The Cambridge English Dictionary defines greenwashing simply as “behaviours or activities that make people believe that a company is doing more to protect the environment than it really is”. For businesses aiming to build trust and credibility with stakeholders, it is essential to avoid this trap, especially in sustainability reporting. A sustainability report is a comprehensive document that outlines a company’s Environmental, Social and Governance (ESG) performance. This provides transparency into the company’s impact on the planet and society. Greenwashing is an important consideration in any sustainability report as companies making environmental claims about their products and services must ensure that they are accurate, verifiable and transparent in line with the Green Claims Code.
What is Greenwashing in Sustainability Reporting?
In the context of sustainability reporting, greenwashing can manifest in several ways, from inflating progress on environmental goals to using vague language that lacks substance. Whether intentional or accidental, greenwashing can severely damage a company’s reputation, erode trust with stakeholders and even result in legal consequences.
Examples of Greenwashing
There have been numerous examples of greenwashing across industries, from fashion to energy. Some common tactics include:
Vague Claims: Using terms like “eco-friendly” or “green” without backing them up with clear data.
Selective Disclosure: Highlighting positive environmental achievements while omitting areas where the company falls short.
Misleading Certifications: Using in-house or unverified eco-labels to imply third-party endorsement.
Product-level Greenwashing: Promoting a single green product while the company’s overall operations remain unsustainable.
Five Tips to Avoid Greenwashing in Sustainability Reports
An organisation can take action to help ensure that its sustainability reports reflect genuine progress, avoid greenwashing and communicate sustainability efforts transparently. Here are five tips to help avoid greenwashing:
Provide Context for Environmental Claims
When reporting on sustainability efforts, it is crucial to provide context for environmental claims. This helps stakeholders understand the broader impact and significance of the company's initiatives. For instance, organisations can use QR codes on labels to show consumers testimonials from farmers involved in product manufacturing, validating sustainability efforts and engaging customers directly with the source of environmental impact. Additionally, comprehensive sustainability reporting helps back up environmental claims further and gives companies a competitive edge in the market.
Verify Environmental Claims with Third Parties
Third-party certifications play a crucial role in validating environmental claims and combating greenwashing in sustainability reporting. These certifications provide independent assurance that a company's sustainability data is accurate and reliable. Organisations like CDP require companies to have their environmental data verified by accredited third-party providers to demonstrate environmental leadership. An example is the Tunley Environmental Sustainability Verification Badge service that allows businesses to showcase their commitment to sustainability with confidence. A badge is awarded after a detailed assessment of the company’s business carbon emissions (through a Business Carbon Assessment), or assessment of their product (through either an Embodied Carbon Assessment or Life Cycle Assessment).
Implement ESG Reporting Practises and Frameworks
Another tip is to adopt standardised reporting frameworks that help ensure data accuracy and completeness. The Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB) and Task Force on Climate-related Financial Disclosures (TCFD) are among the most prominent frameworks. Companies should take necessary steps to identify the frameworks most relevant to their industry and stakeholders and conduct a gap analysis to assess differences and overlaps. Leveraging technology solutions can streamline data collection, analysis and reporting processes. Regular audits and independent assurance can further enhance the reliability of sustainability data and reporting practises. Tunley Environmental follows GHG Protocol standards, to measure and report emissions for our clients to help them achieve their carbon reduction goals.
Report on Both Positive and Negative Impacts
Balance is critical to avoid greenwashing. Ensure that your sustainability reporting addresses both the positive and negative impacts of your operations. If you’re focusing on reducing carbon emissions but have high water consumption or waste production, acknowledge these issues in the report and discuss what is being done to mitigate them. This type of transparency builds credibility and demonstrates that your business is taking a comprehensive approach to sustainability rather than cherry-picking data to create a favourable image. This aligns with points 3 and 4 of the Competition and Markets Authority (CMA) Green Claims Code.
Engage Stakeholders in Sustainability Efforts
To avoid greenwashing in sustainability reporting, organisations must prioritise transparency with investors. This involves communicating performance data and demonstrating tangible supply chain improvements and reduction initiatives. Companies should set ambitious yet achievable sustainability targets and establish a solid framework for progress and transparency. This approach helps generate support and belief in the company's sustainability strategy among both internal and external stakeholders.
Getting involved with supply chains is especially crucial for businesses that sell products and want to calculate the carbon emissions generated during manufacturing. This may seem daunting, but don’t fret! We can assist with supply chain management throughout your product carbon assessment. You will need to retrieve data from your suppliers in order to calculate the Scope 3 emissions of your product.
The customers are also stakeholders in the business; educating consumers about environmental initiatives is essential to combating greenwashing in sustainability reporting. Companies should focus on making sustainability data digestible and accessible to customers, allowing them to understand how their purchases contribute to sustainability goals. Breaking down complex scientific jargon into easily understandable progress updates against goals is one way to keeping stakeholders engaged with sustainability policies.
The Bottom Line
Avoiding greenwashing in sustainability reporting requires transparency, accuracy and accountability. By setting clear goals, providing data-backed evidence, acknowledging challenges and seeking third-party verification, companies can produce honest Environmental Sustainability reports that build trust with stakeholders.
