Where Carbon Footprint Reporting Meets Greenwashing

As we forge deeper into 2011, the number of CSR reports from fiscal 2009 and 2010 that cross my desk with headlines boasting corporate enterprise carbon footprint reductions in the 5%-12% range is astounding.

Here’s a quick sample:

While it’s certainly legitimate that these firms have made the operational changes required to achieve the modestly significant improvements in energy efficiency, another factor is probably a more likely driver: a weak macro economic environment.

In Sunday’s New York Times Week in Review section, energy reporter Matthew L. Wald notes that recession in the U.S. has caused carbon emissions to fall. The U.S. Energy Department estimates that carbon emissions peaked in the country in 2005 and will not return to those levels until 2020.

Along with a sluggish business environment, the rise of domestic natural gas supply (gas is 40% less carbon intensive than coal-powered electricity plants) is another reason America’s carbon footprint has flattened.

The connective tissue between Wald’s timely article and the abundance of CSR reports claiming carbon footrpint reductions is this: context — in this case a macro environment of falling national emissions — matters.

Carbon footprint reporting is essentially meaningless unless there are disclosures in the data that can attempt to isolate variables that are correlated with any changes in emission output.

A simplified example: A firm that reports a 15% reduction in its carbon footprint in a year where their revenues fell 17% has not reduced its impact on the environment. Indeed, its operations have released more greenhouse gases into the environment per units of revenue.

We have arrived at the moment in CSR where carbon intensity — units of carbon emitted per units of revenue — should be the de facto aggregated standard for corporate reporting. Carbon foortprinting remains a vital tool to calculate intensity, but normalized data is utltimately more powerful and can be used as a better benchmark to compare across firms and industries.

Moreover, firms that engage in rigorous carbon footprinting but fail to disclose intensity figures can be legitimately accused of greenwashing.

In the next two years, it will be interesting to see how large companies with public carbon footprint commitments respond when their revenues, and likely their emissions, grow.

Image credit by fotdmike under a CC license via Flickr