Green Finance Advisor of Friends of the Earth (HK)
ESG, sustainability and other associated terms are now in everywhere. A few years back they were jargons that are very still new to many of us in Asia. We are glad to hear more people talking about sustainability and taking positive actions to make our life more meaningful and more hopeful for the generations after us. But at the same time, we have to be aware that many companies are trying to leverage on our purpose to make us believe that their behaviors or activities are environmental-friendly and sustainable. In reality, there are many greenwashing traps – when companies exaggerate their environmental claims and commitments.
There is a clear desire from you, me and many other people for greener, more sustainable products and services. According to the Global Sustainability Report 2021 by global strategy consultant Simon-Kucher & Partners[1], 85% of people indicated that they have shifted their consumption behavior towards being more sustainable in the past five years. Sustainability was rated as an important purchase factor for 60% of consumers and 34% of those surveyed would be willing to pay more for sustainable products or services. The business opportunities are driving companies to develop more green, sustainable products but at the same time incentivize some of these companies to greenwash their brands and products.
Climate change is front and center of environmental sustainability issues. Due to pressure from investors, many public companies have made pledges toward net zero and declared long-term targets to cut emissions or reduce negative impact to the environment. However, devil is in the details for some of these pledges and targets. Companies should be challenged by customers, investors and regulators if they lack explanation and reporting about their net-zero trajectories or leave most of their emission reduction works towards 2040s. The heavy reliance on the development of unproven technologies or carbon credits are not going to help the environment and should not be encouraged. Greenwashing issues need to be addressed.
Last month, the Net-Zero Asset Owner Alliance have updated its Target-Setting protocol which includes the ban of carbon removal to achieve intermediary emission targets.[2] I do think that some carbon removal technologies will be able to commercialize, becoming cost- effective, scalable solutions in the longer run. Companies with sufficient resource should certainly contribute to help accelerate the development of these technologies in different ways. But for now and in the near future companies should focus a lot more on reducing their own emissions and working with their suppliers and customers to reduce their emissions.
More consumers are choosing brands, goods and services that are working for the good of our environment. Because of the shift in what consumers want, many companies are developing goods with no or less plastics and other materials made from fossil fuels, growing plants and animals using techniques that emulate nature with no or less chemicals and medicines, and sourcing their power and energy from renewables. Without any doubt, we are seeing more products and services which are more friendly to our environment. But with greenwashing tactics getting more sophisticated, we need to scrutinize environmental-related claims, in particular those appear in the marketing and labelling of clothes, foods and other consumer goods. Special attention should be paid to words such as “eco-friendly”, “all natural”, “chemical-free”, “natural products” and “non-toxic” and imagery that is associated with green and sustainable. These words and imagery could be vague, irrelevant or misleading. My advice is to read into the details of green or sustainable related labels and look behind the imagery for the goods and services, including investment products.
In early 2023, a non-profit organization Planet Tracker published a report that examined the greenwashing issues and highlighted six types of greenwashing – greencrowding, greenlighting, greenshifting, greenlabelling, greenrinishing and greenhushing. The report provided a good summary of the strategies and tactics companies are using to greenwash.[3] If you are interested to know about greenwashing cases, NGO Truth in Advertising provided a list of companies that have been accused of not being as environmentally friendly as advertised.[4]
Greenwashing
is an issue that is hard to be resolved anytime soon. We are glad to see more regulators
coming up with new or refined measures to scrutinize green and sustainable
claims and to penalize the wrongdoings. We as individuals are also important
influencers. Companies, brands and products that are responsible to the people
and our planet need our support. When we are in doubt of a company or a
product, do our research – the internet has plenty information. At the end, we
should avoid those companies and products that are intentionally greenwashing.
[1] Global Sustainability Study 2021, Simon Kucher & Partners, October 2021
[2] Net-Zero Asset Owner Alliance raises expectations for members’ real economy impact with updated Protocol, 31 January 2023
[3] “Greenwashing growing increasingly sophisticated”, said Planet Tracker, 10 Janurary 2023
[4] Companies Accused of Greenwashing, Truth in Advertising, 26 October 2022
