Friday, April 12, 2024

Bad for business: How to avoid the greenwash label

Improving organisations’ sustainability credentials is becoming essential across nearly all sectors and industries says TEAM Energy’s Data Analyst, Sophie Legg. According to world leading professional services firm, KPMG, 30% of consumers’ look for sustainability when purchasing goods and services from a business.

Additionally, as Generation Z’s purchasing power grows, it is becoming clear that organisations must change the way they operate to meet the expectations of new generations to remain desirable in the market. According to a survey by change agency, Futerra (2019), 45% of Generation Z would trust an organisation more if they were honest about the sustainability challenges they face.

However, it is not just consumers; more and more stakeholders are also putting pressure on companies to cut their emissions. Now more than ever, organisations need to make a concerted effort to reduce their impact on the planet if they want to meet the expectations of their customers, employees and stakeholders.

For many businesses that are starting to embrace sustainability it is difficult to know where to start and despite genuine efforts, businesses can fall into the trap of greenwashing by claiming they are sustainable before they truly are or by overstating the efforts they have made. This could be done by making broad statements, exaggerating positive factors in marketing materials or advertising products as ‘eco-friendly’ when perhaps they are not in all aspects.

Understandably, no business wants to be accused of greenwashing and despite the best intentions, organisations risk coming under fire for the work they have or have not done to become sustainable. In particular, larger and more public businesses could be concerned that whether they announce their work around net zero or not, they will be opening themselves up to scrutiny. In a 2021 survey by Quilter Investors, it was found that when it comes to investing in a business’ Environmental, Social and Governance (ESG), 44% of investors were concerned about greenwashing.

Despite fears of criticism, it is important for businesses to lead the way in net zero commitments and use their platforms as a force for change. By understanding their operations’ carbon footprint and what they need to do to reduce their emissions, organisations can do their best to avoid greenwashing claims. As part of their strategy, one of the ways organisations can support the reduction of greenhouse gas emissions is by investing in carbon offsetting projects.

Now this might surprise you, carbon offsetting can be known as a controversial topic, however despite some bad press and in the past labelled as greenwashing, offsetting a business’ emissions can be a proactive way to kick start their net zero strategy. Organisations that do this can become carbon neutral while they continue to work towards their ultimate net zero target.

So, what is carbon offsetting?

Carbon offsetting is the reduction of greenhouse gas emissions through investments in projects that reduce or remove carbon dioxide from the atmosphere, compensating for the emissions a business produces. One of the ways this can be done is through the planting of trees, which naturally removes carbon dioxide from the atmosphere through photosynthesis storing it for centuries. This can be used to offset the carbon a business emits.

Investing in carbon offsetting projects can be a valuable way to reduce an organisation’s carbon footprint. By ensuring their carbon offsets are equal to or greater than the carbon they produce, an organisation can become carbon neutral while they continue to actively work towards their net zero targets. 

To do this successfully, one of the first steps is for businesses to understand how much carbon they emit. This can take time and resource to analyse, with organisations needing to calculate and report on their scopes 1, 2 and 3 emissions. Through understanding these emissions, businesses can see what they can reduce as part of their net zero strategy and which emissions are unavoidable and should be offset by investing in schemes.

However, carbon offsetting does have some critics, with concerns over organisations not reducing their own emissions and instead buying carbon credits and announcing they are ‘carbon neutral’ via marketing. Although acts like this may be done with the best intentions, organisations that overstate the work they have done to reduce their emissions could risk being called out for greenwashing.

For many businesses that are starting their net zero journey, their hearts are in the right place, they are proud of the work they are doing and want to let their customers know that they are making a positive change. However, buying carbon offsets cannot be used as a substitute for doing the real work to remove a business’ impact on the environment. By working with experts who can help them understand the work they have done so far and what more needs to be done, businesses can avoid greenwashing.

How to find the right carbon offsetting projects

Despite carbon offsetting potentially being painted with the green (wash) brush, it can be a valuable way for businesses to take positive steps in their carbon reduction journey, whilst also providing investment for important solutions.

There are a number of different types of offsetting projects organisations can invest in that facilitate valuable environmental, social and technological benefits for our planet. When looking to invest in offsetting projects, organisations should ensure the carbon credits from their chosen projects are verified to a high standard, these can include Verified Carbon Standard (VCS), Gold Standard Voluntary Emission Reductions (VER), UK and EU Emissions Trading Standard (EU + UK ETS), and the United Nations Certified Emission Reductions (CER) programmes. Doing this will ensure organisations are getting independently verified carbon credits that will stand up to scrutiny, therefore ensure they get the best from their investments and the projects are really making a difference.

Demand for carbon offsetting is expected to increase as more organisations commit to net zero. With projects that have societal and environmental benefits in addition to offsetting a business’ emissions the most popular projects. It is important for organisations to ensure they research and choose the right project to achieve a positive outcome.

Be a force for good and embrace feedback

Most organisations that choose to offset their emissions, are often doing it to make positive change. However, no matter how good your intentions are, it is easy to fall into the trap of shouting about the work you are doing before you should and then get accused of greenwashing.

Nevertheless, it is important not to let the fear of criticism stop you from publicly talking about your sustainability commitments. Organisations that don’t say anything at all in fear of being accused of greenwashing, are doing something just as frowned upon, “greenhushing”.

By not making any announcements to your customers, or even your employees and stakeholders, that you are working to reduce your company’s impact on the planet, means that no one can give you feedback and help improve your net zero journey.

By choosing complete transparency, businesses can demonstrate their actions, openly discuss the difficulties they have overcome, own the mistakes they make and show the great work they are doing. This will allow customers to prove their loyalty to the brand, employees to feel inspired, and the organisation can demonstrate their positive impact on the planet.

It is important to remember that this journey is not an easy one and businesses will undoubtedly get things wrong; but by being open about plans and experiences customers will appreciate the honesty more than a polished public statement, and you may influence other organisations to do the same.

www.teamenergy.com

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