View in Browser

Hello!

This week, the European Commission and Australia are increasingly cracking down on greenwashing as the EU proposes new rules on environmental labeling, while Australia’s competition watchdog considers a complaint made against Etihad airlines. And check out today’s ESG Spotlight for an athletic gardener’s bicycle journey from London to India to raise awareness about soil degradation.

The European Commission proposed rules that would require companies in Europe to back up climate-friendly claims about their products with evidence, to stamp out misleading green labels for products from clothing to cosmetics and electronic goods.

The proposed European Union rules would regulate labels like “natural”, “climate neutral” or having “recycled content” – and tackle what the EU says is rampant greenwashing among products sold in Europe.

To use such labels, a company must carry out a science-based assessment, assessing all significant environmental impacts, to prove that its product lives up to the claim, or have it verified under an environmental labeling scheme.

An accredited verifier would need to check the claim before a company can publicly use it. Companies that make climate-friendly claims without proof could face financial penalties.

EU environment commissioner Virginijus Sinkevicius at the EU Commission headquarters in Brussels, Belgium, March 21, 2023. REUTERS/Clement Rossignol

A Commission assessment of 150 claims about products’ environmental characteristics in 2020 found that most (53%) provided “vague, misleading or unfounded information”. “That’s why we had to react – because those false claims, greenwashing, by the companies have become more and more sophisticated,” said EU Environment Commissioner Virginijus Sinkevicius.

Sinkevicius said the rules should help consumers identify which products are truly eco-friendly and give proper credit to companies whose goods have real environmental benefits – versus those making spurious claims. “They have to compete with those who are openly cutting corners,” he told Reuters.

Although these new rules set on tackling greenwashing focus on consumer products, existing rules on financial products seem to be causing confusion.

Earlier this month, more than 30 fund managers, consultants, lawyers and regulators interviewed by Reuters said that despite European Union rules demanding more disclosure, funds remained hard to compare and greenwashing difficult to spot.

A surge in demand for green investments has led to a rush by investment managers to label products as sustainable, when often portfolios still include carbon-intensive businesses. The people Reuters spoke to said discrepancies among fund portfolios reflected a lack of clarity from the Commission over what constitutes a sustainable investment.

“One of the objectives was to fight greenwashing and we are really at a stage now where the way the regulation is being implemented doesn’t help prevent it,” said Mathilde Dufour, head of sustainability research at French asset manager Mirova.

Meanwhile, Australia’s competition watchdog will consider a greenwashing complaint made against Etihad by a local environmental group that accused the airline of misleading consumers about its environmental credentials and net zero ambitions.

Several Etihad advertisements about the environmental impact of flying and the airline’s net zero emissions pledge were false and misleading “greenwashing”, according to a complaint filed with the Australian Competition and Consumer Commission (ACCC) by the Environmental Defenders Office (EDO).

A dry corn cob is seen on a field in Saverdun as France faces records winter dry spell, March 16, 2023. REUTERS/Sarah Meyssonnier

Murray Birt, senior ESG research analyst at German asset management company DWS, shares his thoughts about regulation of water use and pollution control by governments in light of this week’s U.N. Water Conference:

“Ideally, governments should set science-based water policies in relation to specific watersheds. 

“The EU Water Charter is a good starting point for this. Environmental economists point out that properly addressing challenges like water requires setting a limit on damage that occurs. 

“In addition, social priorities should be considered when assigning responsibility for reducing pollution. This refers to how costs are distributed across society and the impact they have on equality and business competitiveness.

“Since setting science-based limits on key water pollutants and limits on water use are complex, fair water pricing and duties on water polluters would provide a good solution and alternative.

“In particular, mandatory duties are important to ensure that the costs of environmental damage are embedded into business decisions, which in turn can influence capital allocation.”

Shell recommended its shareholders vote against a climate activist resolution asking for more stringent emissions cuts by 2030 at its May 23 general meeting. 

Activist group Follow This wants BP, Chevron, Exxon Mobil and Shell to commit to absolute emissions cuts by 2030, rather than intensity-based targets. This would bring the companies in line with the Paris climate deal, including emissions from the combustion of the fuels they sell, known as Scope 3 emissions.

Rens Goede, gardener from Amsterdam, in London, Britain March 22, 2023. Save Soil/Handout via REUTERS

Today’s ESG Spotlight shines a light on Rens Goede, a gardener from Amsterdam, who begins a 30,000-km (18,640-mile) bicycle trek from London to India as part of a campaign to raise awareness about soil degradation. Elsewhere, climate activists in Vienna, Austria, host an exhibition to draw attention to climate change.

Goede’s roundabout journey to the city of Coimbatore in southern India, in support of the “Save Soil” movement, will see him travel across 30 countries and will last an estimated two years. “I just decided I can do more. I love to cycle, so I thought: do something crazy, get on the (bi)cycle and just do it,” the 31-year-old told Reuters.

Goede’s mission mirrors that of Indian yogi Sadhguru, who last year carried out the same journey by motorbike, launching “Save Soil”. The movement, backed by the likes of the World Food Programme, says it aims “to address the global soil degradation crisis and support governments in implementing concrete policy changes for soil health”.

A visitor of the Leopold museum looks at the painting ” A boy at the spring ” by Albin Egger Lienz  in Vienna, Austria, March 22, 2023. REUTERS/Leonhard Foeger

A Vienna museum where climate activists recently attacked the glass screen shielding a Gustav Klimt painting has responded with an exhibit entitled ‘A Few Degrees More’ that tilts works to draw attention to the need for action on climate change.

“We found this way to be absolutely the wrong one,” the museum’s artistic director, Hans-Peter Wipplinger, told Reuters on the opening day of its response: a small exhibition with the full title “A Few Degrees More (Will Turn the World into an Uncomfortable Place)”.

It involves hanging 15 works by artists including Klimt and fellow Austrian great Egon Schiele at an angle, with texts calling attention to the effect that global warming of more than 1.5 degrees Celsius (2.7 Fahrenheit) from pre-industrial levels would have on the landscapes depicted in them.

“More needs to be done to help support the UN goals and accelerate progress in tackling water scarcity. We need to ensure we are achieving these wastewater treatment targets in the most energy and resource efficient way possible to make it sustainable. This is where technology is key.”

Brandon Spencer, president of multinational firm ABB Energy Industries

Reuters Power Up

Find out everything you need to know about the global energy industry and the forces driving the transition to renewable fuels.

Sponsors are not involved in the creation of newsletters or other Reuters news content.

Sustainable Switch is sent three times a week. Think your friend or colleague should know about us? Forward this newsletter to them. They can also sign up here.

Want to stop receiving this newsletter? Unsubscribe here.
To manage which newsletters you’re signed up for, click here.

Follow Reuters on social media

Reuters Terms & Conditions and Privacy Statement