Nonetheless, the threat of carbonwashing persists, even far more severe than general greenwashing due to the financial values attached to corporate carbon performance. This paper contextualizes sustainable finance-related carbonwashing via an outline of the communication as well as the measurement, reporting, and verification (MRV) of carbon emission mitigation performance. Moreover, it proposes several actionable policy recommendations on how industry stakeholders and government regulators can reduce carbonwashing risks.

Keywords: Corporate Carbon Performance, Net-Zero Carbon, Carbonwashing, Greenwashing, Carbon Data, Carbon Disclosure, Sustainability Reporting Standards

JEL Classification: C80, G3, G24, Q01, Q2, Q3, Q4, Q50, Q54, Q55, Q56

Suggested Citation

In, Soh Young and Schumacher, Kim, Carbonwashing: A New Type of Carbon Data-Related ESG Greenwashing (April 25, 2021). Available at SSRN: https://ssrn.com/abstract=3901278 or http://dx.doi.org/10.2139/ssrn.3901278

Soh Young In (Contact Author)

Global Projects Center, Stanford University ( email )

473 Via Ortega, Suite 242
Stanford University
Stanford, CA 94305
United States

HOME PAGE: http://https://gpc.stanford.edu/

Precourt Institute for Energy, Stanford University ( email )

473 Via Ortega, Suite 324
Stanford University
Stanford, CA 94305
United States

HOME PAGE: http://https://energy.stanford.edu/

Kim Schumacher

Tokyo Institute of Technology - School of Environment and Society ( email )

2-12-1 Ookayama, Meguro-ku
Tokyo, Tokyo-to 152-8550
Japan

HOME PAGE: http://bit.ly/2Dj8Y8S

University of Oxford - School of Geography and the Environment ( email )

Oxford University Centre for the Environment
South Parks Road
Oxford, OX1 3QY
United Kingdom

HOME PAGE: http://www.geog.ox.ac.uk/staff/kschumacher.html

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