The rapid rise of companies setting ambitious climate targets has been a welcome signal of the cognitive shift of business leaders who now understand the need to take climate action in order to attract and retain investors, customers and suppliers.
It is widely understood amongst industry professionals that what is deemed ‘best practice’ will continue to evolve. A by-product of this evolving landscape is that it has provided ample loopholes for some companies to make unsubstantiated claims about their green credentials.
The net zero arena can seem like a minefield. The standards are still being defined and the goals are still being set. Market trends alter the discourse, definitions are updated regularly and can change depending on industry. We regularly help our clients understand what environmental claims they can make that will stand up to scrutiny and avoid the reputational damage of greenwashing. Ultimately what should underpin any net zero strategy is a clear direction and plan to decarbonise as quickly as possible in line with climate science.
Pressure is now increasing to validate these claims and acknowledge the full impact of a product or service. In the UK the Competition and Markets Authority (CMA), the primary competition and consumer authority recently published guidance on environmental claims for goods and services in order to help businesses comply with their consumer protection laws obligations. The guidance sets out principles which are designed to help businesses comply with the law.
The principles are:
- Claims must be truthful and accurate
- Claims must be clear and unambiguous
- Claims must not omit or hide important relevant information
- Comparisons must be fair and meaningful
- Claims must consider the full life cycle of the product or service
- Claims must be substantiated
This month the Dutch advertising watchdog ruled that a Shell campaign promoting carbon offsetting is a case of greenwashing. Shell has been urged to stop running an offer to those buying petrol and diesel can choose to pay an extra fee that will fund carbon offsetting.
Law students from the Free University in Amsterdam made the complaint to the Netherlands’ Advertising Code Committee. The argument was that Shell implies that the offsetting will be equivalent to the emissions which will be generated by burning the fuel in their vehicles, but that this is unlikely given the cost of the service, which stands at one euro cent per litre of fuel. This ruling comes after the news that Shell plans to appeal the May Dutch court ruling ordering it to set strong emissions reduction targets.
Of course, it’s not surprising that Shell received backlash from the sustainability press however it shows that corporations will be made to answer for inaccurate sustainability claims – and that even a group of students can make that happen.
Greater transparency into product lifecycle emissions has meant the smokescreen of dubious green credentials is thinning out. Adidas was accused of greenwashing by the French Advertising Ethics Jury over claims that their ‘Stan Smith’ shoe was 50% recycled.
This campaign was deemed misleading because it is not clear whether half of the materials that make up the product are recycled or if they can be recycled at the end of their life – and, if so, how. The product’s “End plastic waste“ logo was also discredited as it is clearly not the case that by “buying a product made partially with recycled plastic that we will put an end to plastic waste”.
The ‘fine print’ of what lies behind a green claim is under increasing scrutiny. The PR backlash that comes from being ‘found out’ steers savvy customers and investors alike in their decision making.
A problem many corporates face is the lack of available data in order to produce standards and methodologies that can be used to substantiate claims. For example, Sky claims to be producing the first ‘zero carbon football game’ ahead of COP26. But there is no benchmark for what a zero carbon football game would look like (yet). In lieu of having accurate data and given the 2021 timeframe to achieve this, Sky will use offsets to achieve a claim of being ‘zero’ on the day. Without being clear on the magnitude of the carbon emissions that are being reduced through initiatives on the day and what will be neutralised through offsets, it’s hard to evaluate how much of an impact this event has had.
Looking forward we expect benchmarks to be introduced to change as industries continue to jointly invest in accurate carbon data collection that can be applied to robust benchmarking frameworks.
The Science-Based Target initiative places an emphasis on strategies that prioritise long-term, drastic emissions reductions as the most credible. We advise our clients to develop their strategies in the same way. Our advice to clients when setting targets is to first understand and define what should be included in their footprint, measure these emissions accurately, set an ambitious but realistic target that has a clear decarbonisation pathway and communicate this strategy out to teams, suppliers, customers and stakeholders.
For specific environmental product claims, such as a 100% recyclable water bottle or a low-carbon food item, the company should invest in third party expertise to validate the claim. A potential route would be to conduct life cycle assessments (LCA) for the product. Read more about LCA here.
What can you do?
Across all sectors there are many ways businesses can act now and drive the transition to zero carbon. We encourage joining the Race to Zero, a global campaign of businesses, cities and investors committed to achieving net zero carbon emissions by 2050 at the latest. Read our 5 ways for businesses to take climate action here.
How Carbon Intelligence can help
The reputational risk of ‘green’ claims will only increase as investor and customer awareness grows of what net zero actually means. Our team can help you navigate these risks and find opportunities with a robust sustainability roadmap. contact us to today. email@example.com.