Last reviewed 17 January 2012

Protecting the environment is now central to all organisations’ activities as they expand their CSR. But is greenwashing now a thing of the past? Dave Howell reports.

The risk of wash and spin

Over the last few years, the green credentials of companies have increasingly come under the spotlight. However, the risk of greenwashing within an environment where consumers have become savvy to the environmental rhetoric that has been directed at them has meant a doubling of efforts to avoid the taint that greenwashing can bring to a company.

Indeed in a bid to ratify the green claims made by some companies, the Department for Environment, Food and Rural Affairs (Defra) last year published its Green Claims Guidance. The guidance is designed to help consumers make more informed judgements about what they buy, prevent misleading claims and encourage the development of greener products.

Environment Minister Lord Henley said: “Sales of ‘green’ goods contribute billions of pounds towards the economy while helping to reduce our impact on the environment. If people are making the effort to buy green it is only right that we try to make the process as easy as possible. Our guide will make things easier for both business and consumer, helping restore public faith in environmental advertising and acting as a resource for companies developing more sustainable products.”

Focusing on climate change and the business carbon footprint, research by the Carbon Trust makes for worrying reading when greenwashing is considered. Its report revealed that 66% of the public questioned the authenticity of the climate change claims made by companies.

The research shows that the majority of consumers (60%) need third-party evidence of action from a respected climate change body before believing corporate claims. The first place the public search for evidence of corporate climate change claims is not company websites, but search engines, which provide a range of sources. Just 7% believe the word of companies on their climate change responsibilities and actions to reduce their impacts.

Peter Walshe, Global Director, BrandZ, said: “This new research builds on our own global analysis and shows that the public are in a very uncomfortable place regarding climate change; they understand the significance of the issue, they recognise that businesses are a major emitter of emissions, but most are unclear as to the full extent — and what real action looks like.”

Unfortunately for many companies, using environmental jargon can lead to unintentional greenwashing, as Robert Harness, Business Development Manager at ebm-papst UK, pointed out: “It may be subtler but greenwashing still exists. The problem is that there's no definition of ‘efficient’ or ‘eco’ or ‘green’ so these words are used freely to promote products with no data to support their claims.”

An inconvenient truth

In the absence of any universal metric that tracks and verifies the green claims made by corporations, several systems have been developed. These include the Global Reporting Initiative, the Carbon Disclosure Project, the California Climate Action Registry, the WRI GHG Protocol, and the Dow Jones Sustainability Index.

There has also been a parallel trend among western economies for more government-legislated compliance reporting by large organisations of environmental metrics, such as greenhouse gas emissions, energy use, water/wastewater, pollutants, e-waste and so on. These schemes include the CRC (UK), NGERS, EEO, NABERS (Australia), EU-ETS (Europe) and EPA (US).

Commenting on the proliferation of these organisations, Dave Solsky, CEO at CarbonSystems, said: “This is not to say that greenwashing is history or that all is well in CSR reporting. For example, a recent report by Deloitte noted that more than 90% of listed UK companies fell short of Defra’s current carbon accounting recommendations. As few as 20% were able to report progress against specific emissions targets, while only 1 in 100 had identified carbon as a designated business risk in its annual report.

“In addition, the lead taken by high profile US and UK brands such as Wal-Mart, Marks & Spencer, Nike, Target, Cisco, Campbell’s Soup, Hilton, TXU Energy, and Chrysler has demonstrated the financial value of a professional approach to business sustainability — reporting tens of millions of dollars in savings by adopting renewable energy, energy efficiency and recycling schemes.”

For organisations the advice is clear — greenwashing may not have the media hype attached to it that it once had, but it is still a trap that a corporation can easily fall into. The level of consumer awareness means that businesses must ensure that the claims made via their CSR reporting are accurate and support their overall commercial objectives, yet at the same time indicate that they understand the green issues that are important to their customers.

Corporate social responsibility

The reporting of green credentials and the sustainability that this is a part of is now a component of facilities and environmental managers’ key duties. For many companies, using decentralised systems to generate the data that is needed is becoming more commonplace. CarbonSystems’ Dave Solsky explains: “Leading companies are adopting cloud-based enterprise sustainability software to streamline and automate the capture of sustainability data, including utility and supply chain data. Now widespread around the globe, analyst companies such as Gartner, Forrester and Verdantix have reported that this technology reduces the time and cost of managing data and delivers timely, financial grade business and compliance reporting ability.”

Bolstering the green initiatives within your company does not have to be a complex and expensive process. Rob Wicker, Operations Director at Swiftflow, advises: “Managers need to think about what they can do to improve consumers’ perceptions. Incorporating green focus into all areas of the business. There is a huge range of different options that managers can utilise that provide a return on investment.”

In addition, facilities and environmental managers who play a key role in the acquisition process should ensure that the claimed green credentials of a product could be verified in some way. Everything that is used by an enterprise adds to its environmental profile. “Ask for the data beforehand and verify it afterwards,” advised ebm-papst UK’s Robert Harness. “Ideally, suppliers should provide real figures for previous use of a product or service or at least estimated figures before installation. Once installed, facilities managers should insist on verification by measurement of performance in use.”

Commercial gains

The question often asked is whether there is a correlation between the perceived green credentials of a company and its sales performance? Do consumers punish those businesses that they think are greenwashing? BrandZ’s Peter Walshe concluded: “Without even taking into account the role that environmental responsibility has in demonstrating leadership, fairness and trust — our own research shows that taking action on climate change represents a 2% sales increase or decrease for businesses to play for. Right now, this is an opportunity. But as awareness rises of the considerable role of business emissions in climate change, I expect an imminent backlash against companies that do not perform or cannot prove their actions are measurable and authentic.”

What has become clear as the environment has crept up the corporate agenda is that some sectors perform better than others. Food businesses often fair much worse than other industries. Research carried out by AB Sustain last year (ie the agriculture group of Associated British Foods) showed that more than half of consumers believe major food businesses are “only playing at being green”. According to new research, almost 80% of consumers demanding that more retailers and producers commit to tackling climate change.

Johanna Buitelaar Warden, Business Development Manager at AB Sustain, said: “These somewhat damning results would suggest that consumers often feel they are being greenwashed by major businesses in the food and drink industry — there is clearly a sense of mistrust. However, what these results do show is that people are clearly engaged in environmental issues and would like to see more collaborative effort from the food industry on climate change, from the bottom of the supply chain (ie farm level) to the top.

Taking a step back, facilities and environmental managers who are assessing their company’s own green initiatives and asking themselves whether these could be seen to be little more than greenwashing have a short time to react. The current economy may be placing price above all other considerations as consumer’s pockets are squeezed, but the green agenda is still alive and well. It is up to facilities and environmental managers to modify business practices, work to gain accreditation with the organisations that do exist that have recognised metrics, and develop internal initiatives that support their enterprise’s CSR in a wider context. Greenwashing is still a risk that all organisations should be working to avoid.

How to avoid greenwashing

Sustainability expert Sharmel Ali says companies can take several simple steps to avoid claims of greenwashing when reporting environmental performance. In a recent company blog for CSR Asia, he suggests the following.

  1. Do your homework — ensure that the green claims about the business, product or service are true and consistent with wider business activities. Example: A large cosmetics company was promoting its fund-raising for breast cancer research, but was attacked by activists for including carcinogenic substances in its products.

  2. Be honest and humble — nothing is perfect and honesty goes a long way. If a business or company is not 100% green, do not pretend it is, acknowledging products and services that are not yet green. Companies that demonstrate commitment and progress are more likely to earn trust.

  3. Provide documentation — information should be made accessible to the public. Can green claims be verified by recognised eco-labels, methodologies or experts? Companies should make it easier for customers to be able to understand and check on green claims being made. Example: Marks & Spencer has an extensive website documenting and explaining all in-store claims.

  4. Consult stakeholders — engaging stakeholders about green marketing is invaluable. It demonstrates a company’s good intent, desire to improve, and inclusiveness. Companies can take the opportunity to find out if their green claims are acceptable to their staff, suppliers, customers, NGOs and the community and check on whether they are on the right track. Example: Several alcohol producers now have stakeholder panels to comment on whether their advertisement is ethical.