Let me introduce you to the catchily named High Level Expert Group on Net Zero Emissions Commitments of Non-State Entities.
It’s really quite a mouthful.
To explain, this is a wide-ranging group of organisations, including cities, businesses, and large investors set up by the United Nations to work out plans for reducing carbon emissions and tackling climate change.
At COP27 at the end of last year, the group released a report on greenwashing, i.e. making sure claims made by organisations regarding reduction of emissions are genuine, accurate, and not misleading.
Interestingly, the report recommends that net-zero claims should not be valid if the organisation continues to build or invest in new fossil fuel supply or supports deforestation and other environmentally destructive activities.
Firms should avoid purchasing cheap carbon credits to offset their emissions, rather than reducing them. The report does state that “high-quality” carbon credits can be used, but only to balance out remaining emissions once short and medium-term science-based targets have been met.
Another no-no that potentially rubbishes an organisation’s net zero claim is any lobbying or associating it does with groups that attempt to undermine government climate policies, namely through trade associations. Last year, a couple of US investment companies who operate sustainable investment funds were found to be supporting a group pressurising US state pension schemes NOT to invest in an environmental and socially positive way. It’s important to send a message that this kind of double standard is not ok.
The many different shades of greenwash
The term greenwashing was coined way back in the 1980s, a time when people old enough to remember may have donned lurid shades of green in an attempt to be fashionable. It was first used to describe the practice, common amongst hotels, of asking guests to re-use towels for the benefit of the planet. While this is undoubtedly good practice, it should not be used to justify a hotel’s sustainability claims if the rest of its business practices are not environmentally positive at all. The cynic may equally point out that the hotel was simply trying to use green arguments to reduce their costs!
In more recent times, the term “green-hushing” has emerged. This is effectively the opposite of greenwashing. Instead of exaggerating an organisation’s environmental credentials, the company chooses not to publicise them at all, for fear of being accused of greenwash. There has been an increasing number of legal actions brought against companies in the last year, so greenwash accusations have teeth. The issue with green-hushing is that it a company’s silence may not come from a place of false modesty, but rather reflect the fact they don’t actually have much progress to talk about.
As the popularity, importance and pressure to be sustainable increases, so the prevalence of greenwashing grows too. A report from Planet Tracker has listed six different types of “sophisticated” greenwashing that corporates could fall foul of.
Alongside green-hushing, these are:
“Green-crowding” which refers to hiding amongst a “crowd” of other businesses to keep environmentally damaging approaches hidden.
“Green-lighting” – describing how companies shine a spotlight on certain green positives in order to draw attention away from environmental negatives in their business.
“Green-shifting” – whereby companies try and shift the blame for negative environmental outcomes up or down the value chain, usually toward consumers.
“Green-labelling” – when marketing departments mislead through their adverts by claiming something is green.
“Green-rinsing” – describing when companies change climate and sustainability targets before they’ve been achieved. Planet Tracker highlights Coca-Cola and Pepsi and their claims regarding the reduction of plastics as an example of this. Clearly, it’s not the real thing!
Thankfully, strong steps are being taken to tackle the issue. The Competition and Markets Authority (CMA) announced in 2022 that it will undertake its first official investigation into greenwashing, with an initial focus on fashion. Brands found to be flouting its Green Claims Code could face fines and other penalties. Claims will be assessed against the Authority’s ‘Green Claims Code’ – a set of 13 guidelines for businesses and brands with consumer-facing products and services. In the world of finance, our regulator the Financial Conduct Authority (FCA) is also bringing in anti-greenwashing rules in a few months’ time.
I believe that investing in an authentic environmentally positive manner is a key solution to the climate crisis and the need to preserve nature. I therefore welcome any measures that serve to build trust and clarity in finance.
At Somerset Wealth Management, I always make it clear where your money will be invested and why. I will give you information about the environmental implications of your investments and will scrutinise the claims of the investment funds I recommend.
I don’t think I deserve the green light to look after your finances if I did anything less.
Contact me here to get the conversation started: www.somersetwm.co.uk/call
https://www.edie.net/exploring-the-uns-expert-advice-on-stamping-out-corporate-net-zero-greenwash/
Photo by Vidar Nordli-Mathisen on Unsplash
