Climate Change: The increasing risk of greenwashing

Green claims made by companies for their products and services often include statements about how they benefit the environment. These claims reflect growing consumer interest in the impact their purchasing or investing has on the planet. They have also been increasing exponentially in the last few years. Nobody wants to be left out in the rush to highlight carbon statements and their support for a better planet provided by their goods and services. Consequently, statements have been made that are misleading and confusing for consumers. The UK Competition & Markets Authority (CMA) have recognised this an important issue in the degree of informed choice available to consumers. This is what is meant by ‘greenwashing’.

Within Eton Bridge Partners, Ivan Bates is leading on the advice and support we can give our clients on the delivery of their climate change and sustainability targets. Our efforts to date have been focused on supporting our network with advice relating to carbon disclosure and environmental risks to business. We have also developed a strong cohort of climate change professionals, with a particular emphasis at board level.

In this blog, Ivan summarises his discussion with Hugo Kimber, the Founder of Carbon Responsible on the topic of greenwashing. Carbon Responsible provides measurement, management and reduction support for companies and their investors, using data driven solutions and expert advisory.

Highlighting potentially misleading green claims

The CMA conclude that up to 40% of claims made by companies they reviewed are “potentially misleading”, highlighting particular issues in the retail and travel sectors. They have provided some guidance and announced their intention to start prosecuting false or misleading claims from January 2022. Unlike the French who have passed a new law banning greenwashing, the CMA will use existing consumer law to ensure honesty is upheld in the use of green claims.

Green claims can be anything from carbon emissions to product recycling. Carbon emissions related claims are on the rise. The growing enthusiasm for action on climate change has seen a wide range of claims that go beyond the traditional carbon neutral, to carbon negative, carbon zero or net zero.

In the majority of cases these claims are not driven by the reduction of emissions that are central to global 2050 targets. They are predominantly driven by offsets that have varying degrees of success in reducing emissions.

Less specific claims like being ‘climate friendly’ or the planting of trees for new purchases/ consumer subscriptions, convey the impression that purchasing has a positive effect and no impact on the environment. The facts and numbers behind these claims are required to enable informed purchasing, which when absent, are deemed as greenwashing.

What does ‘net zero’ actually mean?

The UK has recently seen the Premier League’s first net zero football match. The effort highlights the value of engagement and awareness, but also shows how difficult it is for consumers, in this case fans to understand what this all means. The claim is based upon several actions to reduce emissions, including the use of renewable energy use at the stadium (source unknown), reducing the impact of team transport and providing 180 free bicycles. However, the considerable, indirect impact of nearly 63,000 fans travelling to the game, despite high levels of public transport usage, still creates an immediate emissions output and it is unclear how, or if, this has been addressed to deliver a net zero status.

Net zero has many interpretations, and in itself needs clear articulation for consumers. Reduction to achieve lower emissions is a key element of any net zero pathway with the removal of carbon from the atmosphere being the other key ingredient.

Storage of emissions through carbon capture projects is at an early stage of development, leaving storage by trees as a popular alternative. The UK Woodland code allows for savings over a 100 year period, and even the fastest growing trees in the UK will take 40 years to grow. This creates a lag between planting and actual sequestration of emissions, creating a positive effect that takes time to deliver. In the meantime, emissions created today are not absorbed by the act of purchasing new forestry projects, and new projects will not realise storage value before the agreed 2050 target date for net zero.

Recommended action

The CMA recommend six key action areas to avoid greenwashing.

  1. Be truthful and accurate: Businesses must live up to the claims they make about their products, services, brands and activities.
  1. Be clear and unambiguous: The meaning that a consumer is likely to take from a product’s messaging and the credentials of that product should match precisely.
  1. Do not omit or hide important information: Claims must not prevent someone from making an informed choice because of the information they leave out.
  1. Only make fair and meaningful comparisons: Any products compared should meet the same needs or be intended for the same purpose.
  1. Consider the full life cycle of the product: When making claims, businesses must consider the total impact of a product or service. Claims can be misleading when they don’t reflect the overall impact, or when they focus on one aspect of it but not another.
  1. Be substantiated: Businesses should be able to back up their claims with robust, credible and up to date evidence.

Review your business’ existing green claims to support change

The CMA advice can be summarised as a requirement to review existing claims and ensure that there are facts supported by measurement of impact that can be clearly communicated to customers. If your claim is that you are climate friendly or carbon zero, what have you measured, and what – if any – reduction has been achieved? If you are just offsetting, how are you doing this? Planting trees takes many decades to remove emissions from the atmosphere and is not an immediate benefit. In the event that your existing review of statements relating to the environment cannot be substantiated, remove them until you have the required measurement and supporting evidence for them. The risks from CMA attention, activist litigation and consumer backlash make this an issue that has moved to centre stage and are worth immediate attention in the coming months.

Please do get in touch with Ivan if you would like to explore ways in which we can support your business to effect meaningful change as we transition to net zero.

Ivan Bates

Partner
Board Practice


Specialising in executive search within senior leadership and board-level positions, Ivan's extensive leadership and people management experience enables him to work closely with both clients and candidates with the C suite to ensure the best possible outcomes.

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