The EU wants rid of spurious green claims: too many of them are made with “no evidence and justification whatsoever”, said Frans Timmermans, executive vice-president for the European Green Deal, as he launched proposals to put the squeeze on greenwashing in March. ‘Carbon neutral’, involving the use of controversial offsets, has become the most pilloried claim and could well disappear from shelves altogether.
“[…] the days of offsetting-supported carbon-neutral claims are numbered,” says Dominic Watkins, partner at law firm DWF. This has as much to do with increasing regulation and scrutiny from campaigners as it does litigation. Research published this week by the Grantham Research Institute shows an “explosion” of cases of climate-washing cases, with 1,590 in the US. The risk involved in making any environmental claim “is only going to grow”, Watkins adds.
In Europe, regulation is closing in through the EU’s green claims directive: the European Parliament recently voted to ban carbon neutral claims but neither the Council nor the Commission want to go that far: they want to see claims evidenced, with both the scope of emissions covered and the reliance on any offsets communicated to consumers in much more detail. How to describe all that on a bag of coffee or a chocolate wrapper matters not.
Food and drink businesses are therefore in a pickle. ‘Carbon neutral’ has become a very effective communications tool that many have used both on their products and in relation to manufacturing sites. Diageo is building a carbon-neutral distillery in Canada, for example, while BrewDog makes claims about its beers being ‘carbon negative’ (offsetting twice as many carbon emissions as it emits). Mars Wrigley gained carbon neutral status for its Mars bars sold in the UK, Ireland and Canada earlier this year.
Marketeers love such tidy catchphrases. But what lies beneath can be a mess of dubious offsetting schemes, poorly scoped out emissions accounting, and an easy opportunity to mislead consumers and investors alike. “Purporting to be carbon neutral has become a popular marketing strategy for companies seeking to give their image a green makeover while continuing to pollute with impunity,” noted Brussels-based not-for-profit Carbon Market Watch recently.
Food’s carbon-neutral claims on NGO radar
The NGO isn’t the only one wanting carbon-neutral claims banished forever. Last week, consumer groups launched an EU-wide complaint against 17 airlines for greenwashing. Claims that paying extra credits can “offset”, “neutralise”, or “compensate” the emissions of a flight are “factually incorrect” because the climate benefits of offsetting activities are “highly uncertain”, while the harm caused by the emissions from air travel is “certain”, they said in a statement.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below formBy GlobalData
Their ire is focused on oil, gas and airline companies but food and drink – another hefty emitter of greenhouse gas emissions – is on the radar. The likes of the Changing Markets Foundation have accused companies of “deception”, in particular those in the business of producing livestock products, for trying to “green” their products with carbon-neutral claims that “hide” the considerable carbon footprint of cheese, meat and milk.
“We want offsetting, insetting, neutralisation claims completely banned”Lindsay Otis Nilles, Carbon Market Watch
Carbon Market Watch recently assessed the claims made on 15 products sold in Belgian supermarkets – from Greenway meat-free chipolatas and Evian bottled water to Innocent orange juice and Brugge cheese. The NGO said all of them misled consumers in one way or another; the researchers were particularly concerned about the credibility of the offsets being used and the limited or vague reduction plans in place.
“We don’t think offsetting, insetting, neutralisation claims – any of those types of [claims that] imply the climate impact has been neutralised – are ok under any circumstances,” explains Lindsay Otis Nilles, a policy expert onglobal carbon markets with Carbon Market Watch. “We want them completely banned.”
Their arguments, built over months, are obviously convincing EU regulators that something needs to be done. As ever there is more nuance than the eye meets in recent headlines. Indeed, not all such claims may be fudging the facts.
Some of the brands Just-Food approached presented pages of evidence justifying the claims they were making – often under the umbrella of recognised standards like PAS2060 (which they admit are imperfect) – and the progress this has stimulated in terms of greenhouse gas emissions reductions.
“We have a plan to reduce livestock emissions on-farm and it will work,” says Richard Clothier, MD at Wyke Farms, which has a carbon-neutral cheddar brand (Ivy’s Reserve Vintage Cheddar) and, in May, launched a carbon-neutral butter. The US SKU for the cheddar shows almost 2kgCO2e has been sliced from the net footprint per kilo of packaged cheese (-21%), and most has come from reducing emissions on farms. There is more to come, according to Clothier.
Other companies also encouraged debate on what good claims should look like. They want standardised approaches to making claims and stricter regulation of offsets. In the current market, offsets per tonne can range wildly in price depending on the project. “There are some truly wonderful carbon offset projects out there [and] there are also some that are not very good at all,” explains Mike Tournier, carbon consultant at global supply chain consultancy Achilles.
“The motivation is good but the outcomes might not be – and outcomes matter more than words right now,” adds Drea Burbank, CEO at Savimbo, an environmental development and fair-trade carbon credits company. The basic science around carbon neutral and offsetting is “very problematic”.
Nevertheless, brands using the claims maintain that such labels have the power to affect change on-shelf and throughout the supply chain. Better regulation of the carbon credits market would certainly make life easier, though. This is coming. But perhaps not fast enough. Some companies have already begun to slip away from carbon-neutral claims that not too long ago they were making a big splash about.
Leon is one high-profile example: the fast-food chain claimed a first with its “carbon neutral burger and fries” launched in 2021 but last year had to face down criticism over the credibility of the offsets it was using. It has now started “phasing out the carbon messaging across our channels”; information has since disappeared from its website.
This week, Nestlé said it has decided to stop using carbon offsets and withdraw its pledges to make certain brands, like KitKat and Nespresso, carbon neutral. Instead, it will “invest in programs and practices that help reduce greenhouse gas emissions in our own supply-chain and operations, where it makes the most difference to reach our net zero ambition”. The decision feels knee-jerk but it won’t have been made lightly.
Could this open the floodgates? The regulatory landscape in Europe is changing – thanks largely to the green claims directive (part of the EU’s ‘empowering consumers for the green transition’ programme of work) – which will certainly make it difficult for food and drink manufacturers to be able to provide the evidence regulators will want in order to make carbon neutral claims.
“There is too much risk in making claims about carbon neutrality and offsetting when we know that voluntary carbon markets lack credibility. Brands can’t offer that assurance, and they shouldn’t try,” says Victoria Page, director at UK-based VP Comms, which specialises in corporate purpose and communications.
Hide and seek
For now, companies can offer scant information on their carbon-neutral claims. Press releases publicise carbon-neutral distilleries for example with no reference to the use of carbon offsets; others mention the offsets but omit information about them. Just Food also approached the likes of ABInBev, Pernod Ricard, Mars and Danone – all of which had made claims or targets – but all declined to comment.
Consultancies that offer carbon accounting services and authorise carbon-neutral claims were more forthcoming. Karen Righthand, VP for corporate marketing, at US-based SCS Global, welcomes efforts to improve transparency around the claims and highlights how “crucial” financing of credible carbon reduction projects is (though it’s worth noting Oxfam data in 2021 showing the huge pressure on land, and potential jump in food prices, if companies fail to make deep reductions and rely too heavily on offsets).
Isabel Hagbrink, senior director at Zurich-based South Pole, which offered a ‘climate neutral’ certification, says companies that offset their emissions “are more likely to show greater ambition in other parts of their climate strategies”. She adds: “The voluntary carbon market offers a credible, proven way for companies to drastically scale up their climate action now, but they need a pathway to take credit for their effort with confidence.”
“We see carbon neutrality is an imperfect but necessary first step for companies”Austin Whitman, CEO at ClimateNeutral
Could the removal of carbon-neutral claims actually derail climate action? If brands cannot talk about what they’re doing, will there be less rather than more action? “We see carbon neutrality is an imperfect but necessary first step for companies,” says Austin Whitman, CEO at ClimateNeutral. “If we take away this interim and annual milestone we encourage businesses to hide behind the vague nature of 20- to 30-year targets.”
What’s more likely is that carbon-neutral claims will be removed from the spotlight. This might not be the end of such marketing but it could lead to “significant changes” in the way businesses communicate their efforts on climate, says Jill Crawford, senior associate at UK law firm Irwin Mitchell.
With Nestlé now having jumped, conversations will undoubtedly be taking place about whether to follow suit. It is a tough sell internally and externally. It comes down to economics, suggests Alexis Normand, CEO at Greenly, a US carbon accounting platform. Cost, speed and the availability of technologies or products all play a part as businesses weigh up whether their money is “better spent on reducing emissions […] or paying someone else to”, he explains.
The Co-op grocery chain in the UK has already moved funds that were being invested in offsets into those aimed at emissions reductions. Of course, there are concerns about a wholesale pulling of the plug on carbon credits but that’s unlikely. There is certainly more to do in terms of cutting carbon. Emissions have recently risen and agri-food as a whole is struggling to get to grips with scope 3 emissions. Many corporations still haven’t measured scope 3 or had their net-zero plans approved by the Science-based targets initiative (SBTi).
“Unless a company has an approved SBTi 1.5°C target that includes scope 3 and absolute emissions cuts, I would take their carbon neutral claims with a pinch of salt,” says Sarah Blanchard, a sustainable food consultant and head of ESG at the Prof. Consulting Group.
Consumers also want to see what Charlotte Bande, global food and beverage sector lead at consultancy Quantis, calls a “real change in impacts”. She suggests the time for commitments has passed and companies need action plans for how they will reduce their emissions. These require scrutiny but Bande offers a warning: “[…] if we start attacking them on anything they claim [to have] accomplished, or anything that they’re working on … well, why would they even continue?”
Indeed, a fine balance must be struck between credibility and transparency. But finding this could take time and, in the meantime, brands are walking a tightrope. What follows now could be a period of rumination and silence – and that could be deadly for progress on sustainability. So-called greenhushing is on the rise as businesses fear regulatory, financial and reputational backlashes. It is a “worrisome” trend, notes South Pole’s Hagbrink.
Neutral by name
In the US, carbon-neutral claims are not yet under the cosh. Amazon allows a number of external carbon-neutral certifications to “distinguish more sustainable products”. Today, “it’s perfectly fine to say you are carbon neutral”, explains Greenly’s Normand but he expects that to change as what’s happening in Europe washes across the North Atlantic.
One grocery brand that arguably has more vested interest in this than any other is Neutral. “We’re the first carbon-neutral foods company in the US,” reads its website. Its dairy products are certified by SCS Global with the offsets verified by third-party auditors to ensure “the projects we support are real, additional, permanent, verifiable, and enforceable”. The information is certainly clear and concise.
Jim Jarman is the company’s VP of marketing and product. “Consumers want transparency [so] let [them] understand the impact of their choices and they will make better choices,” he tells Just Food. “They want companies to ‘own’ their positions,” he adds, “so don’t try to pretend that we aren’t facing real challenges.”
Reducing emissions from livestock can at times appear to be a Sisyphean task but despite a “painfully slow” start some of the on-farm initiatives are starting to produce fruit for Neutral. Almost three-quarters of the emissions from its organic milk are from the farms so that’s where reduction activity is focused. Jarman is confident this is the future. “If Neutral ever gets to 10% of the US milk market that would be phenomenal. That’s a big number but you’d still be at 10%. So, if we really have a mission to reduce emissions across this industry, it’s not just about what we do, it’s about what everyone can do – and what we do can be copied by others.”
The plan now is to target other staple categories with the biggest impact. “Since day one our mission has been [to] radically reduce the carbon footprint emissions coming from the agriculture sector and to empower consumers to be part of that change,” he adds.
Other brands also say they will continue to rely on carbon neutrality to “engage” with customers as part of their “journey” to net zero. Consumers are by and large confused by the claims though. Nearly six in ten US consumers don’t know what the term carbon neutral means or they incorrectly define it, according to research by Morning Consult in 2022. Surveys in the UK and Germany have produced similar results.
Such findings are not surprising given that terms like carbon neutral and net zero are sorely lacking in standardised or legal definitions. Brands are using this ambiguity in their favour, says Nicole Darnall, foundation professor and director of the Sustainable Purchasing Research Initiative at Arizona State University. People see carbon neutral and they don’t think about scopes 1, 2 and 3, she explains.
Darnall is encouraged by the tightening net of regulation in Europe. In the US, there is nothing as holistic on the horizon but that doesn’t mean food companies can carry on claiming carbon neutrality care-free. “Consumer litigation over misleading advertising tied to ESG-related claims is increasing,” warned Chandan Sarkar, principal (forensic & integrity services) at Ernst & Young in May. “Everything from sustainable packaging to carbon-cutting claims are under the microscope, and courts are allowing the claims to progress to ‘fact discovery’ stage, which is a noteworthy shift.”
New climate claims
The US continues to be the country with the highest number of documented climate litigation cases: 1,590 in total since 1986, according to research just published by the Grantham Research Institute, UK. Next is Australia, where 130 cases have been identified, and then the UK with 102. Some 67 cases have been filed before the Court of Justice of the EU.
It’s the last five years or so in which cases before both courts and administrative bodies (such as consumer protection agencies) have “exploded”, say authors Joana Setzer and Kate Higham. And the largest group of climate-washing cases involve challenges to statements about the environmental impact of particular product lines. In the last 12 months, numerous cases have been identified – many of them in Germany – that challenge claims that products ranging from dustbin liners to bananas are ‘climate-neutral’, ‘carbon-neutral’ or ‘CO2-neutral’.
Such litigation can have “significant impacts” on climate governance, the authors note. It can amplify awareness, impact share prices and even “shape narratives around climate action, encouraging decision-makers to change their approach”.
For carbon-neutral claims, this shift is undoubtedly underway. Some of those involved in such claims and offsetting programmes are already making changes. Myclimate, the prominent business consultancy and provider of offsets and carbon neutrality labels, last year announced that it was binning its climate neutrality label in order to transition to a “climate contribution” model.
Climate contributions represent an alternative approach: companies purchasing contribution credits must not claim the emission reductions they represent to offset their own emissions because the underlying mitigation actually continues to count towards the climate target of the country where the climate project(s) are based. Carbon Market Watch calls it a “paradigm shift” in how carbon credits and used and marketed.
New guidance published this week on the use of carbon credits by private companies also encourages the use of the contribution claims model to finance climate action. The Voluntary Carbon Markets Integrity Initiative says its code is the “rulebook” for making credible claims. There are now also three different bands of claims – silver, gold and platinum, depending on the percentage of a company’s remaining emissions that are set against carbon credits. As ever, how to market these schemes remains front of mind.
South Pole this week followed Myclimate’s lead, announcing a new climate claim: ‘funding climate action’. “Terms such as carbon neutral have been a global success story,” says Hagbrink, but “sadly over the past few years it has been abused by some companies for greenwashing”.
The past few weeks have seen carbon-neutral claims under the cosh. The past few days suggest it’s now a crisis. Maybe this is the beginning of the end for the concept (at least as a marketing tool), but maybe it’s also the start of a new era of credible carbon claims. Time will tell how companies (and their marketers) use the new claims, and whether once again some manage to abuse them.