Utilities Reject 'Greenwash' Claims

[11.13.07] It's hard for consumers to buy almost any product these days without being bombarded by information about the company's "good works." Whether it's an oil or automobile company caring for the environment, or a coffee shop's commitment to fair trade, the image of a "caring" company is everywhere.

But how much of it is real and how much of it is just for PR purposes?

That question is at the heart of a study published by The University of Michigan's Erb Institute for Global Sustainable Enterprise. Greenhouse Gas Reductions or Greenwash? looks at utility companies that participate in the Department of Energy's Voluntary Greenhouse Gas Registry to determine if their claimed CO2 reductions equal their actual reductions. ("Greenwashing" is when a company purports to be environmentally friendly, but its actions indicate the opposite.)

The study compares reductions that the utilities supplied to the DOE registry with data they're required to submit to the Federal Energy Regulatory Commission, according to co-author Thomas P. Lyon. He and co-author Eun-Hee Kim conclude that companies didn't tell the whole story.

The study looked at the program, known as section 1605b of the Energy Policy Act of 1992, from 1996 to 2003. That was when reporting requirements were at their loosest. It only asked that companies highlight specific programs. It didn't require them to report overall reductions--just the reductions through certain programs. That means utilities could show their CO2 reductions were reduced because of, say, a wind power station, but they didn't have to show the increase in emissions because of a newly built coal plant.

The DOE says it strengthened the reporting rules last year, but some of the companies say they haven't yet received the software to help them comply.

A DOE spokeswoman referred Forbes.com to the Energy Information Administration Web site for details of the changes, and said that the revised guidelines would "introduce new methods for U.S. businesses and institutions to calculate entity-wide emission reductions. Under this program, U.S. companies submit detailed, annual reports on their emissions and reductions of greenhouse gases, and these reports will become part of the public record."

The utility companies and those, like the Erb Institute, who monitor their environmental performance, will obviously have a close interest in how different these new guidelines are from the current procedure.

"They report on a project level, so they chose to tell you good things, but they don't tell you the bad," says Lyon, a professor of sustainable science, technology and commerce and of economics, public policy and natural resources at the University of Michigan. "We weren't trying to call out the worst companies," he says. "We're trying to show that this is pretty much a worthless number."

The companies don't agree. In fact, many said that in writing this report, Lyon does exactly what he claims the companies are doing: spin information. They say that while the program may have flaws they are abiding by its guidelines.

"The DOE makes very clear that this was never intended to be a comprehensive program," says Pat Hemlepp, director of corporate media relations at American Electric Power (nyse: AEP - news - people ), which serves parts of the south and the Midwest. "It's an opportunity for us to show examples of things we and others are doing. It's an idea sharing thing."

Hemlepp continues: "When we elected to participate in this, we made it clear we're reporting on specific projects, and we also made it clear that our emissions are expected to grow throughout the rest of 1990s, which they did. The funny thing is, he makes this seem like this is something companies are pointing to. The only time I've ever mentioned this is when I'm talking about this to a reporter who is asking about it."

Not surprisingly, all the utility companies included in the report that were contacted by Forbes.com said virtually the same thing. "The authors of the University of Michigan show an apparent lack of understanding about what these reports are designed to measure," says Mark Durbin, a spokesman for First Energy Corp., which serves areas of the Midwest. "The DOE program reflects the voluntary steps utilities have taken over the years to help reduce carbon dioxide and other greenhouse gases. The authors of the study are drawing conclusions that just aren’t accurate, since nowhere in the DOE voluntary program were we asked to "net" out any CO2 increases we incurred by burning more coal."

At Entergy (nyse: ETR - news - people ), a utility that serves several southern states, officials thought the program was inefficient from the beginning. "This points out where voluntary systems don't work," says Brent Dorsey, director of corporate environmental programs at Entergy. We've been a strong advocate of stronger reporting regulations."

Lyon counters by saying that's just an excuse. If they knew it was a flawed system, why participate? "Companies are saying 'We knew this was a bad system, but we couldn't stop ourselves from taking advantage of it. You've got to make a rule to stop us from rigging the game otherwise we just can't stop ourselves.' "

Here is the full article.