Going green without greenwashing

Becoming a sustainable enterprise business is both a long and urgent process. Sharing green achievements along the way is good for reputation and investor relations so let’s investigate - how can we promote green virtues without greenwashing?

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Going green without greenwashing

Key takeaways

• Companies must see the pursuit for sustainability as an operational process rather than just a feel-good message

• Well-defined sustainability goals are key to building brand love and confidence among investors and customers

• Be wary of legal implications – stay up to date on the latest legislation to ensure undisrupted operations

• Utilise reputable frameworks and ensuring progress is measurable will go a long way to gain credibility

The benefits of becoming a fully sustainable business are tenfold; improve operational resilience, capture more ESG-focused investments and improve the reputational image. Business leaders and shareholders have been quick to identify this multifaceted opportunity and are increasingly putting pressure on companies to shift to sustainable operations and willingly share their sustainable credentials.

Companies that were perceived to be greenwashing can expect customer satisfaction levels to drop by up to 2.4%¹.

But with these fundamental changes and increased pressure comes the potential risk of greenwashing and reputational damage. Companies that were perceived to be greenwashing can expect customer satisfaction levels to drop by up to 2.4%1. Wiping that much off the bottom line in an instant is a risk many companies are not willing to take, which means the progress to sustainability will stall.

Since ESG frameworks lack a global data standard, it is also difficult for companies with a global footprint to feel confident that their efforts are meeting all local regulations. They even risk inadvertently greenwashing by focusing on the wrong strategies.

Avoid the risk of greenwashing

Method, not message

Actions, solutions and reporting are first steps to building ESG value

Read

Legislation

Ensure compliance criteria is met

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Open and honest

Data is king to tracking and achieving sustainability goals

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Frameworks and carbon impact

Gain accreditation while ensuring carbon impact is measurable

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Start with the method, not the message

While 86% of companies have a sustainability strategy, only 35% claim that the strategy is in progress.

Research shows that while 86% of companies have a sustainability strategy, only 35% claim that the strategy is in progress. The problem is not willingness but action.2

While sustainability is the ultimate feel-good marketing message, it’s important to start with the method of becoming sustainable before telling the world about business virtues. Starting with the message before the method is how companies like Volkswagen, with their infamous emissions scandal, fell into the greenwashing trap and ended up with a large damage control task on their hands.

Instead of thinking about ESG as a marketing message, it should be considered an operational process that puts actions, solutions and sustainability reporting as the first steps in building value. From there, the message becomes compelling and, most importantly, backed with evidence.

Be open and honest

Being accused of greenwashing isn’t just about a misplaced marketing message; it can also put companies at risk of losing investors. When Nestlé announced they were switching all packaging to renewables by 2025, they failed to define how they would achieve these goals and opened the strategy to both journalist and investor scrutiny.3

Gathering measurements is an early step for many companies in seeking true sustainability. By adding data points to waste, emissions, raw materials and end-of-life products, companies can begin the journey to addressing their biggest environmental impacts and make plans to reduce them.

While this up-front effort can sound time and resource-heavy, sustainability is proving profitable for companies already adopting ESG practices. A staggering 1/3 of customers are happy to pay a premium for sustainable products4, and customers are more likely to purchase additional units if they know they can be recycled.5

Be ahead of legislation changes

For companies with a footprint in Europe, greenwashing is about to have legal implications. When called upon, companies will have just ten days to prove their sustainability claims or face penalties.6

Staying ahead of legislation puts companies on the front foot of sustainable practices and protects them from needing to quickly shift operations to meet new compliance criteria. For companies with a base in developed countries, where compliance is most stringent, this can be applied to countries still defining their legislative changes.

Remember to include scopes 2 and 3

With complex global supply chains, measuring the ESG data credentials of partners and suppliers can be a near-impossible task and puts companies at risk of being accused of greenwashing by proxy. Enlisting the support of reputable organisations such as SBTi7 is a great place to start. They provide the frameworks to begin measuring the carbon impact of your business and allow you to become an accredited company once standards are met.

Digitising and analysing data inputs across the supply chain also reduces the risk of greenwashing by making it wholly measurable. This allows companies to address issues with wastage and emissions as well as provide those compelling (and truthful) data points for sustainability communications.

Adding technologies to address wastage, such as Singtel’s IoT emissions control for ships, also builds sustainable practices by automating pollution reduction and freeing up time to focus on the next opportunity for sustainability.

Supply chains are where most manufacturing and transport-related emissions are created, which is why 45% of G2000 businesses plan to reduce these Scope 3 emissions. This commitment is predicted to bring their businesses a 10% reduction in waste and associated costs.8

Sustainability efforts must be a careful balance of long-term goals and short-term wins.

Talk to us about building sustainability into your business:

References

  1. Harvard Business Review, 2022, How Greenwashing Affects the Bottom Line
  2. LinkedIn Pulse, 2023, Sustainability by Design for Shared Value that Scales
    – An ESG Impact Special with IBM
  3. The Guardian, 2020, Coca-Cola, Pepsi and Nestle Named the Top Plastic Polluters for the Third Year
    in a Row
  4. Reuters, 2023, Dow Said it was Recycling our Shoes. We Found Them at an Indonesian Flea Market
  5. Forbes, 2022, 3 Ways Businesses Can Avoid Greenwashing
  6. The Guardian, 2023, EU to Crackdown on Greenwashing with Proportionate Penalties
  7. Science Based Targets initiative (SBTi)
  8. Forbes, 2023, Sustainability Trends 2023 - Goodbye Greenwashing, Hello Business Results

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