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Study Exposes How World’s Biggest Corporations Embellish Climate Progress

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Without more regulation, this will continue,” said one critic. “We need governments and regulatory bodies to step up and put an end to this greenwashing trend.”

A new study out Monday evaluates the public climate pledges made by 25 of the world’s biggest corporations and concludes they “cannot be taken at face value” because the vast majority of firms analyzed are exaggerating the nature of and progress toward their goals—a greenwashing trend that critics say will continue in the absence of stronger regulation.

“Setting vague targets will get us nowhere without real action, and can be worse than doing nothing if it misleads the public.”

Providing further evidence of the fallacies of “net-zero,”the Corporate Climate Responsibility Monitor 2022 finds that net-zero pledges made by several of the world’s largest companies aim to reduce aggregate greenhouse gas emissions across their full value chains by only 40%, at most, from 2019 levels—a far cry from the 100% implied when they claim to be pursuing “carbon neutrality.”

According to the assessment conducted by NewClimate Insitute in collaboration with Carbon Market Watch, just one company’s net-zero pledge was determined to have “reasonable integrity.” Three were deemed to have “moderate integrity,” 10 “low integrity,” and the remaining 11 “very low integrity.”

“We set out to uncover as many replicable good practices as possible, but we were frankly surprised and disappointed at the overall integrity of the companies’ claims,” lead author Thomas Day of NewClimate Institute said in a statement.

“As pressure on companies to act on climate change rises, their ambitious-sounding headline claims all too often lack real substance, which can mislead both consumers and the regulators that are core to guiding their strategic direction,” said Day. “Even companies that are doing relatively well exaggerate their actions.”

The analysis turned up zero pledges with “high integrity.” Maersk came out on top, with “reasonable integrity,” followed by Apple, Sony, and Vodafone with “moderate integrity.”

Meanwhile, the headline pledges of Amazon, Deutsche Telekom, Enel, GlaxoSmithKline, Google, Hitachi, IKEA, Vale, Volkswagen, and Walmart were rated as having “low integrity.” Those of Accenture, BMW Group, Carrefour, CVS Health, Deutsche Post DHL, E.ON SE, JBS, Nestlé, Novartis, Saint-Gobain, and Unilever were considered to have “very low integrity.”

Although all 25 companies examined in the report establish “some form of zero-emission, net-zero, or carbon-neutral target,” the authors note, just three companies—Maersk, Vodafone, and Deutsche Telekom—make clear commitments to decarbonizing 90% of their entire value chains.

By contrast, at least five companies would effectively decrease their emissions by less than 15%, often by excluding “upstream or downstream emissions”—pollution generated by activities indirectly linked to a company.

Day told The Guardian that “it’s short-term action that’s the most important thing, in the climate crisis.”

Nevertheless, noted the British newspaper, “the report show[s] that the companies surveyed would only cut their emissions by about 23% on average by 2030, falling far short of the figure of nearly halving in the next decade that scientists say is needed to limit global heating to 1.5ºC.”

Despite the damning findings, some companies doubled down on their claims of progress. In a statement shared with BBC, Amazon said: “We set these ambitious targets because we know that climate change is a serious problem, and action is needed now more than ever. As part of our goal to reach net-zero carbon by 2040, Amazon is on a path to powering our operations with 100% renewable energy by 2025.”

However, Amazon is one of several companies that have donated to right-wing Democratic Sens. Kyrsten Sinema (Ariz.) and Joe Manchin (W.Va.), who teamed up with the GOP to torpedo the Build Back Better Act—a piece of legislation that, among other things, would have accelerated the clean energy transition.

According to climate justice advocates, net-zero pledges are inadequate because they are “premised on the notion of canceling out emissions in the atmosphere rather than eliminating their causes.” Because the practice enables powerful entities to continue with business as usual in some places as long as they fund projects that purportedly slash pollution in other places, there is little to no evidence that overall emissions will be sufficiently reduced.

The new study shows how several corporations are inflating the extent of their ambition and progress by taking advantage of ambiguous terms like net-zero and carbon-neutral and by disregarding upstream or downstream emissions.

“Many company pledges are undermined by contentious plans to reduce emissions elsewhere, hidden critical information, and accounting tricks,” states a summary of the report. It continues:

The exclusion of emission sources or market segments is a common issue that reduces the meaning of targets. Eight companies exclude upstream or downstream emissions in their value chain, which usually account for over 90% of the emissions under their control. E.ON may exclude market segments that account for more than 40% of its energy sales; Carrefour appears to exclude locations that account for over 80% of Carrefour branded stores.

24 of 25 companies will likely rely on offsetting credits, of varying quality. At least two-thirds of the companies rely on removals from forests and other biological activities, which can easily be reversed by, for example, a forest fire. Nestlé and Unilever distance themselves from the practice of offsetting at the level of the parent company, but allow and encourage their individual brands to pursue offsetting to sell carbon-neutral labeled products.

Some apparently ambitious targets may lead to very little short-term action. It may be possible for CVS Health to achieve their 2030 emission reduction target with limited additional action, since the target is compared to a base year with extraordinarily high emissions. GlaxoSmithKline may delay the implementation of key emission reduction measures until 2028/2029, ahead of its 2030 target.

As The Guardian reported, “Day said using offsetting tended to obscure whether companies were making genuine progress on cutting their own emissions, or hiding behind offsets to achieve a notional net-zero.”

“It’s better practice not to offset—it’s more transparent and constructive,” said the researcher. “Companies should not be claiming they are net-zero by 2030 unless they are reducing their emissions by 90% by then.”

The failure of so-called “corporate social responsibility” initiatives to deliver on promises to improve the well-being of workers and ecosystems is a longstanding pattern, which is why many progressive critics have called them public relations gimmicks.

According to the new report: “The rapid acceleration of corporate climate pledges, combined with the fragmentation of approaches means that it is more difficult than ever to distinguish between real climate leadership and unsubstantiated greenwashing. This is compounded by a general lack of regulatory oversight at national and sectoral levels. Identifying and promoting real climate leadership is a key challenge that, where addressed, has the potential to unlock greater global climate change mitigation.”

Gilles Dufrasne from Carbon Market Watch said that “misleading advertisements by companies have real impacts on consumers and policymakers.”

“We’re fooled into believing that these companies are taking sufficient action, when the reality is far from it,” said Dufrasne. “Without more regulation, this will continue. We need governments and regulatory bodies to step up and put an end to this greenwashing trend.”

“Companies must face the reality of a changing planet,” he added. “What seemed acceptable a decade ago is no longer enough. Setting vague targets will get us nowhere without real action, and can be worse than doing nothing if it misleads the public.”

In a Monday op-ed, Penn State University climate scientist Michael Mann and Climate Communication director Susan Joy Hassol drew attention to the devastation wrought by corporations that have denied facts to delay necessary political-economic transformations—pointing specifically to a 40-year-long disinformation campaign bankrolled by fossil fuel interests.

Much of the damage caused by extreme weather disasters “could have been avoided had we acted decades ago when the scientific community—and indeed fossil fuel industry’s own scientists—recognized we had a problem,” the pair wrote in The Hill. “While the best time to act boldly to prevent climate catastrophe was decades ago, the second-best time is now.”

Given that the 25 firms analyzed account for roughly 5% of global greenhouse gas emissions, researchers stressed how important it is for them to quickly adopt and scale up best practices.

“If we are to meet this monumental challenge, we will need to use all the arrows in the quiver,” wrote Mann and Hassol. “We must incentivize the energy industry to move aggressively toward clean, renewable energy.”

They concluded, “There is no time left to waste, and failure is not an option.”

Originally published on Common Dreams by KENNY STANCIL and republished under a Creative Commons (CC BY-NC-ND 3.0)


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Newly Public Documents Allege Allstate Overcharged Loyal California Customers $1 billion

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A 2020 Markup investigation found the company pursuing similar goals in other states

A pair of newly public documents filed with a California administrative law judge show experts accusing the company of systematically overcharging customers it believed to be the most loyal around $1 billion over the past decade. 

This practice of charging higher premiums to customers an insurance company suspects are unlikely to defect to a competitor is termed “price optimization” and was the subject of a 2020 Markup investigation that found Allstate was attempting to use a new pricing algorithm for auto insurance in Maryland that would have unfairly targeted its highest-paying customers—and that the algorithm had been approved in several other states. 

Nearly every state, including California, bars insurers from setting car insurance rates on factors apart from the actual risk the drivers pose. Insurance regulators in 18 states and Washington, D.C., have explicitly declared price optimization illegal.

The new documents, which were initially filed in late October by the California Department of Insurance and Consumer Watchdog, a consumer advocacy group allowed by the state to intervene in the case and provide expertise, consist of written testimony from insurance industry experts who examined how Allstate set its prices. 

They allege that Allstate was engaging in price optimization by giving smaller than appropriate discounts to the least-price-sensitive among its customers with clean driving records who held multiple policies with the company or who had several decades of driving experience. 

Edward Cimini Jr., a senior casualty actuary with the California Department of Insurance, said he reviewed internal Allstate documents, documents the company submitted to the state describing its auto insurance pricing plan, and depositions of company employees and found that Allstate gave smaller discounts to drivers with more than 39 years of experience, a group he said is unlikely to shop around. “Since Allstate’s selections were not based on underlying costs, the final rates that Allstate charged these policyholders were actuarily unsound and unfairly discriminatory,” he said.

Allan Schwartz, an actuarial consultant hired by Consumer Watchdog to review Allstate’s pricing practices, estimated that Allstate overcharged California drivers who were owed discounts “about $1 billion.” 

“Those policyholders were known by Allstate to have a lower elasticity of demand and were more likely to renew with Allstate even though they were charged premiums in excess of those based upon an actuarially sound estimate of the cost of risk transfer,” he said. 

The company denies the allegations. “Allstate does not employ, and has never employed, price optimization in determining premiums in California because Allstate does not take into account an individual’s or class’s willingness to pay a higher premium relative to other individuals or classes,” Allstate spokesperson Ben Corey wrote in an email to The Markup. 

In its court filings, Allstate points out that in 2011 the California Department of Insurance reviewed and approved the 2011 plan without highlighting the issues now raised in the long-running class action that triggered this hearing. 

The company was sued in 2015 over alleged price optimization practices in California. Allstate moved to have the case thrown out, arguing in part that it wasn’t a matter for civil courts but rather for the state department of insurance. In 2016, the United States District Court for the Northern District of California put the case on hold and referred it to the authority of the Commissioner of the California Department of Insurance for its opinion, which triggered the administrative law proceeding. Last week, the parties agreed to enter voluntary mediation. 

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Two years ago, The Markup published an investigation revealing that a new method of calculating rates for car insurance customers that Allstate was trying to implement across the country attempted to charge higher rates to customers who were already paying a lot for their car insurance—essentially creating a “suckers list” of big spenders and squeezing even more money out of them. 

The investigation was based on details the insurer provided to regulators in Maryland as part of its 2014 filing there that revealed the current and proposed rate for policyholders in the state. Using statistical regressions, we found that the rating factor, called CGR, would charge more—and severely limit discounts—to big spenders. Maryland regulators rejected Allstate’s plan over price optimization concerns. We found Allstate was using similar algorithms in 10 other states, but we were not able to determine if they worked exactly the same way in those states because we lacked the data we had in Maryland. Allstate did not answer our questions about the algorithms.

Consumer Watchdog founder Harvey Rosenfield, who has long been critical of Allstate’s pricing practices, said that the company found a different method of achieving the same goals in California, which only allows insurers to use a limited number of approved factors—like driving record, type of car, or number of years behind the wheel—to determine how much customers have to pay in premiums. 

“What we’re contending is they took their knowledge of price elasticity and figured out a pretty straightforward way of doing it without saying so,” Rosenfield said. “Their actuaries selected relativities to set people’s premiums that punished people who Allstate knew were inelastic, who fit the profile of being less sensitive to price changes. They charged those people more.”

California isn’t the only place where Allstate has faced litigation over its use of price optimization. Shortly after the publication of The Markup’s Maryland investigation, the company was hit with a class action lawsuit in Texas that directly referenced The Markup’s reporting. That suit alleges that the company was “charging higher premiums to its more tenured policyholders than it charges otherwise identically-situated newer policyholders for the same or materially the same coverages.”

That case is still ongoing.

This article was originally published on The Markup By: Aaron Sankin and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.


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‘Enough Is Enough’: Report Shows Big Oil’s Offshore Tax Loopholes Cost US at Least $86 Billion Per Year

“We continue to bankroll the very fossil fuel companies responsible for the climate crisis, then wonder why our planet is on fire.”

A new report released Wednesday identifies $86 billion worth of offshore tax loopholes that a dozen U.S.-based oil and gas companies exploit each year as part of a “tax bonanza,” a finding that comes as climate justice advocates push Congress to eliminate subsidies to the fossil fuel industry.

“Our government cannot continue to bankroll climate destruction,” Friends of the Earth tweeted Wednesday.

The report (pdf), compiled by Friends of the Earth, Oxfam America, and BailoutWatch, reveals the consequences of “two esoteric provisions in the tax code worth tens of billions of dollars to Big Oil’s multinational majors,” including ExxonMobil, Chevron, ConocoPhillips, and other polluters most responsible for the climate emergency.

As a result of the GOP’s 2017 tax law, corporations that drill overseas benefit from special treatment under the Global Intangible Low-Tax (GILTI) framework, which covers Foreign Oil and Gas Extraction Income (FOGEI).

The Treasury Department estimates that repealing the Trump-era exemption for FOGEI would raise $84.8 billion in revenue from just 12 companies that are currently eligible for the carveout, the report notes.

“It is unfortunate but not surprising that the handful of companies benefitting from these loopholes are lobbying to protect their special treatment.”
—Chrive Kuveke, BailoutWatch

Another corporate handout, the so-called dual capacity loophole, is “a longstanding gimmick” wherein fossil fuel giants “artificially inflat[e] their foreign tax bills” to evade U.S. taxes.

Although they are permitted to claim tax credits for taxes paid to foreign governments, U.S. companies are not allowed to do so for non-tax payments such as royalties. 

“In practice, however, the categories often are commingled—particularly when companies make a single combined payment including both taxes and fees,” the report explains. “A foreign country may even try to disguise non-tax payments as a tax, knowing that in many cases a multinational company may receive a foreign tax credit from its home country. Existing regulation gives dual capacity taxpayers vast latitude to assert what portions of their payments are taxes eligible to offset U.S. tax bills.” 

Eliminating the dual capacity loophole would raise at least an additional $1.4 billion, according to the Biden administration, while the Joint Committee on Taxation puts the figure somewhere between $5.6 billion and $13.1 billion. The report points out that “the estimates vary so widely in part because we have precious little visibility into Big Oil’s payments to governments—and that’s just how the companies want it.”

“As Democrats propose closing loopholes to help cover the cost of their $3.5 trillion reconciliation package,” the report states, “these obscure subsidies present a rare chance to act on climate, fund infrastructure, and promote tax fairness in a single stroke.”

While the House Ways and Means Committee’s markup of the Build Back Better Act includes a tax reform proposal that would reverse the FOGEI carveout and the dual capacity loophole, it would leave intact at least $35 billion in federal subsidies for domestic fossil fuel production—despite President Joe Biden’s call to phase out polluter giveaways over a decade.

House Democrats’ failure to stop showering Big Oil with public money—a move supported by a majority of people in the U.S. and many, though not all, Democratic lawmakers—has drawn progressives’ ire.

“The House bill made a decent start by targeting Big Oil’s international tax loopholes, but it went nowhere near far enough,” Lukas Ross, Climate and Energy Justice program manager at Friends of the Earth, said Wednesday in a statement.

Senate Majority Leader Chuck Schumer (D-N.Y.) “needs to lead on climate and ensure that all $121 billion in fossil fuel subsidies are repealed in the final package,” Ross added.

According to Daniel Mulé, policy lead for Oxfam’s Extractive Industries Tax and Transparency project, “U.S. Big Oil companies like Exxon and Chevron have fought tooth and nail to keep the payments they make to governments around the world a secret, while paying lip service to the global movement for payment transparency.”

“This secrecy,” said Mulé, “has a potential tax impact in the U.S. as well, as it makes it all the more difficult to discern if U.S. oil and gas companies are illegitimately inflating their foreign tax credits.”

The report draws attention to several legislative proposals that would do away with subsidies for domestic fossil fuel production as well as tax exemptions for foreign extraction, including:

The report was released the same day members of the Congressional Progressive Caucus urged House leaders to include a repeal of domestic fossil fuel subsidies in the Democrats’ Build Back Better Act.

“Instead of creating jobs,” the progressive lawmakers wrote, the subsidies “widen the profit margin of fossil fuel companies.”

The report emphasizes that fossil fuel champions—including the Exxon lobbyist who was caught on camera discussing how the company benefits from offshore tax loopholes and intends to further undermine climate action—are fighting hard to preserve billions of dollars in taxpayer-funded handouts.

“Big Oil isn’t going quietly,” said Chrive Kuveke, an analyst at BailoutWatch. “Since Biden became president, it is unfortunate but not surprising that the handful of companies benefitting from these loopholes are lobbying to protect their special treatment.”

Originally published on Common Dreams by KENNY STANCIL and republished under Creative Commons.

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The Number of People With IRAs Worth $5 Million or More Has Tripled, Congress Says

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The number of multimillion-dollar individual retirement accounts has soared in the past decade, as more wealthy Americans use the tax-advantaged vehicles to shield fortunes from income taxes, according to new data released by Congress today.

The data reveals for the first time the staggering amount of money socked away in tax-free mega Roth accounts: more than $15 billion held by just 156 Americans.

Originally published by ProPublica. ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.Series: The Secret IRS Files Inside the Tax Records of the .001%

The new data also shows that the number of Americans with traditional and Roth IRAs worth over $5 million tripled, to more than 28,000, between 2011 and 2019.

The data was requested by Senate Finance Chairman Ron Wyden, D-Ore., and House Ways and Means Chairman Richard Neal, D-Mass., following ProPublica’s story last month exploring the rise of mega Roth IRAs. The story, based on confidential IRS data obtained by ProPublica, revealed that tech mogul Peter Thiel has the largest known Roth IRA, worth $5 billion as of 2019.

In a Senate Finance hearing on retirement on Wednesday, Wyden said such massive accounts underscore the country’s inequalities. “Individuals at the very top — at the very, very top — are able to game the rules to get ahead and basically abuse taxpayer-subsidized accounts with pricey accountants and lawyers,” Wyden said. “This increases the already existing retirement inequality between retirement haves and have-nots to an extreme level.”

Roth IRAs were established in 1997 to incentivize middle-class Americans to save for retirement. Congress imposed strict limits, including a cap on how much can be contributed to the accounts each year, which today stands at $6,000 for most Americans. The average Roth account was worth $39,108 at the end of 2018.

But a select set of the ultrawealthy have managed to get around limits set by Congress and transformed the vehicle into a powerful onshore tax shelter. One way they’ve done that is by buying nonpublic shares of companies with extremely low valuations. That allows them to tuck a huge volume of shares into a retirement account. Congressional investigators have previously found that the IRS has struggled to enforce rules around these investments, including whether the valuations are legitimate.

Once money is deposited into a Roth account, any proceeds from investment gains are tax free. So, for example, a Roth owner who sells a successful tech investment for a $1 million profit gets to keep all of the money, saving a potential $200,000 in federal taxes. The savings can then be reinvested, tax free, as long as the Roth holder waits till he or she is at least 59 and a half before withdrawing the money. Owners of traditional IRAs, by contrast, enjoy tax-free growth but must pay income tax on withdrawals. The Roth is considered the more powerful tax-avoidance tool for the wealthy.

The latest numbers come from analysts at Congress’ nonpartisan Joint Committee on Taxation. They update a widely cited study from the Government Accountability Office that released figures on large IRAs in 2011.

The new figures show that, as of 2019, nearly 3,000 taxpayers held Roth IRAs worth at least $5 million. (The total of more than 28,000 people holding IRAs of that size includes both traditional and Roth IRAs.) The aggregate value of those Roth IRAs was more than $40 billion.

Both Wyden and Neal said in statements that the new figures show the need for reform. Neal said that “IRAs are intended to help Americans achieve long-term financial security, not to enable those who already have extraordinary wealth to avoid paying their fair share in taxes and deepen existing inequalities in our nation.” Neal said earlier this month, in the wake of the ProPublica article, that the Ways and Means Committee would draft a bill to “stop IRAs from being exploited.”

For his part, Wyden said, “As the Finance Committee continues to develop proposals to make the tax code more fair, closing these loopholes will be a top priority.” Wyden first proposed an overhaul of IRA rules to prevent the accounts from being used as large tax shelters several years ago. One reform that is being discussed would prohibit investors from putting assets that are not available to ordinary Americans, such as shares of startup companies, into retirement accounts.

Wyden and Neal’s push for reforms comes as Congress is considering bipartisan retirement legislation. The bills are being pitched as helping ordinary Americans save for retirement, including by proposing to automatically enroll workers in employer-sponsored retirement plans. But they also include perks for the retirement and financial industries, such as relaxing rules in ways that are seen as a boon for insurers. And buried deep inside the two complex bills are provisions that could make it harder for the IRS to crack down on the ultrawealthy who dodge tax rules.

by Justin Elliott, James Bandler and Patricia Callahan for ProPublica and published via Creative Commons License

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