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Greenwashing in the US metals industry?

Jan Kinne

By combining satellite data and webAI information, ISTARI.AI developed a methodology to detect greenwashing in the US metals industry.

23. February 2022

9,500 companies
in the U.S. metals industry
760 companies (8.1 %)
classfied as sustainable

Due to the increasing consequences of climate change and political movements such as “Fridays For Future”, the issue of sustainability has gained significant importance in recent years. A particularly large consideration in the collective discourse is the emission of pollutants and the associated air pollution.  One of the most harmful substances is sulfur dioxide (SO2). The gas is released by processes in the metal industry, among others, and is a trigger for fine dust formation and acid rain.

Social pressure and the need for a “green image” are leading many companies to present themselves as particularly committed to “sustainability”. In this context, “greenwashing” refers to the discrepancy between a company’s positive self-portrayal and its actual environmental impact. Companies that engage in greenwashing thus place a lot of emphasis on a green image without actually implementing effective measures, which can be associated with high costs. One difficulty, however, is to detect such greenwashing. For this purpose ISTARI.AI developed an innovative approach in cooperation with researchers from the University of Salzburg, the University of Heidelberg, the University of Giessen, the Center for European Economic Research and Harvard University. The self-portrayal of the companies based on their websites is thereby linked to globally available pollutant data from the Sentinel 5 precursor satellite.

Using ISTARI webAI, we examined the websites of about 9,500 companies in the U.S. metals industry and classified the companies’ self-portrayals into two categories: “sustainable” companies and “non-sustainable” companies. Thus, a total of 760 companies were classified as “sustainable” (8.1%) and 51.3% as “non-sustainable.” An additional 40.6% of companies in the U.S. metals industry do not have a website and, accordingly, were not assessed by webAI. The map below shows an example of the distribution of “sustainable” and “non-sustainable” metals industries in the Northeast US. It is clear that there are some “hotspots” with a high proportion of sustainable companies, especially in the north of Chicago, but also in Pittsburgh and Buffalo, for example.

When cross-referenced with the satellite data, it was found that the metal industry, which is sustainable in its self-reporting, actually has a smaller impact on local SO2 concentrations than the “non-sustainable” companies. From this, the research team concluded that there is indeed no evidence of systematic greenwashing in the U.S. metals industry. “However, this statement refers to the industry as a whole and not to individual companies. Greenwashing will certainly occur in individual cases,” says Sebastian Schmidt, lead author of the study.

The development and provision of detailed and up-to-date company information on the topic of “sustainability” will be further expanded at ISTARI.AI. “At the moment, we are working on being able to evaluate companies across Europe with regard to their positioning on the topic of sustainability. For this we are relying on our multilingual webAI, which can process over 100 languages. We are currently testing the results in cooperation with the OECD. Linking with satellite-based measurements will also become part of the ISTARI webAI,” says ISTARI founder Dr. Jan Kinne.

You can find more information about our project in the following publication: https://ftp.zew.de/pub/zew-docs/dp/dp22006.pdf

Schmidt, S.; Kinne, J.; Lautenbach, S.; Blaschke, T.; Lenz, D. & Resch, B. (2022): „Greenwashing in the US metal industry? A novel approach combining SO2 emissions from satellite data, a plant-level firm database and web text mining.“

Author: Sebastian Schmidt

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