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Greenwashing – eliminating the spin cycle

Greenwashing – eliminating the spin cycle

 

Climate change is back in the headlines this month due to Portugal, Spain, France, and the UK experiencing record-breaking high temperatures. In Europe, over 1,000 lives have been lost, acres of forests have been destroyed by fire, and impacted communities have been turned upside down.  In the UK we have seen melting runways, buckling railway lines, and shocking scenes of fires in and around London.

Climate scientists have confirmed this heatwave is related to carbon emissions.  It is a clear-cut, climate-related risk that has escalated this week into a crisis in parts of Europe. National contingency plans have been activated as crisis management teams deal with the operational impact of these record temperatures.  It is a stark warning to take carbon emission reductions seriously. And if you need a glimpse into the future with increasing carbon emissions, please do look at the Sheena Thomson Consulting Climate Change Platform, in association with GeollectTM – the data does not lie.

A lot has been said about collective efforts globally, regionally, and locally to combat the effects of climate change and global warming. Many companies have rushed to proudly use their purpose and renewed values around climate change, net-zero ambitions, and creating a sustainable future: great! However, many are using their recognised sustainability-reporting mechanisms, such as Environmental, Social and Governance (ESG), as a PR tactic in a dash to keep their sentiment in line with public opinion. In spite of this, they are increasingly being called out by environmentalists holding organisations to account for evidence of reported misinformation.  It is a problem.

On 7th July, the Public Relations Consultancy Association (PRCA) published its second annual report on climate misinformation. The PRCA is a global association for PR agencies and professionals and represents 35,000 members in 82 countries. The report specifically looks at climate change misinformation and the misuse of sustainability claims to mislead.  This, of course, is more commonly known as “greenwashing”, which Greenpeace defines as follows:

Greenwashing is a PR tactic used to make a company or product appear environmentally friendly, without meaningfully reducing its environmental impact.

…Greenwashing aims to boost a company’s public image or make more sales by convincing us that buying from them aligns with our values.

The PR profession has a responsibility to help raise public awareness and influence public opinion on climate change through client work. Yet it also has clients who are keen to extol their virtues in terms of what they're doing to mitigate the risks and impact of climate change. Clients are also from fossil fuel and heavy carbon-emitting sectors that are keen to be seen as progressive, transitional, and innovative; embracing international declarations; and meeting the demands of a more purpose-led public. It is an ethical PR tightrope – accusations of greenwashing are a real risk to organisational reputation, and ultimately their businesses.

On behalf of its members, the PRCA now fully recognises its role leading the way and navigating this tightrope: their latest published survey results are a glimpse of the progress they are making.  Almost 45% of PR agency clients attempt to greenwash, as the threat to their business overrides the threat to the planet.  Thankfully, 89% of PR agencies have advised against this, with 57% achieving a change of direction and approach.

Nonetheless, this is still a tightrope and the risk of misinformation in climate-change-related reporting is even starker. The report cites that “71% of consumers say they would stop buying from a brand if they knew it had misled its customers about having a positive environmental impact.”

Organisations and companies typically share their sustainability data via ESG reporting frameworks.  Where there are shortcomings, missed targets, or failures, the choice is:

  • Greenwash: Risk being called out by environmentalists, social-media-savvy influencers, and a well-informed public. Judgement may result in consumers and investors withdrawing support, loss of trust and damaged reputation.
  • Transparency: Be honest, see it as an opportunity and be prepared for the reaction.  Judgement may result in an increase in innovation or transition investment.

The PRCA report clearly shows that the days of passing ESG reports with unpalatable information to a PR agency for creative wordsmith treatment are numbered.  The PR profession is pushing back.

So how should organisations communicate problematic sustainability and ESG-related information they need to report?  There are several factors to consider:

Purpose

Consumers and investors are increasingly becoming purpose-led and that influences their buying and investment decisions.  The climate crisis is having a huge impact on purpose, and members of Greta Thunberg’s school strike movement against climate change are all now young adults.  Their parents want to play their part too.  Ensure your purpose is aligned to earn or maintain their trust.  Don’t lose trust through reporting that misleads and not aligned with a declared purpose. Lost trust is difficult to regain.

Values

Ensure values are robust and can withstand scrutiny in every part of an organisation. Words need to have a meaning and must be applied at every level and corner of an organisation.  When faced with accusations of greenwashing, values are the first thing to be questioned.  Every link in the values chain must be strong – it only takes one weak link to destroy the integrity of the entire chain.

Risk culture

Like values, the risk culture must be consistent throughout an organisation.  For example, if it has a stated commitment to reducing carbon emissions, the risk of not doing so must be clearly understood and applied throughout the organisation and at every level, such as requiring hauliers to use only green vehicles for deliveries, as well as increasing efforts with facilities management and staff transportation initiatives.  This can be reinforced through internal communications that underscore the risks to the environment if we are unable to reverse global carbon emissions.  The risk is beyond the organisation.  As with values, it only takes one weak link to break a strong chain.

Law, regulation and reporting requirements

ESG and climate change impact reporting requirements are constantly evolving. There have been huge steps in the financial services sector to move organisations to regulatory reporting of risks, particularly in the insurance sector.  Losses incurred through increased hurricanes and wildfires have proved to be the canary in the coal mine for many.

Businesses and corporate leaders are also campaigning for changes in reporting. The Better Business Act is a business coalition campaigning for more suitable reporting standards to be written into law.  Their research concludes that “76% of the UK wants businesses to be legally responsible for their (ESG) impact (in society)”.  Their goal is to have this amended in Section 172 of the Companies Act 2006.  BCorp is another business organisation where members adopt the standards and stakeholder governance that make them more accountable to people and the planet.  And these are just two – there are many more driving or supporting better sustainability-reporting standards that can help reverse the impact of climate change.

There is no doubt that climate change is here and, according to the Federation of European Risk Managers Association (FERMA), it remains one of the top five transitional risks requiring management attention. When reporting their climate-related risks, however, organisations should bear in mind both the expectation from the public and from wider stakeholders in terms of transparency. Those communicating sustainability progress should do so openly and clearly as they are putting not just their reputation at risk, but their businesses – and ultimately the planet.

References

Sheena Thomson Consulting Climate Change platform, in association with GeollectTM, a free and very powerful data-driven platform to help organisations with their modelling of climate change risks. Only available via desktop.

1994 World Bank defines the expression “sustainability”  Sustainability definition Policy Research Working paper 1302 by Geir B. Asheim

2006 and the introduction to ESG Sustainability framework at IFC conference “Who cares, wins”: Environmental, Societal and Governance (ESG)

PRCA report: “How is PR fighting Climate Change mis-information”

Greenpeace definition of Greenwashing

The Better Business Act: “Britain needs business at its best”

BCorp: “Make Business a Force For Good”

FERMA:  P12:  Results of the FERMA European Risk Manager Survey 2022

Photo Credit:  Tina Bosse, UnSplash