By Hannah Hughes, Senior Account Director
The Race to Zero is on and with it, a global push to agree corporate financial reporting and transparency rules. With more companies focused on declaring how their business plans are consistent with climate goals, the challenge now becomes how to see through the greenwashing – how to spot it, and how to stop it.
What is greenwashing, and what isn’t?
Greenwashing is defined as “the process of conveying the false impression or providing misleading information about how a company’s products are more environmentally sound”. In the corporate world, this often translates as embellishing business commitments to reaching net zero, with no credible action behind it. Something that alternative milk maker Oatly found out the hard way, when it was targeted by a short seller for overstating its ESG credentials.
The pursuit of net zero and corporate commitments to reduce carbon emissions is still relatively nascent. That means there is an absence of clear and universally adopted reporting guidelines. Work is well underway to improve this (organisations like CDP currently provide the gold standard for the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts), but in the meantime there is too much free rein for interpretation. Or more accurately, misinterpretation.
In a recent journalist briefing, our client Volans, the think tank and advisory firm at the cutting edge of sustainability, opined that while there is certainly no place for greenwashing within business – it is important that ambitious and optimistic targets are recognised and supported. These targets have a part to play in moving the sustainability agenda forward as long as the intentions behind this ‘greenwishing’ are earnest. “Businesses do need to make big, bold claims about going green,” CEO Louise Kjellerup Roper says, “in order to keep up with what is expected of them.” These targets ensure business leaders have to focus on coming up with a plan of action, and while few have all the answers they need to achieve these goals right now, open discussion and identifying challenges are key to make meaningful change at the scale and speed required.
Language analysis
As climate commitments become more widely reported, so too does analysis of the language used to detail them. Claims of being ‘net zero’ are currently under scrutiny by journalists like Jess Shankleman and Akshat Rathi at Bloomberg Green who ask: is it right for businesses that buy carbon offsets to claim ‘net zero’ or should they be called ‘carbon neutral’ or even ‘carbon responsible’ instead? The article goes so far as to state that if “companies really want to cancel out emissions with offsets, they would have to purchase more expensive carbon-removal credits that actually draw down greenhouse gases. Only when companies have achieved all the reductions they possibly can, and balanced the rest with carbon removals, would they achieve ‘carbon-neutrality’ or reach ‘net zero’.”.
The article points to a more deep-rooted problem of clarity in language. Besides false claims, vague wording and use of the passive voice is a strong indicator of lack of action. Phrases like “we are”, “we will” and “we have” are far more encouraging to see than “we believe” and “we expect”. In the table below, we’ve looked at the nuanced changes in language that reflect responsible and accurate communications around climate change commitments.
Looking past the language
The clearest way to identify if a company is greenwashing is to look beyond the language and understand what actions it is taking. BlackRock, for example, notable for CEO Larry Fink’s bold assertions that stakeholder capitalism must prevail, has, in the past, been picked up for not acting in line with his statements. We are now starting to see those words put into action in voting against 255 board directors that failed to act on climate issues.
Louise suggests looking at a company’s lobbying history. Companies that are really committed to putting their words into action are political activists, she notes. That means actively lobbying government and regulators for change and putting themselves forward as part of the solution. Not just getting in the way of progress and lobbying against. That is what the banks involved in Bankers for Net Zero, like Tide, Handelsbanken and Triodos, do. Rather than take the easy option of saying “no” to changes they don’t want to see, they are stepping up to be part of the positive change and ultimately, the solution.
Next steps
As a company focused on helping our clients communicate their positive impact, the correct use of language around climate commitments is high on our agenda. The drive towards greater responsibility and a tighter interpretation of terms will ultimately expel greenwashing and promote a better future for us all.
Let’s hope such scrutiny effects change fast enough to make a lasting difference to our planet. Until then, for our part, we will continue advising clients on responsible use of language and claims around climate and net zero.
A new language of commitment to climate change
