“Reputation is like fine china – once broken, it’s very hard to repair …” (Abraham Lincoln)
Environment, social and governance (ESG) strategies and sustainability reporting offer businesses some of their fastest-growing opportunities, but there are no free rides. Those found to be ‘greenwashing’ – making false or misleading claims about positive ESG impacts – can damage or detonate their reputation, sales and share prices. With information shared freely in our digital landscape, organisations must work harder than ever to offer verified proof of their ESG claims. With that in mind, it’s vital that you avoid exposure to accusations of greenwashing on your ESG journey – whether you’re in full flow or taking your first steps – and one tool which could help is a brand-new 6-Check ‘DEPEND’ Model.
Before we cover the model, it’s worth just expanding on the context around greenwashing. A term first coined by environmentalist Jay Westerveld in 1986, it has grown rapidly in significance in recent years, as organisations have sought to use their ESG credentials for broad benefits. Data visibility and trusted evidence have become crucial to supporting growth, meeting new regulations and responding to the needs of customers, staff and wider stakeholders. ESG data is increasingly pivotal when targeting standards, achieving certifications and benchmarking against public disclosure platforms.
However, a recent high-profile European Union study[1] found that 53% of sustainability claims gave vague, misleading or unfounded information, and 40% of claims had no supporting evidence. In a survey[2] this summer, over two-thirds of US executives admitted that their companies were guilty of greenwashing, and Chartered Institute of Marketing research[3] showed that half of marketeers were wary of working on sustainability projects through fear of being accused of the practice.
The Corporate Sustainability Reporting Directive (CSRD) will start to take effect across the EU from the end of this year, and the Securities and Exchange Commission in the US has proposed extensive mandatory ESG disclosures. Being able to back up responsible business claims is increasingly fundamental, but complex data challenges and outdated manual processes can quickly overwhelm organisations. A study[4] from the Boston Consulting Group suggested that less than one in ten global companies were measuring (and therefore reporting) their carbon footprint correctly.
Campaigners and commentators are increasingly willing to take legal action against what they see as errant organisations – with 26 legal challenges across the world making it to court last year[1] and more than 180 other cases being filed. In that context, businesses might be tempted
to stay quiet on aspects of their ESG programmes, or even choose not to communicate anything at all. However, this runs the risk of ‘greenhushing’ – deliberately choosing to under-report ESG credentials to evade scrutiny – a practice which could cause just as many challenges if the organisation has not taken a scientific, structured approach to the issue.
The 6-Check ‘DEPEND’ Model lays out the following key elements for consideration to help avoid accusations of greenwashing:
- Data – robust, comprehensive and accurate data visibility is the key defence against greenwashing, and it’s essential to choose ESG technology that allows you to report your data accurately, consistently and at the right level of granularity
- Evidence – establishing a trusted baseline (One True View) of your ESG evidence will allow you to set credible targets, track results over time and explain impacts and outcomes which go beyond the reporting of the data itself
- Probe – armed with facts, it’s then essential to probe deeper and engage teams across the business in practical actions, such as audits, reviews, supplier engagement programmes and evidence-based decisions, all of which can then drive improvements in both ESG impacts and operational performance.
- End-to-End – one vital trap to avoid is focusing solely on climate metrics or green issues (sometimes known as ‘carbon tunnel syndrome’), but instead making sure that social and governance issues are given equal weight in a balanced ‘end-to-end’ ESG programme.
- Non-Selective – tempting as it might be, it is essential not to leave out ‘uncomfortable truths’ or report only on selected high-performing parts of your ESG activity
- Direct – use clear, unambiguous, understandable language, fair and relevant comparisons and explain why specific targets were chosen
These six simple steps spell out DEPEND of course, and it’s crucial to see them as a cycle – having passed through them once, you can go back to the start and keep your ESG activity under regular review. To reiterate our opening point, ESG strategies and sustainability reporting offer businesses some of their fastest-growing opportunities, but a structured and scientific approach is key if that’s not to backfire and potentially lead to accusations of greenwashing.
We have an OnDemand webinar available to further aid your understanding of how to 'DEPEND' on your ESG claims. It's an excellent complement to the insights provided in the blog.
We invite you to take a moment to watch our OnDemand webinar to gain a comprehensive grasp of how to Avoid Greenwashing and truly rely on your ESG claims.
WATCH NOW
Enabling sustainable choices and ending greenwashing (europa.eu)
Greenwashing Statistics 2023 You Shouldn’t Ignore • GITNUX
Release: Consumer focus on sustainability outstrips marketers current skill set with half still fearful of ‘greenwashing' (cim.co.uk)
Over 90% of Firms Aren’t Measuring Emissions Correctly, BCG Says - Bloomberg
Legal challenges on greenwashing grounds rising steeply - edie