Insight - Guarding Against Greenwashing in Space

Friday, May 6, 2022

by Director of Private Sector Programs Ian Christensen

The private sector is increasingly becoming the most active operator in the space domain. Approximately one-third of currently active satellites are operated by a single company — SpaceX — with several other companies planning to add thousands more in the coming years. This trend draws attention to the role of commercial actors in ensuring the safety and sustainability of the operating environment in space, as both a business domain and as a shared environment. Concurrently, discussions of — and voluntary commitments to — Environmental, Social, Governance (ESG) principles in the space sector are becoming more common.

But are these commitments resulting in meaningful performance? Or are they “greenwashing” — mere marketing pledges or virtue signaling with little actual impact on sustainability?

Satellite operators are making self-governing pledges which ostensibly extend the environment component of ESG to the space environment. For example, in 2019 a group of satellite operators formed the Space Safety Coalition (SSC) to pledge support for voluntary practices that go beyond current regulatory requirements; and the Satellite Industry Association (SIA) created a set of space safety principles. Space industry groups such as the SSC and the Consortium for Execution of Rendezvous and Servicing Operations (CONFERS) have published voluntary best practices and guiding principles for safe and sustainable operations in specific types of space activities. More recently, SpaceX has published a blog post outlining its space sustainability practices for the Starlink constellation; OneWeb has described its philosophy for responsible space operations, SES has included space sustainability as a pillar in its ESG strategy; and Eutelsat’s corporate responsibility policy includes protecting the space environment as an element. Additionally, some industry and government space operators have signed a voluntary “Net Zero Space” commitment to minimizing the creation of additional space debris.

This increased industry attention to space sustainability, on its merits, seems to be a positive trend. After all, any increased awareness and commitment to sustainable operations should contribute to positive outcomes for all. However, the reality is not that straightforward. The voluntary commitments that industry actors are making to space sustainability — while laudable — are inconsistent across individual operators and groups, and are in many cases not clearly or measurably tied to operational and/or financial performance. In some cases, companies are promoting the same voluntary practices that they are also lobbying against being added to regulatory requirements.

Increased corporate attention to voluntary environmental commitments (the E in ESG) is not just a trend in the space sector. Terrestrial industry sectors are also emphasizing ESG reporting and performance. The Economist Impact reports that, as of 2020, there are over 600 different standards or frameworks for reporting ESG performance in the business sector.

But increased reporting does not inherently translate to meaningful stewardship. Greenwashing – a practice in which sustainability pledges are used as marketing to give the appearance of acting in environmentally responsible ways, rather than representing meaningful operational change or practice – exists. For example, consumer products companies have been accused of branding their products with recycling logos while at the same time engaging in lobbying against efforts to expand plastic recycling requirements. As pledges of self-regulation and voluntary practice become commonplace in the space industry, we should ask ourselves how to ensure these pledges are meaningful rather than mere greenwashing.

Fortunately, there are steps that the space industry and regulators can take to guard against the risk of greenwashing in space sustainability commitments:

1. Be Clear in Commitments to Space Sustainability versus Contributions to ESG Initiatives on Earth:

The space sector offers great potential to contribute data used for monitoring ESG performance in terrestrial industries, especially for climate impacts. But marketing ESG data should not be confused with making environmental commitments for our own operating domain. As the space industry seeks to demonstrate its commitment to sustainable use of the space environment, we must be clear in differentiating the discussion of ESG as an opportunity for sales of space data from our discussion of commitments for the space environment. Doing so will help track the follow-through performance of voluntary commitments and protect against the risk that marketing ESG-relevant data is seen as greenwashing a company’s own operating commitments.

2. Commit to Common Principles:

In the terrestrial business sector, the most common ESG reporting frameworks are provided by the non-profit Sustainability Accounting Standards Board (SASB). SASB has more than 70 industry sector-specific standards which set out ESG reporting topics, metrics, and technical protocols. There is no common standard for sustainability reporting for the space environment or industry. Working from the individual commitments of specific firms and the efforts of industry groups, the development of ESG reporting standards for the space industry would be an important tool in translating voluntary commitments into measurable performance.

3. Leverage Public Companies:

As more space companies become publicly traded, this can create momentum towards meaningful sustainability reporting. Public companies have increased incentives to report sustainability performance, linked to corporate financial performance, which can be augmented or supported by regulatory reporting requirements. Since no space-specific sustainability reporting requirements exist in financial regulation, the increasing public market attention to space companies creates the potential for this to evolve.

4. Hold Each Other Accountable:

Progress towards meaningful sustainability commitments requires the space community and industry to hold ourselves accountable. Accountability means recognizing practices that follow through on self-regulatory commitments, such as OneWeb’s choice to install fiducial markers to facilitate de-orbiting or SpaceX’s decision to deploy Starlink at initially low check-out orbits. It also means calling out behavior that acts counter to commitments.

Apart from contributing to a more safe and sustainable operating domain, meaningful environmental commitment in space operations can contribute to a growth environment for the space industry. In terrestrial industries, demonstrable ESG performance — particularly focused on climate impacts — can be associated with institutional investor confidence in corporate performance. Institutional investors (e.g., pension funds, hedge funds) increasingly believe that attention to ESG performance is linked to improved financial performance versus risk. However, achieving that meaningful performance — and the associated investor confidence boost — cannot be done by voluntary commitments alone.

In terrestrial industry sectors seeing benefit from ESG initiatives, those initiatives are often linked to performance baselines set in regulation. ESG reporting works best for environmental and business outcomes when a regulatory or standard baseline is available as a basis for comparable measurement across different firms and jurisdictions. Currently, the space sector lacks this regulatory underpinning for reliable ESG measurement and reporting. There exists neither the regulatory entity to define space environmental values nor the regulatory authority (outside of limited space debris mitigation plan reporting requirements) to require space-related ESG reporting.

Furthermore, many space sustainability challenges motivating voluntary industry commitments are partially the result of regulatory shortcomings. Governmental licensing, space debris mitigation requirements and space traffic coordination practices have not kept pace with the rate of innovation and deployment of very large constellations. As the industry develops its own practices, it is reasonable to expect that some of these practices might be codified in regulation, and that additional provisions might also be developed. Operators must be willing to accept some increased regulatory and operational costs. As SpaceX argued in 2019 comments to the FCC: “Operators of satellite systems have a responsibility to protect the orbital environment, even when this responsibility adds cost to operations.”

Without a more holistic approach by both industry and regulators to support ESG practices in the space domain, reliance solely on voluntary commitments will continue to offer the potential for greenwashing and regulatory avoidance, where firms seek to leverage space sustainability commitments for their own advantage rather than meaningful environmental benefits.

This article originally appeared in the April 2022 issue of SpaceNews magazine.