WE want, we need, businesses to be greener, to launch planet-friendly initiatives. But they must beware. Being caught peddling false or misleading claims can hurt enormously.
This isn’t only a PR issue; regulators are cracking down. The International Sustainability Standards Board has published a set of G20-backed rules aimed at outing and penalising “greenwashing”. This comes after a European Commision directive on green labelling and a new “green claims code” from the UK’s Competition and Markets Authority.
Companies run the risk of falling foul of the watchdog concerned, frequently in the UK that means the Advertising Standards Authority or facing actual litigation or being shamed in the court of public opinion.
The ASA has brought more than 20 enforcement actions against greenwashing. Etihad claimed it was “taking a louder, bolder approach to sustainable aviation”. The adverts were banned because the claim “exaggerated the impact that flying with Etihad would have on the environment”.
The ASA targeted Innocent’s “Little Drinks, Big Dreams” video adverts. The authority concluded their recycling message exaggerated the total environmental benefits since Innocent used single-use plastic products. It was misleading for implying “purchasing Innocent products was a choice that would have a positive environmental impact when that was not the case”.
Plant-based milk brand Oatly claimed it generated “73% less CO2e” versus cow’s milk, and that the dairy and meat industries “emit more CO2e than all the world’s planes, trains, cars, boats etc combined”. Oatly said it relied on UN research and scientific studies. But the ASA said the ads were inaccurate and had to go. An Oatly spokesperson admitted the company “could have been more specific in the way we described some of the scientific data”.
Deutsche Bank settled a greenwashing court case after a watchdog filed a lawsuit accusing its DWS asset manager of misleading investors by claiming its Climate Tech Fund excludes companies active in controversial sectors such as coal or defence equipment.
Meanwhile, environmental groups are suing KLM over an alleged greenwashing campaign. They maintain KLM’s “Fly Responsibly” promotion violates the EU’s Unfair Consumer Practices Directive by giving the false impression its flights will not exacerbate the climate crisis.
Ahead of the last Winter Games, the International Olympic Committee issued press releases heralding how every venue in Beijing would be fully powered by renewable energy, while glossing over how Beijing 2022 diverted groundwater to make the 1.2 million cubic metres of fake snow that carpeted every ski slope or that it bulldozed part of a mountainous nature reserve to build the bobsled, skeleton and luge centre.
In similar fashion, the organisers of the World Cup in Qatar in 2022, declared theirs to be the “first carbon neutral” tournament. That was quite a boast and was promptly challenged across the international media by a detailedanalysis from an environmental think tank accusing them of under-reporting the projected emissions, in particular the carbon footprint from building seven new football stadiums.
In another instance, Carbon Tracker Initiative said asset managers had invested $376 billion (£295 billion) in oil and gas companies, despite publicly pledging to back efforts to limit global temperature rises to 1.5C. The environmental think tank found that more than 160 funds with a green label held $4.6 billion in 15 companies including Exxon and Chevron.
The ever-higher levels of scrutiny threaten to encourage “greenhushing”- companies deliberately avoiding communicating about environmental initiatives, for fear of being called out.
Sustainability adviser Leighton Barnish of Powerscourt describes companies as “on the one hand, needing to demonstrate their environmental credentials to increasingly discerning consumers, regulators, employees and investors; while on the other, needing to be very mindful of greenwashing and the damage that can do to a firm’s reputation”.
He believes that “companies can’t, and won’t, stop promoting the sustainability merits of their goods and services. That means they’ll need to provide watertight evidence that their claims are true in a way that doesn’t make ‘the story’ less appealing.”
We don’t wish to see companies dissuaded from going down the eco-route, perish the thought. Equally, they must go into it, eyes open. It’s not another marketing ploy, a gimmick for adding sales; they will have their project examined every which way. Get it right and they will receive deserved acclaim; get it wrong and opprobrium awaits.
Where climate change is concerned, the stakes are too high for any other approach — behave half-heartedly, be cavalier with the truth, and they can increasingly expect severe punishment.
Chris Blackhurst is the author of Too Big To Jail: Inside HSBC, the Mexican drug cartels and the greatest banking scandal of the century (Macmillan)
