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When companies fall victim to greenwashing

Amber Daines | 31 March, 2023


Green sheen or greenwashing is something every business must examine closely, especially with regulators like ASIC cracking down on those who overstate their Environmental Social Governance (ESG) credentials.

When communicating your ESG messages on your website or in an investor pitch deck or annual report, several common mistakes may be made. But here we look at the most common and how to avoid them.

Here are some examples:

Bandwagon language

Using overly general, vague language and buzzwords can be a mistake. For example, saying that a company is committed to sustainability without providing specific actions or goals can be insincere or disingenuous. The proof is key!

Smoke and mirrors tactics

Transparency is essential when it comes to ESG communication. Companies not forthcoming with their ESG performance may be seen as hiding something or not taking ESG issues seriously.

Focusing too much on the “E” and not enough on the “S” and “G”

While environmental issues are undoubtedly important, ESG encompasses social and governance issues. Companies that only focus on their environmental performance may be seen as neglecting social and governance issues. It is a package deal.

Not engaging stakeholders

Stakeholder engagement is critical when communicating ESG messages. Companies that fail to engage with stakeholders and consider their concerns and opinions may be seen as unresponsive or dismissive. Do let your internal communications work, as well as your external channels, to ensure that the image and reality of your green messaging are aligned.

Using “greenwashing” tactics

Greenwashing makes false or exaggerated claims about a company’s environmental performance or practices. This can be a significant mistake when communicating ESG messages, as it can damage a company’s reputation and credibility. Think of Volkswagon and its infamous diesel emissions case.

Failure to integrate ESG into business strategy

Companies that treat ESG as separate rather than integrating it into their overall business strategy may be seen as insincere or not fully committed to ESG issues.

Lack of measurable goals

Companies that fail to set measurable ESG goals and track their progress towards those goals may be seen as lacking commitment to ESG issues or not taking them seriously. Customers these days expect the reporting to mean something.

To avoid these mistakes, companies should strive for transparency, engage stakeholders, integrate ESG into their business strategy, set measurable goals, and avoid greenwashing tactics by seeing if these methods stack up should they suddenly be audited.

The interesting reality is greenwashing can happen on social media far more easily and is largely not policed. Ads come and go. They stick on our feeds and minds but often use subtle or suggestive language and images to sell an idea.

In October 2022, ACCC launched two internet sweeps to identify misleading environmental and sustainability marketing claims and fake or misleading online business reviews.

The sweeps are being conducted over the coming weeks as part of the ACCC’s compliance and enforcement priorities for 2022-23, with the broad aim of identifying deceptive advertising and marketing practices by businesses or industries.

At least 200 company websites will be reviewed for misleading environmental claims across targeted sectors, including energy, vehicles, household products and appliances, food and drink packaging, cosmetics, clothing and footwear.

Around the same time, a Harvard study published by Greenpeace showed that 67% of companies used social media to speak of “green innovation” without meaningfully acknowledging the climate crisis (only 0.3% of the companies explicitly referenced “climate change” or “global warming”). There was a haunting climate silence in this bandwagon of climate marketing. This seems to teeter on the edge of transparency and can’t be a great place for any company to be long-term!

The lesson is to be ahead of the regulators and do better with your green credentials, which start with honesty.

Many companies are just getting their heads around ESG; however, those that will win the hearts and minds of their people and consumers and the communities they operate in will be the ones who show up with integrity.

Typically, the old and golden PR rule has been to ‘gloss over’ the ‘negatives’. This does not apply anymore. And it certainly does not apply to ESG. Any company which is honest about where it’s at, its lackluster performance, or otherwise, will be seen as having a much more genuine commitment to ESG than one which over-states its performance.

If you need help, I’m here to guide you with communication.

Listen to my recent podcast on The Politics of Greenwashing with John Pabon as my expert guest. It is one big truth-teller episode!