A recent study conducted by the UPV/EHU’s Research Group on Circular Economy, Business Performance, and the Achievement of Sustainable Development Goals reveals that energy companies hide 47% of the damage they cause to biodiversity.
For their study, the researchers analyzed 47 incidents involving 30 major energy companies in Europe, including cases of deforestation, bird electrocution, and habitat destruction. Surprisingly, 22 of these incidents were not mentioned in the companies’ sustainability reports.
“European directives oblige large companies to publish documents relating to the environment and biodiversity, but the information that has to be included in them is not fully specified. Each company decides which aspect to cover. So they act freely and soften their image,” stated the author, Goizeder Blanco-Zaitegi. As a result, for example, energy companies clearly reported only 23% of the biodiversity-threatening events.
Moreover, some events were communicated vaguely. In 30% of the adverse impacts analyzed across 14 cases, companies employed strategies to downplay their responsibility.
Blanco noted that a common tactic is to highlight positive actions, “For example, palm oil trees are planted by some companies in tropical areas to produce biofuels, and this destroys the local ecosystems. However, in their sustainability reports they divert attention towards softening the issue.
“They emphasize that they have planted numerous trees in other areas. And that does not make up for the deforestation caused by the company as a result of palm oil trees, among other things, because the plantations are located far from the damaged sites.”
Sometimes, energy companies claim unclear responsibility for the destruction or blame other parties, such as suppliers.
The research also indicated that transparency varies by event type. Companies more accurately report negative events like bird electrocutions and impacts on indigenous communities.
“In the latter cases, it is clear that it is more difficult to be non-transparent when humans are involved. People, unlike nature, speak, protest and engage in confrontation. Such events have to be communicated,” said Blanco. Also, bird electrocutions are also reported accurately due to fines and the ease of accounting for these incidents. Therefore whatever gets measured, the companies feel obligated to be more honest about.
However, the same transparency does not apply to more complex issues, such as ecosystem destruction. “For example, if a wind farm is built on a bird species’ migratory corridor, this isn’t clearly communicated. The effects are deeper and harder to measure, so companies tend to conceal these events,” Blanco added.
To reach these conclusions, the researchers employed a counter-accounting, a method often used in corruption and societal matters. They did not directly review the companies’ sustainability reports. Instead, they used external sources like Google News, social media, and counter-information websites to identify incidents of biodiversity loss, then checked the official documents of the involved institutions.
The findings are published in the Journal of Behavioral and Experimental Finance.
Like seriously, be man and own up to your accountabilities because ultimately lies and poor transparency hurts everyone including ourselves .
G Blanco-Zaitegi et al. Impression management of biodiversity reporting in the energy and utilities sectors: An assessment of transparency in the disclosure of negative events. Journal of Behavioral and Experimental Finance (2024). https://doi.org/10.1016/j.jbef.2024.100942
