The rise of environmental claims
As more and more consumers become aware of climate risks and try to adopt more sustainable practices, businesses are sensing an opportunity to tap into the green market. With this comes the danger of unsubstantiated claims about products and services, leading to consumers believing that a company’s products and services are ‘environmentally friendly’. In the UK alone, 72% of consumers consider sustainability in purchasing decisions.1 However, as environmental claims by businesses become more prevalent, so do instances of greenwashing. The good news is that governments are becoming increasingly aware of this trend and beginning to crack down. But, we may be seeing a shift from one extreme to the other; some businesses are beginning to practice a new phenomenon known as green-hushing.
Greenwashing vs green-hushing
Greenwashing occurs when businesses provide consumers or investors with misleading information about the environmental impact of their operations.2 By exploiting consumers’ genuine ethical concerns, greenwashing impact a consumer’s ability to make a sound, environmentally friendly decision – generating confusion, scepticism and increased perceived risks around ‘green products’. Due to public and regulatory backlash against greenwashing, instances of green-hushing have become more frequent. Green-hushing occurs when businesses do not publish details of their climate targets to avoid scrutiny and allegations of greenwashing.3
In order to avoid greenwashing or green-hushing, businesses must ensure that the claims they make are accurate, unbiased, and supported by robust evidence. Legislation in both the United Kingdom and the European Union can guide businesses aiming to take the necessary precautions.
Greenwashing and the regulatory landscape
UK Green Claims Code
In September 2021, the UK government launched the Green Claims Code (GCC). The principles of the GCC are designed to highlight the standards businesses must adhere to when making claims about their environmental impacts.
The code enforces new guidance on misleading and socially irresponsible environmental claims. By delivering clear and explicit instructions, the code covers the entire lifecycle of a product, service, process, or brand. Beyond the legal penalties for failing to comply, neglecting these six principles risks separating a company from its customer base. As public opinion and expectations rapidly evolve, a company’s reputation is increasingly exposed to this danger. Over 12 months, for example, the Advertising Standards Authority (ASA) found 16 advertising campaigns had either exaggerated their company’s green credentials or made unsubstantiated environmental claims.4 These breaches were widely publicised, severely impacting the businesses’ reputations.
As trust in green claims is fragile, the Green Claims Code is a welcomed intervention that will play a vital role in levelling the playing field. Businesses that have been working to mitigate their social and environmental impact – with data to support – will see the code as a golden opportunity to gain commercial advantage and improved performance.
EU Green Claims Directive
The EU is following a similar approach to the UK. In March 2023, the Commission adopted a proposal for a Directive on Green Claims. The proposal on green claims aims to:5
- Make green claims reliable
- Protect consumers from greenwashing
- Contribute to creating a circular and green EU economy by enabling consumers to make informed purchasing decisions
- Help establish a level playing field regarding the environmental performance of products.
To ensure that aims are met, the Directive will set out criteria on how companies should prove their environmental claims, requirements for claims to be verified and enhanced governance on labelling schemes. Although the Directive still needs to be approved by the European Parliament, its significance is paramount and emphasises the need for increased transparency. It is recommended that businesses keep a watching brief on the proposal as it will likely significantly impact current practices.
How does Simply Sustainable support businesses in getting their environmental claims right?
Simply Sustainable recognises the increasing complexity of abiding by environmental rules and regulations. These are particularly difficult to navigate when faced with large and often elusive supply chains, alongside time and resource constraints.
At Simply Sustainable, we encourage transparency in all business publications and disclosures and are adept at guiding businesses to comply with existing obligations on environmental claims. In particular, we ensure that reporting and communications are aligned with the latest environmental regulations and best practice frameworks.
If you are interested in getting your environmental claims right, but not sure where to start, please contact us or request a call back.
Author: Lauren Hyatt, Senior Consultant
It is vital to understand where you are setting off from, before embarking on your net-zero journey.
Like all targets, net-zero targets point to where you need to get to, from your current baseline and by when. There are various ways of creating carbon reduction targets and it is good to see that we have finally moved on from picking nice-sounding round numbers that worked well together (e.g. 20% reduction by 2020 or 30% by 2030). Today, most targets are being set in-line with what the science is telling us is needed to avoid the worst effects of climate change. Targets in line with climate science, AKA science-based targets.
Before embarking on your net-zero journey, it is vital to consider why you are setting your target and how you want to communicate your goals. What is the scope of the target? Is it for one company, a group-wide target or country specific? This will impact the approach you need to take, particularly the first step in your net-zero journey; measuring your carbon footprint.
Step 1: Understand your current emissions
Every company’s net-zero journey will be different, but they all start in the same place; understanding the baseline carbon footprint.
To establish a resilient and comprehensive net-zero target, it is important to ensure that you include all relevant emissions categories in your baseline carbon footprint. Whilst some net-zero frameworks, such as the Science Based Targets initiative (SBTi), don’t require 100% of your footprint to be covered in your target, it is important to begin with a full picture of your footprint and association carbon hotspots. For the purposes of SBTi, your baseline year must be no earlier than 2019 and ideally should be your most recent year.
Our advice would be to follow best practice emissions reporting standards (e.g. Greenhouse Gas Protocol Accounting and Reporting Standard [2004:2015], ISO 14064-1, SBTi Corporate Net-Zero Standard [2021]). This will not only ensure that you have a solid baseline but will also mean that you can use the data collected for other reporting requirements (such as SECR, TCFD and CSRD). Following best practice standards will also assure that you are audit ready, should someone come knocking!
All six greenhouse gasses covered under the GHG Protocol should be included in your footprint and emissions from across the entire value chain should be incorporated. This includes emissions produced by a company’s own processes (Scope 1), purchased electricity and heat (Scope 2) and those by suppliers and end-users (Scope 3). For more information on emission scopes see the diagram below and this Simple Guide to Scope 3 Emissions by Styze Dijkstra, Simply Sustainable’s Netherlands Country Manager.
Step 2: Hotspot analysis
Analysing the biggest areas of opportunity and risk in relation to decarbonisation.
Emissions hotspots are areas within your business operations and supply chain that have the greatest carbon impact, and as such, offer the greatest opportunity to drive reductions in your carbon footprint. Before setting carbon reduction or net-zero targets it is important to understand your hotspots and understand how these will be impacted by any areas of significant change or growth within your business.
Step 3: Internal buy-in
Getting buy-in at board level is key to the success of your net-zero strategy.
One common mistake is organisations signing-up to sustainability targets and commitments without fully understanding the implications on their business, or how to achieve their commitments. This does not mean that you need to know the exact actions you will be required to take to achieve net-zero, but it does mean that you need to understand the scale of the challenge ahead, before committing. This is not only important for gaining buy-in internally but can also carry a reputational risk. In the first five years after launching, SBTi expelled 119 companies from the initiative after failing to submit climate targets within two years of committing.
Getting buy-in at board level is key to the success of your net-zero strategy, this will not only help your board to increase its carbon literacy but will also help to drive action when it comes to the decarbonisation required to meet your net-zero commitment.
Step 4: Committing to your net-zero journey
Publicly committing to your net-zero journey will help keep momentum and drive action.
Publicly committing to set a net-zero target is not mandatory, but something that is encouraged by the SBTi. This can be done informally through your own internal and external communications, or more formally though submitting a commitment letter to SBTi. If going through the formal SBTi process, you have 24 months to submit your target after signing your commitment letter.
Next in the net-zero series
This is part 2 of a series of insights into net-zero. The next article in our series will cover how to calculate your net-zero target, how to ensure it’s in line with the science and making sure you are setting the right level of ambition, whilst ensuring your target is achievable.
If you are interested in setting net-zero targets, but not sure where to start, please contact us or request a call back.
Author: Henry Unwin, Head of Climate and Carbon Services
- What is net-zero and why is it important?
- How to approach setting a net-zero target (baseline carbon footprinting and understanding)
- Ensuring your target is robust, ambitious and in line with the science on climate change
- Integrating and communicating your net-zero target
The Carbon Disclosure Project, informally known as CDP, has emerged as a critical global platform, holding the largest environmental database in the world. The platform primarily facilitates transparent reporting and disclosure to drive sustainable practices across industries. With approximately 20,000 organisations disclosing data on climate change, water security and deforestation issues via CDP, 2022 set a new milestone for disclosure – a 38% increase since 2021 – including listed companies worth US$60.8 trillion (half of the global market capitalisation)1.
Over time, the platform has evolved to reflect the most recent climate science and global policy developments. The 2015 Paris Agreement marked a turning point in the global response to climate change, demonstrating that ‘business as usual’ is no longer sufficient.
Objectives
CDP’s primary objective is encouraging organisations and cities to reduce greenhouse gas (GHG) emissions, protect water resources and preserve forests. CDP accomplishes this by offering a solid and standardised platform for organisations to voluntarily report their environmental data annually.
The structure of the CDP climate change questionnaire was redesigned in recent years in response to market needs and trends in corporate climate change reporting. Revisions included an increased emphasis on forward-looking metrics, improved alignment with other reporting frameworks and the integration of sector-specific questions.
Significance in climate change mitigation
CDP promotes transparency and accountability by pushing organisations to measure and report their carbon emissions and climate-related data. This incentivises implementing comprehensive sustainability policies, whilst providing stakeholders with crucial information for informed decision-making. Beyond corporate boundaries, CDP allows investors to assess the climate risks and opportunities associated with their portfolios, ultimately promoting a shift towards greener investments2. This harmonisation will help to optimise reporting and accelerate the generation of decision-useful information.
CDP also aligns with other large initiatives, facilitating benchmarking and amplifying the impact of sustainability strategies, addressing interconnected challenges and leveraging expertise and best practices.
CDP in 2023
Developments in 2023 reflect CDP’s strategic priorities to track organisations’ alignment with a 1.5°C world, which include enhancing disclosure, governance, engagement, emissions accounting, carbon credits and carbon pricing.
Respondents are asked whether their spending and revenue is aligned with sustainable finance taxonomies to add credibility to their commitment to mitigate and adapt to climate change.
In alignment with the International Union for the Conservation of Nature’s (IUCN) Corporate Reporting on Biodiversity Guidelines, respondents are required to report on the approach to maintaining and addressing concerns associated with having activities located in or near biodiversity-sensitive areas.
Respondents are also requested to provide emissions data for subsidiaries, which includes a breakdown of their Scopes 1 and 2. As other regulatory frameworks and standards increase their scrutiny around emissions reporting, organisations are encouraged to consider subsidiary emissions, which can represent a significant gap in terms of unassessed climate risks and opportunities.
Conclusion
CDP has emerged as a vital catalyst in the fight against climate change. CDP is transforming corporate behaviour, empowering organisations to embrace sustainability practices and mitigating the adverse effects of climate change.
For end-to-end support with your CPD submission or other ESG ratings or disclosures, contact us or request a call back.
Author: Maria Serrano, Climate and Carbon Consultant
ESG and sustainability strategy
Environmental, Social and Governance (ESG) and sustainability strategies in businesses have changed radically in the last 5 years. With the increase in stakeholder expectations, companies are now finding their strategies are not meeting current requirements and are needing an update.
In the past, sustainability and Corporate Social Responsibility (CSR) strategies were considered an addition, a bolt-on to a business’s commercial strategy. In recent years, there has been a significant acknowledgement by stakeholders, regulators and the financial sector of the direct and indirect financial impact of ESG and sustainability and issues. This has been set out in the recent European Corporate Sustainability Reporting Directive (CSRD) and Task Force on Climate-related Financial Disclosures (TCFD).
Businesses are now looking to ensure their ESG and sustainability strategies are entirely intertwined with their commercial strategies and to maximise commercial opportunities and minimise financial and stakeholder risk. This often means using the old-fashioned approach of focus areas being people, planet, community – a box-ticking exercise – is now too simplistic. Rather companies are now developing strategies which are more sophisticated, tailored and refined to their specific needs, with a focus on the financial opportunities and alignment to the commercial strategy.
Complete the form below to download the full in-depth Insight from our sustainability consultancy Thought Leadership team.
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Reporting for a new era
Simply Sustainable has been providing best practice guidance in ESG and sustainability reporting for over 12 years. We predict that 2023 will be the year that robust and credible nonfinancial reporting becomes the expected norm for global business.
In short, this is down to new Environmental, Social and Governance (ESG) and sustainability reporting requirements in the United Kingdom, the European Union and the United States that are set to fundamentally change the nonfinancial reporting landscape.
The Corporate Sustainability Reporting Directive (CSRD) is a new set of EU rules that will require ESG reporting on a level never seen before, capturing a whole host of companies that previously were not subject to mandatory nonfinancial reporting requirements, including public and private non-EU companies that meet certain EU-presence thresholds.
For US issuers, the new EU rules will result in mandatory reporting on a broader set of ESG topics than those required under current and proposed Securities and Exchange Commission (SEC) rules. It is important that the business community does not ignore the approaching tide of regulation on sustainability reporting that could entail significant financial and reputational damage if overlooked.
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At Simply Sustainable, we understand that sustainable growth is the only way to build a prosperous business that has a lasting positive impact on our environment and society.
The past few years have been pivotal for the ESG and sustainability revolution. It continues to be an area of focus for stakeholders at all levels – investors, regulators, businesses and consumers – despite the current backdrop of a turbulent economy and cost of living crisis.
In 2022, we saw a rise in important conversations and the development of global regulation aimed at improving sustainability, particularly across ESG and sustainability reporting and greenwashing.
The key sustainability trends for 2023, across various sectors, will remain focused on the credibility of claims and robust disclosure and reporting.
In addition, there will be greater attention on carbon reduction, a strategic focus on understanding what the transition to a low carbon economy means for business and its stakeholders, as well as moving away from using carbon offsets as a credible means to decarbonise.
Regulators have been exercising greater scrutiny of corporate sustainability efforts, fuelled by concerns that companies and asset managers may be using disclosures and sustainability-related labels on products and services as a marketing tool to appear more proactive on ESG issues than they truly are.
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Since 2010, Simply Sustainable has developed corporate sustainability strategies for some of the biggest brands in the world.
Over the years, we have learned a thing or two about what makes a robust sustainability strategy, and we have created this guide to share our learning with you.
Whether you’re starting with a blank page, refreshing your existing approach, or are just keen to see how your organisation measures up, here you will find what we have come to understand to be the hallmarks of a truly robust sustainability strategy.
To read our in-depth analysis, please complete the form below:
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Business as usual cannot be sustained
Momentum towards sustainability has reached a tipping point. From a business context, it is now permanently on the majority of company agendas.
The path ahead will be far from ‘business as usual’.
Planning and delivering the required transformation and incorporating measures that will make a business more resilient, competitive and relevant, in a marketplace with increasingly demanding sustainable solutions. Companies that thrive will have fully embraced the need for transformative change, as a means to become ‘future-fit’.
In the document we detail why the need for transformation is now, at pace and at scale and how we at Simply Sustainable work with businesses to enable this change in all aspects of business; bringing together decades of transformational and sustainability expertise.
Business has a crucial part to play not just as economic engines, but in minimising negative environmental impact, maximising social benefits and in enabling a more sustainable world.
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Companies worldwide are experiencing mounting pressure from investors, regulators, the public and other stakeholders to take environmental, social and governance (ESG) matters seriously. In fact, the number of ESG reporting standards and regulations at a global level has almost doubled in the last 5 years.1 As there are more than 600 ESG reporting provisions currently available worldwide, with many having different interpretations of sustainability, the task of disclosing quality ESG information presents a major challenge for companies.1
The lack of a single, standardised framework for ESG reporting, coupled with low compliance to existing regulation, has unfortunately fuelled the disclosure of misleading and/or inaccurate information.2,3 Numerous international corporations, like Volkswagen and BP, have been exposed for greenwashing4 and a global review conducted by the Competition and Markets Authority (SMA) revealed that 40% of green claims made online by firms could be misleading consumers.5
While greenwashing appears to be rife and particularly problematic, companies are also starting to be exposed for misleading the public about how they treat their people. On International Women’s Day 2022, a day to celebrate the social, cultural, political and economic achievements of women, hundreds of British organisations posted to social media to show their support for the cause.6 However, on Twitter a bot was on the loose, which retweeted their posts but also shared the difference in median hourly pay between men and women at each firm.7 The Gender Pay Gap bot, which had the strapline ‘Deeds not words. Stop posting platitudes. Start fixing the problem’, highlighted the apparent hypocrisy between company posts and gender pay performance.7 In many instances, the gender pay disparity flagged by the bot was shocking, such as 68.6% difference at Ryanair.7 Companies in the public sector were not out of the firing line; Cancer Research UK, for instance, was revealed to have a 30.9% median gender pay gap in 2021.8
Consequently, and unsurprisingly, scepticism is high among investors with regards to ESG claims that companies make. Indeed, research conducted by Edelman in 2021 found that 86% of global investors believe companies exaggerate their ESG performance when disclosing results, and 72% do not think they will live up to their ESG commitments.9 Another recent survey of more than 4,600 individual investors across the UK, US, France and Germany obtained similar findings: 90% of respondents stated that they struggle to trust ESG claims made by businesses at face value.10
How can we rebuild trust and confidence among investors concerning ESG disclosures?
In response to growing calls from international investors for high quality, reliable, transparent and comparable reporting by companies worldwide on ESG issues, the International Financial Reporting Standards (IFRS) Foundation announced the formation of the International Sustainability Standards Board (ISSB) at COP26 in November 2021.11 The ISSB has been tasked with developing a comprehensive global baseline of sustainability-related disclosures standards, providing investors and other capital market participants with the information they need to make informed decisions.11 While a host of reporting standards already exist, there is optimism that the ISSB standards will be widely accepted and adopted – the IFRS sets financial accounting rules that companies in more than 140 countries adhere to, and because the standards build on existing ESG frameworks developed by other sustainability reporting initiatives, such as the Sustainability Accounting Standards Board (SASB) and the Global Reporting Initiative (GRI).1,12 By creating a comprehensive and detailed corporate reporting standards framework, companies will be able to measure and report their ESG performance in a consistent manner.11 Ultimately, it will restore trust and confidence among investors and other key stakeholders in the ESG disclosures that companies make.
It is becoming more pertinent that companies need to transparently disclose their ESG performance to reduce the risk of reputational damage. Adherence to globally accepted standards, such as the GRI and SASB, can help companies to understand and effectively report their ESG performance; the imminent release of ISSB standards is anticipated to significantly ESG reporting worldwide.
At Simply Sustainable, we support an array of international organisations with their sustainability reporting, employing best-practice global standards (e.g., GRI) to ensure their disclosures meet the needs of key stakeholders. If you are looking for support with your sustainability reporting, please contact us using the details below.
1 EY. Future of sustainability reporting standards.
2 City AM. Better regulations, not more, are the answer to greenwashing controversies.
3 Carbon Market Watch. EU works to beef up regulations on green claims.
4 Earth Org. 10 companies and corporations called out for greenwashing.
5 UK Government. Global sweep finds 40% of firms’ green claims could be misleading.
6 Forbes. Twitter bot trolls organisations for hypocrisy on International Women’s Day.
7 Personnel Today. International Women’s Day.
8 Civil Society News. Cancer Research UK ‘disappointed’ by widening gender pay gap.
9 Edelman. 2021 trust barometer special report: institutional investors.
10 Edie. Survey.
11 IFRS. ISSB
12 The Globe and Mail. Is a reporting standard finally on the horizon
Much attention is being given to the environmental claims that businesses make when marketing their products and services. As demand for eco-friendly products skyrocket, in the UK alone, one third of consumers want to shop responsibly by choosing more environmentally friendly products and services.1 By exploiting consumer’s genuine ethical concerns, greenwashing impacts a consumer’s ability to make a sound environmentally friendly decision – generating confusion, scepticism and increased perceived risks around ‘green products.’ As stakeholders are increasingly exposed to the material risk of greenwashing, how are the businesses that are responsible held to account?
There are many statements made about the environmental and sustainable credentials – nicknamed green claims – of products in advertising, packaging, and other marketing materials. Getting these wrong is bad for business, bad for consumers and bad for the planet. That’s where we, whether consuming as an individual or on behalf of an organisation, need assistance to better understand and trust green claims. In September 2021, the Committee of Advertising Practice launched the Green Claims Code. The principles are designed to highlight the standards that businesses need to adhere to when making claims about their environmental impacts.
The rules are simple, claims must:
- Be truthful and accurate
- Be clear and unambiguous
- Not omit or hide important and relevant information
- Be fair and meaningful when comparing to competitor
- Consider full life cycle of product or service
- Be substantiated.
So, what do these six principles set out for businesses and who is affected?
The code helps businesses understand and comply with best practice around marketing and advertising. By supporting the Advertising Standards Agency (ASA), the code enforces new guidance on misleading and socially irresponsible environmental claims. By delivering clear and explicit instructions, the entire lifecycle of a product, service, process, or brand is covered by the code. A tough route for a business to navigate when faced with the current macroenvironment of supply chain issues, inflation and rising cost of living impacting a volatile labour market.
Beyond the legal penalties for failing to comply, neglecting these six principles risks separating a company from their customer base. And as informed public opinion and expectations rapidly evolve, a company’s reputation is increasingly exposed to this danger. Over a 12-month period, the ASA found 16 advertising campaigns had either exaggerated their company’s green credentials or made unsubstantiated environmental claims. 2 Major companies caught up in this scandal included Innocent Drinks, Oatly and Alpro.3 Other household names such as Amazon, Ikea and Unilever were among companies to be exposed to fall short of promises that reach net-zero by the middle of the century.3 Showcasing the increased stakes of marketing credibly, with action by regulators such as CMA set to grow.
As trust in green claims is fragile, the Green Claims Code is a welcomed intervention that will play a vital role in levelling the playing field. Bridging the gap between marketing and sustainability requires a big shift in mindset. Businesses that have been doing the work to mitigate their social and environmental impact – with data to support – will see the code as a golden opportunity to gain commercial advantage and improved performance.
At Simply Sustainable, we support the current trends of increased transparency in disclosures and can guide you to comply with existing obligations on environmental claims.
[1] Forbes. One third of UK consumers want to shop responsibly.
2 Independent. Number of adverts banned for ‘greenwashing’ triples in a year.
3 The Guardian. Biggest net zero claims.
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