Insight

5 Key areas on how to avoid greenwashing

28th March 2023

The European Commission is sharpening its teeth on greenwashing – confirming this week that EU member states will be in charge of imposing penalties, including fines, confiscation of revenues and temporary exclusion from public procurement and funding. The draft version of the Commission’s Green Claims Directive reveals that 53% of green claims on goods and services sold were “vague, misleading or based on unfounded information”.

More details on what counts as greenwashing in specific sectors is expected in a few weeks in a bid to provide clarity to consumers and businesses. The potential issuing of fines on companies in the EU comes as other regulators across the globe, including in the UK and US, are also set to issue their own clampdowns. The reputational damage of those exposed will be even more significant.

Here we outline our top five recommendations to avoid the reputational risk of being found guilty of making false environmental claims:

1. Transparency
Transparency is key in every aspect of sustainability. The latest EC Directive reinforces this point – stating it will pull companies up for greenwashing if they exclude relevant information about their environmental impact. Therefore, companies cannot get away with hailing their latest renewable energy deal without noting that a large amount of their investments are in the fossil fuel industry. Similarly, businesses need to disclose the full environmental impact of their initiatives. So, if a move to sustainable packaging, such as from plastic to cardboard, pushes up carbon emissions, it needs to be stated. The key takeaway is that businesses need to frame their claims in the context of the improvements they are making towards the transition to a global decarbonised economy while not hiding areas where they need to improve.

2. Reporting
By revealing the wider context of the business’ sustainability strategy, goals and progress, it will provide more credibility and mitigate the risk of being accused of misleading. ESG reports shouldn’t be buried deep within a corporate website, but at the heart of all your communications making a link between your claim and the company’s wider performance.

3. Follow the science
Being able to back up any claim with scientific evidence is crucial to avoid greenwashing. In fact, the EC Directive requires this, especially around statements surrounding the use of recycled plastic content in packaging and products, and the carbon impact of products and services.

4. Language
Greenwashing is essentially a failure of language. Using the wrong word to overstate or make misleading claims can be perilous. The common mistake is being too general with the use of some terms. Serial offenders are “eco-friendly” and “green” – both used for a thousand different things. Keeping a basic, descriptive name and saying exactly what the new initiative does will avoid falling foul of this trap. An example we recently had was of a client using recycled plastic to make a fuel for transport. Rather than label it a “sustainable fuel”, we advised a client to say what their product actually does and agreed on “lower carbon fuel”. It resulted in no criticism following a public launch.

5. Tone
Finally, setting a humble tone is half the battle when avoiding the risks of greenwashing. Companies should be proud about the efforts they are making to transition, but must place this in the wider context of there still being lots to do as a business, within their industry and as part of their wider community.