GreenWatch: Al Calls out Greenwashing Companies

Artificial intelligence is discovering which companies are walking the sustainability walk, and which ones are just talking.

By Seabright McCabe, SWE Contributor

The 2021 United Nations Intergovernmental Panel on Climate Change report is unequivocal: Climate change, with its historic heat waves, droughts, wildfires, and floods, is directly caused by humanity’s generation of greenhouse gases. It’s not years in the future; it’s happening today — and rapid mitigation is now the goal.

As more institutional and individual investors seek out sustainable companies, it’s difficult to compare what a company claims with what it actually does — to discover the truth in the blizzard of information and promotional spin known as greenwashing.

GreenWatch, an algorithm-based tool developed at University College Dublin (UCD), is inspired and funded in part by Science Foundation Ireland, whose call to action, “AI for Societal Good,” invites teams to solve important challenges with artificial intelligence.

“GreenWatch aims to detect greenwashing companies, in order to better measure progress toward the UN’s sustainable development goals,” Georgiana Ifrim, Ph.D., associate professor at UCD’s School of Computer Science, said. “Its machine learning capabilities drill through huge numbers of company disclosures about their progress toward these goals, looking for indicators that can show a company’s claim is not what it seems.”

Andreas Hoepner, Ph.D., of UCD’s Lochlann Quinn School of Business, assembled a team that covered aspects of sustainable finance, focusing on climate change and climate change mitigation, and also gained support from Sustainable Nation Ireland, and Pat Cox, president emeritus of the European Parliament. “Dr. Hoepner’s team invited me to advise them on the AI component,” Dr. Ifrim continued. “We were given funding and three months to formulate a more concrete idea of how to approach a possible solution for this problem of climate change mitigation through the detection of greenwashing.”

flow chart illustration for greenwashing data
Following the data: This flow chart illustrates the extremely high likelihood of greenwashing among companies making strong to absolute sustainability claims. (Credit: GreenWatch)

Quantifying greenwashing

The term “greenwashing” covers a lot of ground, because it’s being done to some extent by every industry in the world, from fast fashion to food packaging to plastics and fossil fuels.

GreenWatch defines the practice as “selective disclosure, symbolic management, deflection of public attention and the disconnect between claims made by companies and their lobbying and investment activities — ranging from slight exaggeration to complete fabrication.” For example, if a utility in the United Kingdom converts to burning wood pellets instead of coal, it could be spun as a sustainability initiative. But how sustainable is it, when the wood pellets are obtained by clear-cutting a forest in the United States, then exported at huge cost and carbon footprint? Stating that a process is sustainable when it isn’t, is greenwashing.

“Once we had a quantifiable way of describing what greenwashing is, we developed a data pipeline, together with algorithms that would work effectively in three stages,” Dr. Ifrim explained. “There are companies that the World Economic Forum Sustainability Index, Morgan Stanley Capital International and the like have identified as sustainable — so collecting data on those came first.”

Meanwhile, data analysts trained in environmental sustainability focused on press releases. “We also had computer science undergraduates from UCD scraping the internet for press releases and reports on these companies, categorizing the type of claims they make,” Dr. Ifrim said. “For example, a company can make a relative claim, a modest claim, or a strong or absolute claim about its performance on climate change mitigation and sustainability.

“We contrast the strong claims with the company’s actual performance on reducing greenhouse gas emissions,” she continued. “This was our objective, hard indicator of what a company is actually doing versus what they report to the public.”

Georgiana Ifrim, Ph.D. headshot

“We learned there are a large number of companies making absolute claims that just don’t stand up when contrasted with the United Nations Environment Programme’s call to reduce greenhouse gas emissions by 7.6% year on year, which is absolutely what they should be doing.”

– Georgiana Ifrim, Ph.D., associate professor, School of Computer Science, University College Dublin

From green champions to climate deniers

After data is collected, GreenWatch sorts companies into categories, based on the types of claims they make. Those that tend to make relative or modest claims are more likely to be green leaders, hidden green champions, or green incrementalists. And the opposite bears out: The more absolute the claim, the more likely it is that a company will land in the greenwashing, green apathy, or climate denier categories. “We learned there are a large number of companies making absolute claims that just don’t stand up when contrasted with the United Nations Environment Programme’s call to reduce greenhouse gas emissions by 7.6% year on year,” Dr. Ifrim said. “Which is absolutely what they should be doing.”

GreenWatch’s initial findings are beginning to identify the culprits: A whopping 95% of analyzed sustainability claims made by the communications services industry, including telecommunications and media, showed a high or probable likelihood of greenwashing. The industrials, materials, and consumer products sectors follow at more than 80%, while utilities and energy companies make far fewer absolute claims, at 52% and 44%, respectively.

The data can also be analyzed at the geographic level. Japan tops the list with 84% of analyzed statements being likely or probable greenwashing, followed by the U.S. at 72%. Only the U.K. and Australia fall in the 50–60% range.

The speed of its artificial intelligence in detecting and sorting out so much misleading information makes GreenWatch a valuable tool. “With the current state of affairs, it’s been fairly hard to match all the bold claims with the actual reality on the ground,” Dr. Ifrim said, noting that it’s still a human decision whether to accept or reject a claim. “AI supports and augments that human element.”

Are there companies doing a great job at sustainability? “The other side of the coin is the companies that either don’t make green claims although they are performing well or make relative claims,” Dr. Ifrim said. “A relative claim compares current performance to previous performance so you can see improvement. We have a category called hidden green champions, the ones that show a significant greenhouse gas reduction year on year, but don’t make strong, absolute claims. In a sense, they could be more forthcoming about their performance.”

The hope is that GreenWatch will be embraced by investors, who can then leverage their financial power to push companies toward sustainability. “This tool is also intended for policymakers and members of civil society that want to make sure their funds and finances are invested in truly sustainable companies and economic activities,” Dr. Ifrim said.

GreenWatch is now in the process of finding those investors and stakeholders. The next development step will be to scale up the data collection pipeline. Though GreenWatch currently only permits full access to beta users for feedback, there are plans to share a second dataset more widely later this year.

“We also believe this tool can be developed further to investigate other sustainability issues surrounding biodiversity, air and water pollution, and so on,” Dr. Ifrim said. “For right now, though, we’re focused on greenwashing detection. Climate change mitigation is huge — there’s no planet B if we don’t get this part right.”

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