Companies that participate in the U.S. Department of Energy’s program to report greenhouse gas emissions report reductions when in actuality they tend to have increased emissions, according to research from The Erb Institute for Global Sustainable Enterprise at the University of Michigan.
The Erb study, begun in 2005, focused on eight years of data reported to the registry by the electric utilities industry, the sector that emits the greatest amount of greenhouse gases. This sector is required to report detailed fuel-use data to the Federal Energy Regulatory Commission. By comparing the data reported to the registry with the data reported to FERC, researchers were able to evaluate the reported GHG reductions against actual reductions. According to the study results, of the 550 reports analyzed in the study, 323, or 61 percent, had actual increases in emissions rather than decreases.
“The problem is not that companies are lying but rather that they are taking advantage of lax and inconsistent reporting rules,” said Thomas P. Lyon, Ph.D., director of the Erb Institute and author, with doctoral student Eun-Hee Kim, of the study. “Until these reporting loopholes are closed, the registry runs the risk of merely being a greenwashing tool for companies worried about their image.”
Lyon pointed out that examples of lax registry reporting rules include the ability of companies to choose whether to report reductions at the company level or the level of individual projects. In addition, voluntary reporters can select baseline emissions that are historical or hypothetical and, when historical, can choose any year between 1987 and 1990, or simply calculate an average of those years. Thus, participating companies are able to optimize their results without violating the reporting rules and criteria.
“Our research suggests that firms are more likely to participate when they have low-cost opportunities to cut emissions and the pressure to participate is higher,” said Lyon. “These companies did not hesitate to take advantage of the loose reporting rules. This proves that, without more rigorous requirements, when presented with the opportunity, companies will greenwash.”In April 2006, the DOE issued a revised set of guidelines for the program. Under the new rules, participants must now report company-wide reductions rather than reporting on only the most favorable projects. Data reported under these new guidelines are still being tabulated and researchers do not yet have access to it. While these changes will make it more difficult for companies to use voluntary reporting of GHG as a form of greenwash, mandatory reporting with consistent standards across all companies is the only real solution to this problem, said Lyon.