Companies May Rely Heavily on Carbon Offsetting
Leaked drafts of upcoming EU legislation suggest that companies could largely depend on carbon offsetting to substantiate their claims of being climate-friendly. Critics argue this could lead to double standards, where companies and the products they sell are held to different climate action benchmarks. The proposed Green Claims Directive aims to combat greenwashing but raises questions about its effectiveness given the reliance on carbon credits.
Belgium’s Push for Compromise
Belgium has made a final attempt to establish an inter-governmental position on the Green Claims Directive before passing the EU Council presidency to Hungary in July. The central debate in the negotiations is the extent to which carbon offsetting should be allowed to support corporate climate claims. While the European Parliament advocates for limiting offsetting to “residual” emissions, the latest draft suggests member states might support broader use of certified carbon credits.
Inconsistencies in Environmental Claims Rules
The directive could create inconsistencies with other EU regulations on environmental claims for products and services. These rules, adopted in March, prohibit climate-friendly assertions based on carbon offsetting for items ranging from bananas to budget flights. This discrepancy could result in situations where companies are barred from labeling products as “low carbon” but can still advertise their overall corporate commitment to net-zero emissions.
Criticism from Environmental Groups
Environmental groups have criticized the directive’s reliance on carbon offsetting. Margaux Le Gallou from the Environmental Coalition on Standards argues that offsetting does not truly reduce emissions but merely “greenwashes” them through accounting tricks. She stresses that the directive should align with scientific evidence and EU climate commitments by banning the use of carbon credits for all but residual emissions.
Impact on Petroleum Firms and Future Negotiations
The directive also introduces a definition that includes scope 1, 2, and 3 emissions in calculating a company’s total carbon footprint. This could impact petroleum firms, whose climate pledges often focus on scope 1 and 2 emissions—direct emissions and those from consumed energy. The Belgian presidency aims to have the compromise text adopted by senior diplomats and environment ministers in June, with negotiations with the new European Parliament likely starting in mid-September.
SOURCE: Ref Image from Yahoo News
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