Permutable AI is the first member of its kind at ORB. With innovative use of artificial intelligence technology, they are striving to drive transparency, sustainability, and ethical practices in Big Business by revealing the heart of operations. They also help business consultants by providing a toolkit for sussing claims out, such as the Greenwashing Framework discussed in this article written by Talya Stone – CMO at Permutable AI.
Identifying Greenwashing and Forging a Path to Transparency
In the ever-evolving landscape of corporate sustainability, it’s imperative to scrutinise companies that are greenwashing – those employing deceptive tactics to portray environmental responsibility. In this article, we delve into recent examples of claims made by businesses (largely financial institutions) and examine companies that are known for greenwashing using our proprietary framework. Our goal at Permutable AI is to shed light on the specific areas where these companies are either gaining or losing ground in their sustainability efforts.
Screening For Companies That Are Greenwashing
Using our proprietary greenwashing framework, we’ve examined a range of companies to gauge their commitment to environmental responsibility. Here are some of the notable ones, each with their Consistency Section and Communication Section scores.
Apple:
Consistency Section Score: 0.9715
Communication Section Score: 0.9525
Final Score: 0.925
JP Morgan Chase:
Consistency Section Score: 0.8755
Communication Section Score: 0.935
Final Score: 0.819
Scotiabank Chile:
Consistency Section Score: 0.8
Communication Section Score: 0.955
Final Score: 0.764
Invesco Ltd:
Consistency Section Score: 0.82
Communication Section Score: 0.9
Final Score: 0.738
AIB Group plc:
Consistency Section Score: 0.8
Communication Section Score: 0.86
Final Score: 0.688
Bank of Ireland:
Consistency Section Score: 0.8
Communication Section Score: 0.6225
Final Score: 0.498
Diversa Trustees:
Consistency Section Score: 0.698
Communication Section Score: 0.455
Final Score: 0.318
Deutsche Bank:
Consistency Section Score: 0.5
Communication Section Score: 0.565
Final Score: 0.283
BlackRock:
Consistency Section Score: 0.47
Communication Section Score: 0.5375
Final Score: 0.253
Among these, we’ve focused on three companies notorious for greenwashing: Deutsche Bank, Diversa Trustees, and BlackRock. On the flip side, Apple stands out as a frontrunner in terms of sustainability and environmental, social, and governance values.
Negative Ground Truth Examples
Deutsche Bank
In 2019, Deutsche Bank pledged to align with the UN Principles for Responsible Banking and aimed to reach EUR 200 billion in sustainable financing and investments by 2025. However, in 2023, the bank faced allegations of greenwashing its sustainable investment products, which were found to fall short of genuine sustainability standards.
Diversa Trustees
This company claimed to prevent investments in environmentally harmful activities and poor corporate governance. In 2022, ASIC expressed concerns about the broadness of their statements regarding investment screening, leading to a $13,320 AUD fine for potentially misleading consumers.
BlackRock
BlackRock projected that by 2030, the majority of its investments would be with issuers committed to reducing greenhouse gas emissions. However, in 2022, BlackRock faced criticism for continuing investments in fossil fuels, contributing to climate change despite its sustainability claims.
From our analysis, two forms of greenwashing emerge: blatant deception and vague, misleading claims. While Deutsche Bank and BlackRock fall into the former category, Diversa Trustees leans towards the latter.
Consistency Section Comparison
In the Consistency Section, Diversa Trustees, despite its vague claims, achieved the highest score. Although it had a lower impact score, it excelled in local alignment, indicating that its corporate policies closely matched its claims. Deutsche Bank and BlackRock scored lower in this section due to their failure to meet their claimed outcomes.
Communication Section Comparison
Diversa Trustees scored poorly in the Communication Section due to the vagueness of their claims, making transparency and exposure challenging. Although Deutsche Bank and BlackRock also struggled with claim promotion, their more transparent and specific claims improved their scores compared to Diversa Trustees.
Positive Ground Truth Example: Apple
Apple is a solid example of a company with a genuine commitment to sustainability. With Consistency Section Score of 0.9715 and Communication Section Score of 0.9525, Apple’s Final Score is an impressive 0.925.
Apple’s claims are aligned with global targets, company policies, and initiatives. They maintain transparency, and their claims are well-exposed across various platforms. Furthermore, Apple consistently implements innovative, environmentally-friendly practices in its product manufacturing processes. Their consistent efforts in reducing their carbon footprint are evident in every new product launch.
The Fight Against Greenwashing
Using our GreenProof framework developed in collaboration with international regulators, our assessment of companies that are greenwashing and those who are making genuine sustainability claims highlights the critical importance of transparency, clear claims, and genuine commitment to sustainability. While some companies resort to deceptive tactics or vague statements, others, like Apple, set the standard for responsible corporate practices.
As consumers become increasingly environmentally conscious and as new regulations to combat greenwashing come into effect, it’s imperative for businesses to uphold the principles of corporate responsibility and sustainability genuinely. By holding companies accountable for their claims, we can collectively push for a more transparent and sustainable corporate landscape.
In our ongoing pursuit of a greener future, it’s crucial to recognize the efforts of companies genuinely committed to sustainability while also remaining vigilant against those that engage in greenwashing practices. By doing so, we can contribute to a more environmentally responsible world and encourage responsible business practices that benefit us all.
The Path Forward: Transforming Our Framework Into a Universal Tool
Permutable AI is at the forefront of the fight against greenwashing. Our proprietary greenwashing framework has shed light on deceptive practices and showcased genuine sustainability leaders.
Our next step is to secure funding to further develop this framework into a user-friendly product which can screen both companies and investment funds for greenwashing so that all stakeholders, from consumers to investors, can openly access the tool. By making our greenwashing detection tool widely available to all those who would like to use it, we seek to empower individuals and organisations to make informed choices and hold businesses accountable.
As Permutable CEO Wilson Chan states, “We believe that transparency and authenticity in sustainability claims are paramount. Our goal is to turn our framework into a powerful tool that helps consumers and investors distinguish between genuine commitment and deceptive tactics.”
We’re inviting stakeholders, investors, and organisations to join us on this journey towards a more transparent and sustainable future. By supporting the development of our greenwashing detection product, you can play a pivotal role in creating a marketplace where authenticity and sustainability.
If you’re interested in joining us on this journey towards a more transparent and sustainable future, please don’t hesitate to get in touch with us at talya@permutable.ai. Your support for the development of our greenwashing detection product can help create a marketplace where authenticity and sustainability thrive.