Greenhouse Gaslighting

Companies know that customers, investors, and regulators are watching what they do on climate. That is why they have invested so much in glossy sustainability branding and ambitious climate rhetoric. But a climate claim is only meaningful if a company backs it up with real emissions cuts. 

A 2024 EU report found that 53% of corporate “green claims” gave vague, misleading or unfounded information. Companies must stop treating these claims as marketing techniques to make business-as-usual look like climate action. Behind each claim a company makes, there must be public, verifiable evidence of emissions cuts. In this context, companies should not present avoided emissions, offsets, credits, certificates, mass balance attribution, book-and-claim systems, or intensity-only metrics as equivalent to real emissions cuts.

To claim environmental progress, companies must account for what actually goes into their products: what inputs are used, where they came from, and what impacts were created along the way. Across polluting sectors, companies increasingly make traceability more challenging through complex accounting systems such as mass balance accounting and environmental attribute credits. This allows companies to label their products “green” without proving that those products contain fossil-free or recycled inputs.  

At a minimum, companies that are serious about climate progress must reject mass balance accounting systems that allow environmental claims to be disconnected from the physical inputs in a product. Mass balance allows companies to mix inputs throughout the supply chain and then allocate credits to a final product. In the plastics context, ECOS has warned that mass balance rules risk failing to reduce virgin plastic use. That means more fossil-fuel emissions and more plastic pollution in increasingly fragile ecosystems. 

Corporate engagement in standards processes should be transparent and focused on absolute emissions reductions, not loopholes that preserve business-as-usual. Companies must align their advocacy, as well as their business strategies, with their climate commitments. InfluenceMap’s LobbyMap framework offers a starting point for corporate engagement, including science-aligned advocacy, strategic engagement, and addressing the indirect negative influence of industry associations. 

Standards should make environmental impact and climate progress easier to understand, not easier to manipulate. Across polluting sectors, companies use complex accounting systems to turn partial progress into sweeping claims. 

Standard-setters have a responsibility to draw bright lines around what is real environmental performance. Rules should distinguish between real emissions cuts versus market-based and accounting mechanisms that create the illusion of progress. These tools are not interchangeable, and standards should not allow companies to present them as if they are. ISO’s Net Zero Guidelines already recognise the need to address value-chain emissions reductions separately from avoided emissions, removals, offsets, credits, certificates and other accounting instruments. That distinction should be strengthened and standardised across standard-setting frameworks.

At the same time, the major standards-setting bodies,  including the Greenhouse Gas Protocol, SBTi, ISO, and ISSB, should work toward greater alignment around the highest-integrity approaches to climate accounting and claims. Fragmented or inconsistent rules create opportunities for selective reporting and regulatory arbitrage, allowing companies to choose the weakest interpretation rather than the most credible one. Harmonization should raise the integrity floor across frameworks, not dilute ambition to achieve consensus.

The process for writing standards directly influences what ends up in the final text. When rules are negotiated behind closed doors, shaped by industry insiders, or justified with unpublished evidence, the public is left guessing whose interests the standards serve. That weakens trust, widens loopholes, and allows companies to treat participation in standard-setting as a branding exercise rather than a public-interest responsibility. 

To create trustworthy rules, standard-setters must ensure full transparency around decision-making processes and the evidence used to justify key outcomes. Consultation responses, technical working group membership, voting procedures, conflict-of-interest declarations, and decision rationales should be made public by default. The recruitment and composition of technical committees should also be transparent, including clear information about who is represented, how participants are selected, and whose interests may be underrepresented. Wherever possible, meetings should be open to observers or recorded and published to improve accountability and public scrutiny.

Transparency will not solve every problem, but it makes corporate capture harder, strengthens public trust, and helps ensure standards serve the public interest rather than narrow commercial priorities.

Environmental standards cannot credibly prevent corporate behaviours that undermine their goals if the companies most affected have undue influence over how those rules are written. of the game. Industry expertise has an important role in standards development and revision, but standard-setters must guard against the real threat of industry capture. To do this, standard-setters need governance systems that identify and manage conflicts of interest. Protecting the public-interest purpose of the standard requires governance systems that identify, manage, and mitigate conflicts of interest throughout the standard-setting process.

To achieve this, standard-setters should adopt, publish, and enforce robust conflict-of-interest policies that apply not only to participants in technical committees and decision-making bodies, but also to funders and sponsoring organisations. Standard-setters should also establish clear principles and due diligence processes around funding sources to ensure financial relationships do not compromise independence, credibility, or public trust.

At the same time, standard-setting processes should ensure balanced stakeholder representation and support equitable participation from underrepresented groups, including civil society organisations, affected communities, workers, and representatives from lower-income countries. Without meaningful diversity in participation, standards risk reflecting the interests and assumptions of the most well-resourced actors rather than the broader public interest they are intended to serve.

To effectively tackle greenwashing and ensure a level playing field, we need to move from voluntary initiatives to regulated requirements for climate claims. Holding companies accountable is a critical role of national regulators and judicial bodies. They should use their authority to investigate and act against false and misleading green claims. 

Many regulatory and consumer watchdog authorities have outlined the important role they play in corporate accountability. The Australian Competition and Consumer Commission, or ACCC, says that environmental claims must be truthful and accurate, with specific mention of greenwashing threats. The UK Competition and Markets Authority warns that misleading environmental claims distort consumer decision-making and give an unfair competitive advantage. Regulators and courts should treat misleading green claims as a serious market integrity issue, not a minor communications problem. When companies profit from claims they cannot substantiate, they should face consequences.

Companies and industry coalitions have tried to position insetting as a way to reduce emissions and scale the adoption of technologies for decarbonization. Insetting refers to interventions within a company’s own supply chain that the company can turn into sweeping product-level claims. One form of insetting that is rapidly gaining industry attention is mass balance accounting. 

According to its proponents, mass balance is a bridge to more sustainable supply chains and a way for companies to support early markets for clean inputs. In reality, mass balance is a tool for companies to claim progress without making any substantive changes to their supply chains. 

Rather than requiring companies to prove their final product physically contains its advertised inputs in the amount that a company claims — for example, “100% bio-plastic” — mass balance allows companies to mix inputs in the production process and allocate their attributes as credits. Under loose frameworks for mass balance accounting, a company can move its credits across products, batches, production sites, and even time periods. As a result, a company can give its product a “green” claim even when that claim is not supported by what is physically present in that product. 

The result of this accounting trick is a broken link between environmental claims and real-world change. A company can market a product with bold green claims simply by reallocating credits from somewhere within its supply chain, rather than investing in backing up its product claims with real-world changes. In theory, mass balance accounting could allow a company to enhance its low-carbon claims even as its actual use of lower-carbon inputs stays flat or falls.

There are higher-integrity alternatives. Physical segregation keeps cleaner and fossil-based materials separate. Controlled blending allows mixing while keeping claims tied to the actual physical share of cleaner inputs in the product. In both cases, stronger claims require real changes in production. Mass balance does the opposite: rather than changing what goes into a product, it changes what companies can say about it.

The case for carbon offsets has collapsed under scrutiny. Whereas companies sold offsetting as a practical way for industry to take responsibility for hard-to-abate emissions, offsets instead gave companies a blank check to keep polluting and paying for dodgy emissions reductions elsewhere.

In 2025, a peer-reviewed study in the Annual Review of Environment and Resources found that widely used offset programmes overestimate their climate impact, often by a factor of five to ten or more. The review identified persistent problems with additionality, leakage, double counting, environmental injustice, verification, and permanence, and concluded that many popular offset project types have “intractable” quality problems. A 2024 Nature Communications article offers a similarly grim assessment, concluding that, based on a sample of more than 2,300 carbon mitigation projects, less than 16% of carbon credits represented real emissions reductions. 

These shortcomings go to the heart of the offsetting model, and demonstrate that the failure of carbon offsets is not just about a few bad projects. The Guardian’s reporting captures how some projects generate credits for emissions reductions that would have happened anyway, while others rely on forests or land-based carbon storage that can be reversed by fire or other natural disasters. There are examples of projects that protect one area of land or forest while pushing pollution or deforestation elsewhere, and other examples of double-counting where buyer and seller claim the same benefit from a given project. 

For Action Speaks Louder, the problem goes beyond the poor quality of offsets. Offsetting is dangerous because it changes the story a company can tell about its climate and environmental impact without requiring the company to make any real emissions cuts. Offsetting lets companies use accounting tricks to manufacture climate progress, making it harder for consumers, investors and regulators to confirm whether a company has actually transformed its operations and supply chain. 

Companies can and should invest in infrastructure and supply chain decarbonisation, but that critical investment cannot be used to claim emissions reduction that has not actually occurred. For standard-setters, there should be a clear message that offsets, credits, and avoided-emissions claims will not be treated as equivalent to real emissions cuts. 

Companies, industry groups, and some governments increasingly use vague terms like “clean energy”, “low-carbon energy”, or “lower-emissions energy” to market energy systems that still depend on fossil fuels or carry significant environmental harm. These labels are often used to justify continued investment in gas, coal with carbon capture and storage (CCS), large-scale biomass, or nuclear power under the banner of climate action. By broadening the definition of “clean” energy, companies can present incremental emissions reductions or speculative future technologies as equivalent to a genuine transition away from fossil fuels.

Supporters of these broader definitions argue that they provide flexibility and support a more “pragmatic” energy transition. In practice, they weaken climate standards and blur important differences between energy sources. Fossil gas still produces substantial greenhouse gas emissions across its lifecycle, including methane leakage. Coal with CCS remains costly, technically uncertain, and dependent on continued coal extraction and combustion. Biomass energy can drive deforestation, biodiversity loss, and significant lifecycle emissions, while nuclear power raises unresolved concerns around radioactive waste, environmental risk, and long development timelines. Grouping these energy sources together with wind and solar obscures major differences in environmental impact and climate performance, while allowing companies to market harmful activities as part of a “clean energy transition”.

There are higher-integrity alternatives. Standards and climate frameworks should use clear, specific language that distinguishes renewable energy from fossil-based or environmentally damaging energy sources. Renewable energy should refer to sources such as wind and solar that generate energy without ongoing combustion, extraction, or significant lifecycle emissions. If standards discuss transitional or lower-emissions technologies, they should do so transparently and separately, rather than folding them into misleading “clean energy” categories. Strong definitions matter because they shape investment, policy, and public understanding of what a credible energy transition requires.

Unbundled Energy Attribute Certificates, or EACs, are the accounting mechanism behind many weak environmental claims. There are many types of EACs. Renewable energy certificates (RECs) and Guarantees of Origin (GOs) are rapidly gaining momentum in corporate climate reporting. These instruments allow companies to separate the environmental attribute of renewable electricity from the electricity itself. In practice, a company can continue drawing power from a local, fossil fuel-heavy grid while purchasing a certificate” linked to renewable energy generated somewhere else in order to claim lower emissions or “100% renewable” energy.

EACs create the kind of loophole Greenhouse Gaslighting is designed to expose: a company claims improvement before any meaningful real-world progress has occurred. They change the accounting rather than the underlying energy system. In the case of electricity, companies can use unbundled EACs to make sweeping claims about decarbonisation without materially changing how or where they source their electricity.

The risks of this false solution are not hypothetical. According to a study published in Nature Climate Change and initiated by GHG Protocol, nearly half of REC-backed company commitments did not result in real emissions reductions. When REC-based reductions were removed, the companies’ 2015-2019 Scope 2 emissions trajectories were no longer aligned with a 1.5°C emissions pathway. 

The real solution is stronger electricity accounting and stricter rules for certificate systems that separate environmental claims from physical energy use. Companies should disclose both location-based and market-based electricity emissions, the type and quality of certificates used, whether certificates are bundled or unbundled, where and when the electricity was generated, whether certificates are additional and retired, and whether they are deliverable to the same grid where electricity is consumed. Unbundled EACs should not be treated as proof that a company’s operations are powered by clean energy in the real world.

More broadly, standard-setters must ensure that environmental claims are backed by genuine operational changes rather than accounting mechanisms that detach products and corporate claims from their real-world emissions impacts. 

The Fossil-Fuel Industry has tried to present the E-ledger approach as a breakthrough in carbon accounting. Under this model, products are assigned an “E-liability” representing the emissions embedded in them, which is then transferred from seller to buyer as goods move through the economy. Supporters argue this creates more accurate and auditable product-level emissions data.

The challenge the E-ledger approach seeks to address is real. Companies need better ways to understand the carbon intensity of the goods and services they buy and sell. However, the model also creates a significant risk: it allows companies to sidestep responsibility for comprehensive corporate emissions accounting. 

The World Resources Institute, (WRI) warns that E-ledgers could encourage companies to pass emissions liabilities down the value chain rather than reduce emissions across it. This creates a loophole where companies can shift responsibility to customers at the point of sale instead of addressing the emissions tied to their own business models.

This weakness is particularly concerning in sectors where downstream emissions account for the largest part of a company’s climate impact. For oil and gas companies, for example, emissions from sold products are central to their overall footprint. An accounting system that enables companies to transfer or minimise responsibility for those emissions reduces pressure for meaningful transition and risks obscuring the true scale of corporate climate impacts. The E-ledger approach also raises concerns around removals and offsetting. The E-ledger Institute proposes that verified removals, or “E-assets,” could be credited against emissions liabilities to support net-zero claims. WRI warns that, without strict limits, companies could theoretically offset all liabilities through removals rather than decarbonise their operations and value chains.

A credible solution to product-level emissions accounting should strengthen corporate accountability, not replace it. Standards should support better supplier data, stronger traceability, and more transparent value-chain reporting. They should not allow companies to transfer climate responsibility down the supply chain or neutralise it through accounting mechanisms and removals claims.