Greenwashing in the US Metal Industry? A Novel Approach Combining SO2 Concentrations From Satellite Data, a Plant-Level Firm Database and Web Text Mining

Abstract

This Discussion Paper deals with the issue of greenwashing, i.e. the false portrayal of companies as environmentally friendly. The analysis focuses on the US metal industry, which is a major emission source of sulfur dioxide (SO2), one of the most harmful air pollutants. One way to monitor the distribution of atmospheric SO2 concentrations is through satellite data from the Sentinel-5P programme, which represents a major advance due to its unprecedented spatial resolution. In this paper, Sentinel-5P remote sensing data was combined with a plant-level firm database to investigate the relationship between the US metal industry and SO2 concentrations using a spatial regression analysis. Additionally, this study considered web text data, classifying companies based on their websites in order to depict their self-portrayal on the topic of sustainability. In doing so, we investigated the topic of greenwashing, i.e. whether or not a positive self-portrayal regarding sustainability is related to lower local SO2 concentrations. Our results indicated a general, positive correlation between the number of employees in the metal industry and local SO2 concentrations. The web-based analysis showed that only 8% of companies in the metal industry could be classified as engaged in sustainability based on their websites. The regression analyses indicated that these self-reported 'sustainable' companies had a weaker effect on local SO2 concentrations compared to their 'non-sustainable' counterparts, which we interpreted as an indication of the absence of general greenwashing in the US metal industry. However, the large share of firms without a website and lack of specificity of the text classification model were limitations to our methodology.

Keywords: Sentinel-5P, air pollution, natural language processing, spatial regression

JEL Classification: Q53, Q56, R11