The effect of co-opted boards on corporate carbon performance

Corporations, particularly those with high financial materiality, are now required to assess not only their total level of GHG emission but also their GHG intensity to evaluate the costs pertaining to environmental action or inaction. Co-opted boards are when directors are appointed after the chief executive of the company assumed office.

Researchers at Manchester Metropolitan University examined a group of large US companies in the Russell 3000 Index, looking at their carbon performance and how the make-up of their board affects the business's action on the environment.

They found that co-opted boards are decreasing greenhouse gas emissions intensity for these industries. In other industries, where company value is not impacted by climate change, they found no effect.

Fewer Companies Greenwashing But More Repeat Offenders With Severe Offenses

For the third consecutive year, RepRisk’s report on greenwashing highlights trends in the number of companies linked to misleading the public about their environmental impact. RepRisk data shows a 12% decrease in the overall number of companies associated with greenwashing risk for the first time since 2019.

While the 2024 data shows an overall decrease in greenwashing cases for the first time in six years, high-risk cases of greenwashing surged by over 30%.

Private companies represent a significant portion of greenwashing cases: 70% of the companies associated with greenwashing were private, compared to 30% that were public. This means that a focus on the Boardroom may not always bring about changes for offenders making false claims. 

As in the past six years, greenwashing incidents continue to be highest in Europe and North America, followed by Asia and Latin America and the Caribbean. The Netherlands experienced the largest reduction, with cases falling by 48%, followed by Italy at 39% and Spain at 28%. Germany, on the other hand, saw a below-average decline of just over 15%. France diverged from this trend, seeing an increase in greenwashing cases of nearly 11%. 

In 2024, the Oil and Gas sector accounted for the largest share of greenwashing cases, followed by Food and Beverage, and Banking and Financial Services. In terms of YOY change, the Banking and Financial Services sector saw the largest decline, with a drop of almost 27%, followed closely by Retail, Personal, and Household Goods, which decreased by over 25%.

Greenwashing backlash hinders ESG investment in US

Almost three-quarters (73 per cent) of private equity managers have robust ESG management processes today, compared to just 27 per cent in 2014, according to LGT Capital Partners' ESG report.

Europe leads the way, with 87 per cent of managers rated either “excellent” or “good”, up from 82 per cent last year. But the US is progressing much more slowly. Only 16 per cent of managers achieved the “excellent” rating, up from 13 per cent in 2023.

In 2023, more than 150 anti-ESG bills and resolutions were proposed in 37 US states, and at least 40 anti-ESG laws were enacted in 18 states.

The report also shows that greenhouse gas emission monitoring has increased globally, with 56 per cent of private equity managers tracking emissions in 2024, compared to 48 per cent in 2023. On a global basis 42% of companies are taking actions to decarbonize, while another 35% are even further ahead and already aligning with net zero.

Awareness of diversity, equity and inclusion (DEI) also continues to grow. In 2024, 74 per cent of managers had their own DEI policy, up from 60 per cent the previous year.

New Greenwashing Claims

J&J Greenwashes '100% Plant-Based' Wipes, Suit Says

Recent claims allege that Johnson and Johnson's line of Aveeno makeup removing wipes are not 100% plant-based or environmentally friendly as the package claims. It says J&J greenwashes its wipes by labeling them as plant-based when, in fact, the product has ingredients like Isohexadecane, a synthetic ingredient found in many cosmetics products.  The complaint claims that companies like Johnson & Johnson use their labels to entice customers seeking environmentally friendly options but who may be unfamiliar with the names of synthetic polymers or ingredients into purchasing items at a premium price.

Customers accuse NW Natural of greenwashing, in lawsuit over its carbon reduction program

NW Natural’s customers have filed a class action lawsuit claiming the company misled them about how its carbon reduction program works and that it’s using funds from that program to promote and generate more carbon emissions. The complaint says the company’s Smart Energy program is making false promises about reducing customers’ carbon footprint. The complaint also says the program represents a breach of contract under Oregon law because it violates the state’s prohibition on unfair and deceptive marketing claims.