The problem here sounds like lack of clarity over the meaning of the colours.
In organisations with 100s of in-flight projects, it’s understandable that red is reserved for projects that are causing extremely serious issues right now. Otherwise, so many projects would be red, that you’d need a new colour.
I'd be willing to believe they had some elite high level reason to schedule things this way if I thought they were good at scheduling. In my ~10 years there I never saw a major project go even close to schedule.
I think it's more like the planning people get rewarded for creating plans that look good and it doesn't bother them if the plans are unrealistic. Then, levels of middle management don't want to make themselves look bad by saying they're behind. And, ultimately, everyone figures they can play a kind of schedule-chicken where everyone says they're green or yellow until the last possible second, hoping that another group will raise a flag first and give you all more time while you can pretend you didn't need it.
In organisations with 100s of in-flight projects, it’s understandable that red is reserved for projects that are causing extremely serious issues right now. Otherwise, so many projects would be red, that you’d need a new colour.