• The term greenwashing was first used in 1986 by Jay Westerveld, an American environmentalist and researcher.
• Greenwashing is the practice in which firms and governments mark all kinds of activities as climate-friendly,as something that would lead to emissions reduction, or avoidance of emissions.
  • Many of these claims are unverifiable, misleading, or dubious.
  • While it helps in boosting the image of the entity, they do nothing in the fight against climate change.
  • Several multinational corporations, including oil giants like Shell and BP, and Coca Cola have faced accusations of greenwashing.
• Greenwashing is prevalent across a whole range of environmental activities.
  • Developed countries are often accused of greenwashing their normal business investments in developing countriesby highlighting climate co-benefits of the financial flows, sometimes with very little justification.
• Impact of Greenwashing:
  • Greenwashing presents a false picture of the progress being made on the climate change front,pushing the world towards disaster, while at the same time, rewarding entities for irresponsible behaviour.
• Challenges in Regulating:
  • The processes and products that can potentially cut emissions are so many that it is practically impossible to monitor and verify all.
  • The processes, methodologies and institutions to measure, report, create standards, verify claims and grant certifications are still being set up.
  • Large number of organisations have sprung up claiming expertise in these areas and offering their services for a fee. Many of these organisations lackintegrity and robustness, but their services are still availed by corporations because it makes them look good.

Greenwashing Affect Carbon Credits

• Carbon Credit:
  • A carbon credit (also known as carbon offset) is a credit for greenhouse emissions reduced or removedfrom the atmosphere by an emission reduction project, which can be used by governments, industry, or private individuals to compensate for the emissions they generate elsewhere.
  • Those that cannot easily reduce emissions can still operate, at a higher financial cost.
  • Carbon credits are based on the"cap-and-trade" model that was used to reduce sulfur pollution in the 1990s.
  • One carbon credit is equal to one metric ton of carbon dioxide,or in some markets, carbon dioxide equivalent gases (CO₂-eq).
• Effect of Greenwashing on Carbon Credit:
  • Informal Markets:
    • There are now credits availablefor all kinds of activities such as for growing trees, for planting a certain kind of crop, for installing energy-efficient equipment in office buildings.
      • The credits for such activities are often certified by unofficial third-party companies and sold to others.
      • Such transactions have been flagged for lack of integrity and double counting.
    • Credibility:
      • Countries like India or Brazil had accumulated huge carbon credits under the Kyoto Protocoland wanted these to be transitioned to the new market being set up under the Paris Agreement.
        • But many developed countries resisted this, questioning the integrity of the credits and claiming they did not accurately represent reductions in emissions.
        • Carbon offsets from forests are one of the most controversial.

Looking ahead

• Corporations pursuing net zero targetsmust not be allowed to make fresh investments in fossil fuels.
  • They must also be asked to present short-term emission reduction goals on the path to achieving net zero.
• Corporations should also use offset mechanisms at the start of their journeyto net-zero status.
• Priority should be focused towards the creation of regulatory structures and standardsto monitor greenwashing.