5 ways to avoid greenwashing in 2022

Written by Chris Bowden, Managing Director, Squeaky.

 

The term greenwashing has become more important to understand than ever before.

This is because the UK competition watchdog, the Competition and Markets Authority (CMA), has given companies that make misleading claims about their green credentials until the end of 2021 to stop the practice of greenwashing.

In fact, when the CMA looked into the green claims businesses were making in 2020, it found that over 40% could be misleading to consumers, and therefore, potentially break consumer law.

CMA found the greenwashing tactics used include vague claims and unclear language such as ‘eco’ or ‘sustainable’ or reference to ‘natural products’ without adequate explanation or evidence of the claims.

The practice of greenwashing – whether intentionally or not – has become such a concern that the government launched an investigation in the summer of 2021 into firms claiming to offer environmental benefits to customers, specifically consumer renewable electricity deals.

Clearly, important steps are being taken to address ‘greenwashing’.

In my opinion, it is not only good business sense to eliminate greenwashing from your company, but it is also the moral and ethical thing to do on our collective mission to protect the planet from climate change.

Here are five ways you can protect your company against greenwashing in 2022:

  1. Investigate your electricity suppliers’ true source of energy.

The first step to understanding where your energy comes from is to check your suppliers FMD where they will give you the percentage mix of the fuels, they use to supply you.

However, this isn’t sufficient on its own to ensure you are buying genuinely green energy.

The next step is to investigate the source of your supplier’s renewable energy. According to Directive (EU) 2018/2001, renewable energy refers to energy from renewable non-fossil sources, namely wind, solar (both solar thermal and solar photovoltaic) and geothermal energy, ambient energy, tide, wave and other ocean energy, hydropower, biomass, landfill gas, sewage treatment plant gas, and biogas

Many companies are increasingly avoiding sources of energy that damage the environment like biomass, so it’s important to know if your supplier is using REGOs from biomass to cover some or all of their renewable claim under the FMD.

It is also possible that your supplier might be using European Guarantees of Origin or GoOs to cover some, or all, of the renewable claim. In recent years there has been a surge in suppliers buying GoOs as these can also be used to ‘greenwash’ energy supply but also because historically they have been less expensive than UK REGOs and worse still by using GoOs suppliers avoid some of their obligations to pay the mandatory support mechanisms all suppliers have to pay to support UK renewables like the Feed in Tariff.

By buying energy badged renewable but backed by GoOs you’re actually undermining the development of clean energy in the UK!

  1. Hold yourself accountable for green practices in your supply network.

Ultimately, transparency in your supply chain is key to eliminating greenwashing. Typically, two thirds of a company’s emissions are scope 3 emissions.

Note: Scope 3 emissions are the result of activities from assets not owned or controlled by the reporting organisation, but that the organisation indirectly impacts in its value chain.

The fact is, if you are serious about sustainability, it’s likely a green supply network will be on your priority list. And the ideal scenario here would be to create a cascade of sustainable practices in your supply network. As your suppliers develop their understanding of sustainability issues, so too will their supply network – and so on.

As admirable as the idea is, there is no denying that it is hard to realise in practice. After all, it’s likely you are concerning yourself and your time with your own sustainability practices.

Even some of the world’s top brands with budget aplenty have been called out for violating sustainability standards. What’s more, notable supply chain violations have almost always involved first-tier suppliers, but the practices of lower-tier suppliers are almost always worse.

And it may be that you don’t even know who your lower-tier suppliers are, let alone what the fuel mix of their electricity supply is.

Ultimately, the wrongdoings of your supply network will expose you to big financial, social and environmental risks.

But there are several steps you can take to address your supply chain’s social and environmental responsibility – some of which multinational corporations have already put into place:

–      Ensure supply chain transparency is included in your long-term sustainability goals, and, include lower-tier suppliers

–      Make it necessary for your first-tier suppliers to establish their own long-term sustainability goals

–      Task an individual with addressing greenwashing within your supply network.

Uncovering any wrongdoings in your supply network and promoting green practice will likely be essential to your environmental credentials.

  1. Become a B Corp

A B Corp is a not-for profit company which commits to create a positive impact on our society and the environment through their operations.

In short, B Corps are businesses that strive to do good in the world, beyond making profit. Examples of B Corps include Ben & Jerry’s and Patagonia, both famous for their sustainability credentials.

So why could becoming a B Corp be good for you?

Well, to achieve certification you must meet rigorous standards of social and environmental performance, accountability, and transparency.

If you are a company that takes its sustainability commitments seriously, becoming a B Corp will give you the certificate of transparency for your customers to see.

Becoming a B Corp is integral to our own ‘squeaky clean’ values and it was always something I aspired to when I started Squeaky. The recognition isn’t just key to our Squeaky clean values as a company, but our B Corp certification marked a big step towards our vision of accelerating the world’s transition to 100% clean energy.

If you are interested in becoming a certified B Corp, make your way over to the B Impact Assessment where you can measure your impact on your workers, community, environment, and customers.

  1. Ignite and keep a close relationship with marketing and communications.

When the CMA announced they were cracking down on environmental and sustainability claims, the Advertising Standards Authority (ASA) entered the conversation and announced a series of inquiries.

It’s also worth noting that its sister-body – the Committee of Advertising Practice (CAP) has also teed up new guidance on environmental claims to advertisers.

And it’s for good reason; the scrutiny on environmental-based marketing claims has ramped up significantly.

The fact is, marketing and communications teams are the outwards voice of your brand. They gatekeep what your customer does and does not hear about your company. And whether it’s been your priority or not in the past, it means that now, you need to commit resource to and time to this key function.

And here’s why:

First and foremost, on issues regarding environmental claims, communications teams and marketers have the skill and a timely opportunity to translate often seemingly puzzling sustainability and environmental data, into claims that encourage and empower customers to shop their values.

Here’s an example:

In the lead up to COP 26, there have been a number of corporations making ‘net-zero’ claims, but a huge portion of people, and other businesses no less, cannot define the term. It is not just your responsibility to ensure the claims you make are clear, but you also have an opportunity to show you truly understand what your customer needs by demystifying sustainability jargon.

To achieve this ensure you have a clear line of communication with your counterparts in communications and spend time building an effective working relationship. It is critical that your marketing team is translating the reality of your impact on the climate and is making evidenced-based claims.

Let’s be clear – this is not a time to rely on eco-claims being ‘technically true’.

  1. Consult compliance executives.

I think it would be fair to say that the UK has yet to truly show its hand on the sanctions for companies who lie to their customers about their green credentials.

However, we have seen positive signals of change.

And it’s worth noting that last June the UK government appointed a Green Technical Advisory Group (GTAG) to advise the government in establishing a green taxonomy to prevent incidents of greenwashing.

Besides, just because something is work in progress, does not mean it is any less important and, indeed, should certainly not inhibit companies from being proactive.

Plus, backlash from investors, customers and your supply network is surely enough of a threat?

Regulatory and legal action is coming and engaging compliance executives at this early stage will be a worthwhile move in helping prevent potentially fatal blows in the years to come.

Greenwashing is clearly a dangerous practice for your company, your customers, and our planet. Self-regulation must start now.