The public is increasingly wary of greenwashing, and companies and certification bodies need to come up with more concrete actions.

The board of "green washing" is beating the giant enterprises and certification bodies.

In August, the Science Based Targets initiative (SBTi), the international certification body for climate targets, updated its list: companies that had submitted pledges to the agency but had not met their targets within two years were labeled "commitments removed." Amazon, Yahoo Japan, Vale and more than 120 other companies are on the list.

For companies, joining the SBTi is a "green honor" that not only allows them to show that their climate goals are in line with the Paris Agreement, but, more importantly, that they are scientific and verifiable.

Once it is marked as "commitment deleted" by the SBTi, the credibility of corporate climate targets will be greatly reduced - even the submitted short-term emission reduction targets of 5-10 years cannot be achieved, and the public will find it difficult to believe that enterprises can implement ambitious emission reduction plans for as long as 30 years - and the suspicion of corporate greenwashing will be greatly increased.

Companies want to complete the SBTi certification process, which is usually divided into five stages: submit commitments, make goals, submit and verify goals, disclose goals, and disclose carbon emissions annually and the progress of target completion. The company that was removed from the list this time is stuck in the step of "submit and verify the goal."

Amazon submitted its short-term climate commitments for the next 5-10 years to the SBTi as early as 2020, but subsequent steps have been slow to move forward. After being removed from the list, Amazon first issued a notice saying that it did not submit and verify the goal on time because it was "difficult to submit meaningfully and accurately" and will continue to explore a reasonable path to submit goals in the future.

Amazon has a long history with SBTi. The company was not only one of the three core sponsors of the SBTi, but also the Earth Foundation owned by Amazon boss Bezos, which is also a core sponsor of the SBTi - Amazon can be described as a major financial backer of the SBTi.

But the SBTi did not give the donors the benefit of the doubt. In the face of growing concerns about green washing, both Amazon and the SBTi need to take more concrete action.

01 Amazon is not innocent of being delisted

Objectively speaking, Amazon is not not hard at work in sustainable transformation, only Rivian electric pickup trucks, Amazon has purchased tens of thousands of vehicles, but the delivery time is scheduled to 2030. According to Bloomberg data, Amazon has been the largest buyer of renewable energy since 2020, with 20GW of renewable energy projects.

But it's hard to turn the ship around. Amazon's main businesses, cloud services and logistics, are energy-intensive, and replacing the entire system with sustainable equipment won't happen overnight.

In 2019, Amazon proposed a goal of becoming carbon neutral by 2040. However, the reality is that the carbon emissions of enterprises have not decreased but increased by more than 40%, and the annual carbon emissions reached 71.27 million tons, even more than the carbon emissions of Switzerland, Denmark and other countries. In response, Amazon said that its carbon emissions per unit have been reduced, and the total increase is due to the rapid growth of the volume of sales.

Amazon's emissions-reduction plan is also too crude. In a corporate responsibility monitoring survey published last year by the NewClimate Institute, an environmental nonprofit, Amazon scored lowest on most of the metrics for both transparency, which represents the quality of disclosure, and integrity, which represents the quality and credibility of methodology.

The NewClimate Institute believes that Amazon not only does not have enough carbon emission data and details of emission reduction measures, but also may use a large number of carbon offset credits to meet the target. The extensive use of carbon offset credits has been controversial and has intensified the suspicion of green washing by enterprises.

02 The greenwash board, also on SBTi

Amazon, which is not performing well, can get a green endorsement from the SBTi for up to two or three years just by submitting a commitment. This will also pull the SBTi into the water, which is suspected by the outside world to be a hotbed of green washing.

The SBTi is a certification body for climate goals jointly initiated by the United Nations Global Compact, the World Resources Institute and other organizations. It has wide influence around the world, including nearly 6,000 companies such as Apple and Microsoft, which have submitted commitments to the SBTi. The SBTi has a near monopoly on companies certifying climate targets.

The company is proud to obtain SBTi certification. Even just by submitting a commitment to the SBTi, most companies will highlight this in their ESG reports, proving that their sustainability plans are scientific. But in practice, many companies do not make it to the next step in the certification process.

Amazon is a case in point. In 2020, when Amazon completed the first step of submitting commitments, it highlighted "honored to join the SBTi" in its 2019 Sustainability report released that year. In the sustainability reports for 2020 and 2021, Amazon also mentioned that it was on the SBTi list.

In fact, some companies even deliberately do not submit targets, relying only on a commitment to get on the SBTi record list for endorsement. The SBTi is in a crisis of confidence by giving companies the opportunity to exploit loopholes.

The commercial nature of SBTi also makes the certification business appear not objective and pure. SBTi's income is mainly divided into three categories: direct funding from sponsors, cooperation fees provided by other foundations, and certification fees charged after helping enterprises do certification, of which certification fees account for one-third of the revenue source.

According to the NewClimate Institute, the SBTi will charge a certification fee of $14,500 for each certification. As of August 28, 2023, a total of 3,358 companies have performed target certifications, based on which it is estimated that SBTi has earned nearly $50 million in revenue from the certification business.

Of the 18 companies reviewed by the NewClimate Institute, at least 11 have controversial climate plans. For example, Nestle said it would not use carbon offset points to meet its climate goals, but its subsidiary brands KitKat chocolate and Nestle Coffee said they would use carbon offset points. But these companies are all certified by the SBTi.

The NewClimate Institute argues that the SBTi should focus on honing its own methodology, rather than endorsing large companies that lack concrete measures, which could become a platform for greenwashing.

03 Under pressure inside and outside, SBTi opened the knife to the gold owner Amazon

The external greenwashing is questioned, and the internal wave of SBTi is also frequent.

Bill Baue, a member of the SBTi's Technical Advisory Group, is one of the agency's founding fathers. Starting in 2021, he repeatedly lashed out at the SBTi on the Internet for betraying the public trust, teasing that the SBTi had barely responded to his complaint letter.

Bill Baue reported that the SBTi was not objective enough in its choice of methodology. The methodology chosen by management was developed by partners with mutual interests.

The SBTi has also signed non-disclosure agreements with companies that conduct target certification. On the SBTi website, as of August 2023, the public can only see which companies have made commitments or set specific targets, but not the specific carbon emissions data of these companies, and it is not clear how companies scientifically meet their commitments or targets.

Bill Baue speculated that the SBTi may not disclose specific data to protect the interests of its partners. Because the main business of some partners relies heavily on first-hand data, once the data is made public, it is equivalent to smashing the rice bowl of partners.

These doubts were forwarded by the Financial Times and other media. In the face of public pressure, the SBTi had to respond to Bill Baue's complaint. In 2023, the SBTi formally created an official grievance mechanism, hired a compliance director to deal with criticism, and encouraged companies to be more transparent about their data disclosures.

In January 2023, the SBTi announced a new compliance statement: Companies must submit specific targets within two years of submitting their commitments, or they will be removed from the list and marked "commitments removed." As a transition before the new rules take effect, the SBTi set a six-month grace period.

By August of this year, the grace period ended, Amazon had still not submitted specific targets, and the public's questions about Amazon's sustainability goals have deepened. At this point, even the big donors, the SBTi can only bear to remove them from the list.

The public is becoming increasingly wary of greenwashing, and the arbitrage space for greenwashing is shrinking. Under the dual pressure of policy and public opinion, enterprises and certification bodies need to come up with more practical and more specific carbon reduction actions.