The demand for more ‘eco-friendly’ products and services is booming. According to a survey by WWF, online searches for ‘sustainable’ goods increased by 71 per cent since 2016. This has translated into growing pressure throughout supply chains for organisations to demonstrate ‘green’ credentials. Many companies are now actively reporting their ‘environmental impact’ and committing to long-term goals like ‘carbon neutrality’.
Notice all the terms in apostrophes. Today’s environmental agenda is filled with buzzwords, many of which have no universally agreed definition. In fact, all of the terms highlighted above can be used in varying, and sometimes misleading, ways.
Misleading customers or stakeholders into believing a company, product or service is doing more for the environment than it is, is called greenwashing.
Unfortunately, greenwash is not uncommon. Sometimes it’s rather obvious, like a fossil fuel company advertising that it is leading the way to cleaner energy, when in reality these activities only make up a tiny proportion of its business. Sometimes it’s less obvious and may occur despite good intentions. For example, a business that chooses to purchase carbon offsets and promote itself as ‘carbon neutral’, without making any change to its own operations, could easily be accused of greenwashing.
Key greenwashing terms worth knowing
Research shows that an alarming 40 per cent of ‘green’ claims being made by businesses online could be considered misleading, often due to:
The effect is increased scepticism amongst consumers. A recent YouGov poll found that two thirds of people are now wary of environmental and social claims made by brands.
Separate research found that around 60 per cent of institutional investors believe greenwashing is blocking them from delivering on their sustainable investment goals, while the vast majority of individual investors say they find it hard to trust business’ claims at face value.
There is even doubt around corporate net zero emissions goals, some of which offer little accountability or any genuine action on the ground.
Understanding the new Green Claims Code
This cynicism is good news in the fight against greenwashing, but it also poses a risk for companies who are trying to do the right thing. Even if you are taking genuine action to improve the impact of your products, services and/or operations, you could get caught up in accusations of greenwashing if you communicate your action poorly.
To ensure businesses don’t fall foul of a stakeholder backlash – or break the law – the UK’s Competition and Markets Authority (CMA) has launched the Green Claims Code, with businesses failing to comply facing legal action from consumers or trading standards bodies.
The guidance sets out six principles all businesses should follow:
Businesses must live up to all environmental claims they make. You cannot say something that is factually incorrect, nor overstate or exaggerate the sustainability or environmental impact of your products, services, brand or activities.
In other words, buzzwords like ‘green’ and ‘eco-friendly’ must not be used without proof of positive environmental impact. You also cannot claim that you are environmentally friendly if you are simply complying with legal requirements or an expected minimum standard. Honesty is the best policy – admitting that you aren’t the finished article, but that you are making progress, is likely to be welcomed by stakeholders.
An environmental claim must be transparent and properly defined. Vague or general terms with multiple meanings should be clearly explained. Claims about future goals or ambitions must only be used if you have a clear, measurable and verifiable strategy to deliver on those goals. The more these goals are embedded in the fabric of your overall business strategy, the better.
Avoid giving stakeholders the impression that a product, service or business has a positive environmental impact by leaving out the negatives. For example, you cannot state that a product is recyclable if only certain parts of it are. Similarly, you cannot say your business is ‘sustainable’ because of improvements made to your building, if they mask negative impacts in your supply chain.
If making a comparison between your product and another, it should be like-for-like – the products should be intended for the same purpose and the comparison should be relevant, verifiable and measured using the same metrics.
Be mindful of the total impact of your business or your products and services when making claims. For example, claiming that an entire product is ‘eco-friendly’ because the packaging is made from recycled material, but the fundamental product is environmentally damaging when used would be misleading.
Complying with this rule can also be a useful exercise in helping you to identify and prioritise action where it is most effective – the largest part of your environmental impact is not necessarily the most obvious, or the most visible.
Make sure you can back up any claims you make with robust, credible and up-to-date evidence. Wherever possible, this information should be publicly available.
This requirement can sometimes be satisfied through a respected third-party environmental standard or certification.
An introduction to environmental standards
These six principles are designed for any business making an environmental claim that is ultimately aimed at the end consumer. But even if that doesn’t apply to you directly, they are good principles to follow for building trust and legitimacy when communicating with your stakeholders and potential customers.
If you’re unsure about the environmental aspects of your operations or products, want to do more to minimise your impact or need support to give you confidence that your claims are accurate, Green Economy can help.
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Sustainability Business Advisor
In her role as an advisor, Rebecca provides support to businesses to calculate their carbon footprints and identify and quantify resource efficiency opportunities to reduce costs and cut carbon emissions. Rebecca also supports businesses with developing and sharing their green credentials for competitive advantage.
Rebecca is experienced in delivering workshops and training to SMEs on a variety of environmental topics, both online and in-person. Additionally, Rebecca is the appointed lead internal ISO14001 auditor for The Growth Company and an Associate Member of IEMA.
