Carbonsink-A new chapter in the corporate claims landscape

Companies are pushed to prove their climate action to an increasingly conscious consumer-base and growing cohort of investors who want to know whether their investees can thrive in a rapidly evolving world. With climate performance becoming a key strategic asset, it is clear that companies must become more savvy about communicating their corporate climate action and making climate-related claims that resonate with stakeholders as well as, most importantly, showing their progress as transparently as possible. 

In an age where new regulations, guidelines and heightened public scrutiny are setting new boundaries to what a company can and can’t say, corporate climate action claims can become reputational threats, unless they are carefully communicated. This is originating new and worrying trends, as observed in the 2023 Corporate Claims report by South Pole, world-leading climate company Carbonsink is part of. Despite businesses increasingly backing up their targets with science-based emissions reductions milestones, nearly a quarter (23%) have decided not to publicise their milestones beyond what is mandated, a phenomenon called green-hushing. Furthermore, more and more companies that previously made bold environmental commitments are now, due to the risk of greenwashing, green-reversing, reverting back to the more risk-averse approach of green-hushing.

These trends are concerning as less public-facing communication makes climate action more difficult to assess and scrutinise and could lead to missed opportunities for sectors to work together to decarbonise. Indeed companies are unwilling or unlikely to invest unless they are able to claim credit for their actions by making clear, credible claims that the market supports and which do not bring them under attack for greenwashing.

It is time for climate communications to shift gears. This is particularly critical when talking about the use of carbon credits within climate strategies, where concerns around claims lacking clarity or being misleading have arisen, such as carbon neutrality claims allowing for companies to prioritise compensation over authentic emission reductions. Luckily several frameworks for more refined claims are emerging to help companies credibly communicate climate action within and beyond their value chain, with the goal to add credibility to climate claims and inspire companies to set more ambitious goals. Encouraging a science-based hierarchy of climate action interventions - as in the Voluntary Carbon Markets Integrity Initiative (VCMI) framework - as well as pushing companies to incorporate a commitment to global net-zero emissions - as in the Gold Standard approach - the emerging frameworks are helping companies integrate carbon credits into long-term strategies and consider their carbon impact in the broader context of achieving global climate goals.

Carbonsink and South Pole encourage this change towards increased integrity and credibility in the climate market. First and foremost, companies need to build a robust foundation to make bold claims through ambitious, measurable, and time-bound climate action within and above and beyond their own value chains - an imperative recognised by Article 6.4 in the Paris Agreement. This means that climate claims must therefore be built on solid and holistic climate strategies that clearly show what a company is doing to meaningfully reduce its carbon footprint while helping to scale carbon finance, which is critical to supporting global climate change mitigation and adaptation efforts in parallel. Our new Funding Climate Action claim supports this approach.

These new approaches mark a much needed chapter in the corporate claims landscape to overcome confusion and green-hushing, provide companies with a clear pathway to scaling up climate investment without facing undue criticism and, ultimately increase trust in the sector.