Tips for companies to ringfence themselves against greenwashing

Greenwashing is the practice of exaggerating a company’s commitment to environmentally-friendly practices to attract environmentally-conscious consumers or to falsely demonstrate compliance to ever-stringent ESG requirements. Companies can adopt the following measures to safeguard against greenwashing allegations

Accurate representations

• Clearly communicate environmental initiatives, detailing actions, targets, metrics and achievements.
• Avoid vague and misleading language that can be misinterpreted as greenwashing. Be specific about environmental footprint and the benefits of the company’s products and services.
• Most importantly, avoid exaggeration

Form a cross-functional team that includes representatives from various departments involved.

Third-party certifications & independent audits

• Seek certifications or assurance from reputable 3ʳᵈ party organisations that can add creditability to the company’s environmental claims.
• Consider conducting independent audits of the company’s sustainability reports and practices to provide assurance to stakeholders.

Metrics and reporting

• Establish clear and measurable Key Performance Indicators (KPI) related to sustainability goals.
• Regularly report progress on these metrics in an easily accessible and understandable format, promoting a commitment to transparency.

Scenario analysis can also be used to understand potential impacts on the organisation.

Product lifecycle assessment & continuous improvement

• Conduct a comprehensive assessment of the company’s products or services' environmental impact, including raw material sourcing, manufacturing, distribution, use and disposal.
• Companies can also adopt a continuous improvement process to constantly reduce environmental impact over time.

Stakeholder engagement

• Involve stakeholders, customers, employees and communities in the company’s sustainability initiatives, demonstrating that commitment to environmental responsibility is an integral part of corporate culture.
• Provide information to customers to aid understanding of the environmental aspects of the company’s products and services, thereby promoting transparency, which can help to build trust.
• Encourage open dialogue/feedback with stakeholders to address concerns, showcasing a commitment to accountability and improvement.

Genuine commitment to environmental responsibility, transparent communication and verifiable actions are key to maintaining a positive reputation in light of greater scrutiny over companies’ environmental footprint by its stakeholders and regulators.

Towards this end, sustainability specialists from Baker Tilly can partner with companies to ringfence themselves against greenwashing.