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Environmental groups file complaint against Chevron for ‘greenwashing’ with US Federal Trade Commission

17 March 2021 Kevin Adler

Earthworks, Global Witness, and Greenpeace USA are jointly accusing Chevron Corp. of producing "deceptive advertisements which overstate investment in renewable energy and its commitment to reducing fossil fuel pollution."

The complaint, filed on 16 March with the US Federal Trade Commission (FTC), came a week after Chevron announced it was updating its Climate Change Resilience report as it had reached its 2023 carbon intensity goals three years in advance. In this update, the company set lower targets for carbon intensity, methane leaks, and flaring (see IHS Markit article here).

If the FTC conducts an investigation and finds in favor of the claims, it could result in removal of Chevron's statements cited in the complaint and a required dissemination of corrections. Financial penalties also could be imposed, the groups said.

In the complaint, the groups say that Chevron "is consistently misrepresenting its image to appear climate-friendly and racial justice-oriented, while its business operations overwhelmingly rely on climate-polluting fossil fuels, which disproportionately harm communities of color."

The groups criticized Chevron's updated climate plan for focusing on carbon intensity rather than a specific reduction in greenhouse gas emissions and for omitting from that plan a comprehensive environmental justice program to reduce "pollution and toxic hazards for communities living near its US facilities." The groups also called the new promised investment in carbon reductions "negligible," while saying that Chevron's spending in the area is skewed towards "unproven technologies like carbon capture."

In a response provided to IHS Markit, Chevron spokesperson Sean Corney called the allegations "frivolous," and he pointed to the more than $3 billion the company has allocated for energy transition and related emissions reductions from 2021 through 2028. The company has stated that it supports the Paris Agreement to limit global warming and "well-designed carbon policies applied across the widest possible coverage of emissions," Corney wrote.

"We engage in honest conversations about the energy transition. We believe the future of energy is lower carbon and are working to help the world achieve that goal. We are taking action to reduce the carbon intensity of our operations and assets, increase the use of renewables and offsets in support of our business, and invest in low-carbon technologies to enable commercial solutions," he added.

He did not comment on the environmental justice complaints.

IHS Markit Global Head of Strategic Governance Advice Christine Chow said that investors looking at energy companies often use multiple measures of their environmental progress. "Fund managers use carbon intensity alongside absolute emissions precisely because [they] understand that not all industries are in a position to reduce absolute emissions, especially when their businesses are expanding. One example is TSMC, the global foundry business," she said, adding: "[At IHS Markit], we use a range of intensity measures, with different denominators such as production capacity or revenue based on which sectors we are monitoring."

First petition of its type

In 1992, the FTC created a set of general principles called the "Green Guides," to protect consumers from misleading environmental marketing claims, also known as "greenwashing."

Since their inception, the Green Guides have been cited by the FTC in warning letters to consumer products companies for improper use of terms such as "biodegradable" and "recyclable," and for improper representations about green certifications their products have received.

Earthworks, Global Witness, and Greenpeace USA said this complaint would be the first use of the Green Guides against a fossil fuel company for allegedly misleading consumers on the climate and environmental impact of its operations.

They argued Chevron's social media promotions, television advertisements, and other digital ads, violate the Green Guides by using terms such as "reducing emissions intensity," which they called "deceptive jargon" designed to mislead consumers. They alleged that Chevron's ads "imply that Chevron's business operations do not harm (and even help) the environment, despite numerous environmental disasters," and the company has misrepresented the benefits of renewable natural gas, which it is testing in California pilot programs.

They also took issue with Chevron's statement that it "produces 'ever-cleaner' or 'clean' energy," because they say that it has been spending less than 0.2% of its capital expenditure on renewable energy sources. The groups estimate that between 2010 and 2018 Chevron spent $26 million per year, on average, of its $13 billion average annual capital expenditure on low-carbon energy sources. They did not comment on Chevron's new commitment, as referenced by Corney, for $3 billion in energy transition spending from 2021 through 2028.

"The world's second-biggest polluter shouldn't be allowed to advertise that they're good for the environment," said Josh Eisenfeld, corporate accountability campaigner at Earthworks, in a written statement. "Our fieldwork shows Chevron is regularly polluting methane — a greenhouse gas 86 times more potent than carbon dioxide. Chevron's plan to convince the public and investors that they're fixing this problem, when they're not, is dishonest and dangerous."

Added Anusha Narayanan, climate campaign manager at Greenpeace USA: "Chevron spent decades sowing doubt about the science of climate change. Now, in the face of widespread public support for climate action, the company is misrepresenting its role in the climate crisis and deceptively casting itself as an ally."

Reaction

Investment bank Federated Hermes said that the complaint is indicative of the increased attention that will be paid to climate change commitments by corporations.

"The complaint made to the US FTC about Chevron shows the growing legal and reputational risks faced by companies if they are perceived to be taking insufficient action on climate change. We expect to see such risks increase for companies that are not reducing greenhouse gas emissions at a pace required to achieve the goals of the Paris Agreement on Climate Change," said Tim Goodman, engager for EOS at Federated Hermes, in an email to IHS Markit.

"Even if this action is not successful, we expect further action against Chevron and other companies with high emissions or those which are not reducing their emissions quickly enough. We expect companies to demonstrate that they have transition plans in line with the Paris goals which will lead to net-zero emissions by 2050, or sooner."

Posted 17 March 2021 by Kevin Adler, Editor, Climate & Sustainability Group, IHS Markit

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