
The rising tide of greenwashing: Navigating ‘greenwashing’ risks in climate change targets and sustainability credentials
The report highlights the risks and challenges associated with businesses misrepresenting their sustainability credentials or strategies. The document elaborates on the subject with the help of multiple examples and practical guidelines to reduce legal and reputational exposure to businesses and corporations.
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OVERVIEW
Introduction
The report defines ‘greenwashing’ and the risks involved in misrepresenting sustainability-related business credentials. Misleading statements in annual reports, market filings, or trade and commerce may contravene relevant laws and regulations.
Greenwashing risks
The report highlights multiple greenwashing risks, including emissions reduction targets, truth to label credibility, enterprise branding, and emerging financial reporting issues. Companies must ensure that their products’ sustainability credentials are genuine and narrow the definition of terms like ‘sustainable’ and ‘green’.
Emerging standards
Emerging standards imply that defining ‘sustainability’ or ‘green’ is becoming more nuanced and demanding, necessitating clear and credible specifications and regulatory oversight. Environmental, social, and governance (ESG) risks like climate change complicate sustainability, demanding rigorous planning, scenario analysis, and stress-testing across a plausible range of climate futures.
Mitigation
Companies must develop ambitious and credible transition plans to reduce emissions and environmental impacts. This planning must minimise legal and reputational risks, litigation, regulatory action, or consumer and civil society campaigns. Defining clear targets and promoting sustainability credentials is possible with careful documentation, credible intent, and clear communications.
Companies can mitigate greenwashing through clear and measurable metrics, integrated capex and opex, alignment of corporate strategy with emission reduction targets, and robust board evaluations of sustainability claims.
Conclusion
The report provides practical insight into the rising tide of greenwashing, necessary to help companies avoid legal and reputational damage. Maintaining transparency, credibility, communication, and following international best practice are the keys to ensuring that organisations are sustainable and genuinely ‘green’.