Carbon washing

The terminology has changed; the goal remains the same.

“Carbon washing,” yet more difficult-to-decipher phraseology used to describe the approach of corporate entities and products to reduce, or eliminate entirely, carbon emissions. This new carbon jargon is more often than not designed to give the impression that new buildings and products make zero contribution to atmospheric carbon.

Just last month, Aperam South America, Latin America’s leading stainless-steel producer proudly announced that it had become zero carbon, the first in the industry to have done so. In practice, after having neutralised the emission of the entire volume of gases produced in the manufacture of steel and charcoal, the company’s integrated operations with Aperam BioEnergia – a Brazilian outfit – removed an additional “… 33 thousand metric tons of greenhouse gases from the atmosphere.”

Sounds impressive but as an ESG specialist based in Mexico explains, “Statements making ‘zero carbon’ claims are now widespread but do not often stand up to scientific scrutiny. Wordy press releases too often obfuscate truth. Across the region, there is a lack of national regulation to force companies to incorporate sustainability criteria – when they do, the metrics for measuring carbon emissions often differ wildly from company to company and from jurisdiction to jurisdiction.”

“Statements making ‘zero carbon’ claims are now widespread but do not often stand up to scientific scrutiny.”

ESG specialist, Mexico

Certainly, pressure from the Biden administration and from the European Union has given impetus to companies across Latin America to really cement their ESG credentials and reduce their carbon footprint. The codification of international standards and best practice shared by peers has helped.

According to our sources however, it is the public sector that is badly underperforming the private sector in this regard. Many administrations across the region continue to promote the use of petroleum derivatives. Indeed, if governments themselves are failing to comply with environmental commitments, what message does that send out to companies and individuals to follow suit?

Arguably, there are two equally effective options available to instil a long-term sustainability focus in Latin America’s corporate culture. The first is pressure from ‘blue’ and ‘green’ investors, the second is the pressure that comes from eco-minded consumers themselves. Governments such as the one in Mexico need to consolidate the blue carbon market and reduce its fiscal dependence on the state oil entity, Pemex which is a significant contributor to methane emissions.

An environmental official in Colombia explains, “Colombia’s carbon-neutral policy framework is more developed than much of the region. Validation requires a certification process that verifies and accredits those actions aimed at reducing greenhouse gas emissions and the compensation of residual emissions. The framework is guided by relevance, integrity, coherence, accuracy and transparency.”

“Colombia’s carbon-neutral policy framework is more developed than much of the region. Validation requires a certification process that verifies and accredits those actions aimed at reducing greenhouse gas emissions and the compensation of residual emissions.”

Environmental official, Colombia

Achieving carbon neutrality and climate resilience in the mining and energy sector – the region’s largest carbon emitters – in the shortest possible time is probably one of the greatest challenges facing administrations across Latin America. In Colombia, the ministry of mines and energy adopted the “Comprehensive Climate Change Management Plan for the Energy Mining Sector” in 2018. This was updated in 2021 with the purpose of including the different climate change variables in the main regulations and planning instruments of the sector. Other countries across the region are following suit.

“Solid regulatory frameworks are about enabling opportunities for industry to contribute to the compliance of goals related to climate change, and just as importantly to raise awareness, prepare and strengthen the industry in an increasingly competitive business framework at the national and international levels,” adds the environmental official.

Zero carbon matters but for companies to have achievable goals to work towards, coherence and consistency must go hand in hand.

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