Net Zero Matrix and the curse of Greenwashing
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Net Zero Matrix and the curse of Greenwashing
The Background
Jon Curtis told the attendees of the Business Sustainability Group that to date, global efforts to reach a state of net zero by 2050 and to peg rising temperatures by a maximum of 1.5˚C for that goal to be possible, are currently way off track.
It had been calculated that the amount of carbon dioxide we are allowed to burn between now and 2050, to keep within the 1.5% threshold, was 2890 billion tons worldwide. “If only that amount was released, then we would go from a 1.2˚C increase in temperature to 1.5˚C,” he advised. But he said that since that calculation had been made, 2390 billion tons had already been produced in the atmosphere. “If we continue at the same rate, we hit the brick wall by around 2030.”
He said the evidence was irrefutable. It was now a question of the world’s economies trying to mitigate against the implications of a continuing rise in temperature.
However, the problem was being kicked down the road, he said. And, despite targets being set nationally by individual countries and organisations, such as the Science Based Targets Initiative (SBTI), who were encouraging large multi-national corporations to enter into voluntary net zero targets, there remained a lack of standardisation or consistency in the disclosure of emission reduction levels.
“The purpose of Net Zero Matrix is to provide an unbiased view of the actual progress made towards a sustainable earth. The organisation’s mission is to build the largest carbon registry, which is universally accessible and a key reference point,” he explained.
Jon said that although around 80% of companies globally were making efforts to reduce their own carbon footprints (CFPs), because there was no official register or agreed form of standardisation, the issue of greenwashing was endemic. (Greenwashing is the disinformation released by an organisation making out it is being environmentally responsible, to create a good public image).
How do companies measure carbon footprint?
He said that carbon footprint consisted of 3 components – the first caused by our direct activities (Scope 1), the second being the energy you consume to conduct your business (Scope 2) and the third and most controversial – known as Scope 3 – being the supply chain. “What Governments have done post the Paris Agreement and Cop26 is to lean on companies to ask them to calculate their entire Scope 3 supply chain – the idea being that big bully boy companies get their suppliers to be more sustainable,” Jon told the meeting.
“But those companies might be reporting it themselves, so there is double counting. Or the suppliers might pass it off to the big companies, so there is zero counting.”
He said reaching net zero targets by 2050 “was also based on assumptions”. Nobody knew how much energy companies were producing from renewable sources – something that was also true for the Isle of Man. “There’s all sorts of monkey business going on around greenwashing,” he declared.
The Carbon Register
Jon said that a lot of companies were trying to do their best to be sustainable, but Governments, citizens and businesses should be all working in a congenial way, in the best interests of our children and grandchildren. So, it was important to build a verifiable database, which was the purpose of the carbon register he had created.
He said that of the 25,000 companies already on the register, over 5000 had CFP progress data, 1200 of whom had a formal target.
Nevertheless, although his own group of companies had been carbon negative since 2020, he questioned: “How do we validate that? That is what I am trying to do with the data register – to build an ecosystem measuring carbon footprint that can be verified.”
He said that even information about the Island’s carbon footprint was unclear. One recent Government report had noted the figure was 840 tonnes, whilst another claimed it was as little as 682 tons, he revealed. “When I asked the Government about this, I was told it was down to a miscalculation of household energy use. But, if they are saying it has been reduced by 20%, how can this be verified?”
Electricity generation was where we could be looking to make early gains in reducing carbon footprint on the Island. The new interconnector coming to the Isle of Man from the UK would be a positive step, to bring renewable energy to the Island but, “we need solar farms and wind turbines, even though some people aren’t going to like it,” he said.
Renewable Energy Certificates
He said big companies like Scottish Power and British Gas were increasingly involved in producing renewable energy and had the resources to build out renewable energy projects. But could it be proved to be green? Jon said the introduction of Renewable Energy Certificates would be a good starting point and these would happen very soon. He also championed the concept of GECKOs – Green Energy Certificate of Known Origin.
But, for the time being, greenwashing remained a big issue and he cited the EU as being one of the biggest greenwashers of all!
Carbon Budget
He said he wanted to introduce the concept of a carbon budget. The SBTI had come up with a series of mechanisms that companies need to produce to start moving towards their reduction targets.
But he said companies were guessing what their carbon footprints were and simply putting these figures into their company reports “because institutional shareholders want to invest in businesses which are sustainable.”
He said his own company had been monitoring this activity very closely since 2018, when only around 5% of larger companies were reporting this type of information. Since then, there had been an explosion of companies reporting this – around 80% in total.
Currently everything was being done on trust, he said. Climate change now featured right at the top of corporate reports, but it was being self-reported and not officially validated. Data was all voluntary and there wasn’t a body at the moment that regulated the information being published. “Greenwashing is so endemic – I challenge any company to prove that they are not greenwashing one way or the other. We can see what is happening,” he declared.
But things were about to change. From now on, the market for carbon auditing was going to be explosive, he predicted. “Financial auditing in the future isn’t just going to be about auditing, it’s going to be about carbon as well. Carbon reduction is going to become part of financial reporting on the balance sheet,” he forecasted.
He said it would be shareholders, investors and government regulators who would increasingly want to know about carbon footprints. As far as the Island was concerned, he said the FSA would probably need to do more in terms of centralising information around carbon footprint.
“At the moment there is no standardised reporting. For companies to get onto that curve, they will have to prove that they are using renewable energy,” he predicted. One example would be demonstrating that they were using electric vehicles. There would be tighter controls in future for both large and small companies, which could place extra strain on SMEs, he said.
The auditing of carbon data was in its infancy, but businesses of all sizes could be in for a shock in the future. “When the auditors come in, how far down the food chain are they going to go?” he questioned.
He said his company were monitoring all these companies, producing their corporate reports and taking the data from an unstructured format into a database. “Then you can do something with it. You can look at benchmarks, drill down into supply chains within particular industrial classifications, to see which is the best-performing company in a certain sector,” he said.
This was the essence of a carbon register. He said his team was scanning the internet for information. In the reports they were getting, this mainly consisted of Scope 1 and 2 reporting. But, in the last year, more and more companies were reporting under Scope 3, following pressure from shareholders, he commented, adding that companies now had specialists on the boards of directors giving advice on accurate CFP measurements.
In future, especially with AI, Jon said it would become easier to identify greenwashing. “But you can only do it, if you’ve got the data all in one place.”
Net Zero Matrix and the Blockchain
He said the Net Zero Matrix was to build a carbon register of IOM registered businesses. To date, there was classified data on around 5000 companies, including information on their electricity usage.
“When we are loading the data, we go back and ask the companies to verify that the data is correct,” he said, adding that they were currently creating a series of certificates for each registered business.
Nevertheless, for the time being, there were shortfalls in the validity and security of the information coming forward. This was because everything was being generally prepared on an excel spreadsheet by company staff, meaning it was on a relational database which could be changed by anybody – including hackers - and was not immutable.
He said the solution to creating immutable information – that could be respected worldwide by all countries – would be to put the data on the blockchain.
“Data in an excel spreadsheet can be altered whereas data in a blockchain can’t be changed,” he said. “So, the final step in what we are doing is tokenising the carbon reduction and we’re putting in the blockchain. Whether the information is right or wrong, is not for us to decide. It is for other people to decide whether companies have acceptable reporting and whether it can be believed.
“What we are trying to do here on the Island is to build an ecosystem so that whatever is reported cannot be altered – using blockchain technology,” he declared. This would be significant for carbon auditing in the future.
The key was that information could be validated by people who could agree that the data was accurate and that it was decentralised, democratic and could be trusted (unlike the Cloud) – and available to all within seconds of being loaded onto the blockchain.
“It means even within a country you could have a carbon register, but large companies all over the world need to have a single place where all the information can be collected. Any interested party, an analyst or mathematician, only has to go to one place and it’s all there.
“Everything we are doing is to reduce the amount of greenwashing at a business level,” he said.
Practical steps we can take:
Did you know that the carbon dioxide released from rotting trees (30 billion tonnes a year) is more than the entire carbon footprint of our activities. One of the reasons that trees die prematurely is when they get smothered in ivy. Putting a nick in the ivy on a tree can significantly prolong the life of an otherwise healthy specimen.
Get a washing line – instead of drying clothes in a drier (extra electricity use), if you have a garden, erect a washing line and let the wind do the drying for you. If clothes still feel a little damp, finish the drying in a drier – but at least you will have saved a certain amount of electricity in the meantime. Good for the planet!
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