As Environmental, Social and Governance (ESG) become more popular in Australia, so does the awareness of greenwashing and the need for transparent ESG reporting and assurance.

What is greenwashing?

Greenwashing is when a company presents misleading information about their environmental impact or action. It is more extensive and subtle than reporting false statistics and can include:

• making green commitments with no targets, plans or timelines on reaching said commitments
• packaging a product to appear environmentally friendly, when it is not
• using misdirection in brand marketing to imply a business is more eco-friendly than what it is
• misleading advertising statements, and more.

The Australian Competition and Consumer Commission (ACCC) is cracking down on Australian businesses that are greenwashing, targeting companies that use misleading messaging or claims about their environmental action and impact.

As there is no singular legal definition for words such as “sustainable” or “environmentally friendly” these terms are often used as nothing more than a marketing tool to capture environmentally conscious consumers or to strengthen a brand under false pretenses.

Five ways to avoid greenwashing

1. Be specific
   Vague claims leave too much open to interpretation. Instead of marketing a product as “climate-friendly”, instead list the specifics of what makes it climate-friendly.
   
2. Ensure all company actions are value aligned to your sustainability goals
   Companies have been known to greenwash by having admirable carbon stats and investing in renewables, yet still contributing to lobby groups to work against climate policies. A commitment to sustainability should be integral to the whole business.
   
3. Plan your sustainability
   Instead of making sweeping statements with no action plan, dedicate the resources to identifying core ways you can make positive changes towards climate or environmental impact.
   
4. Take action
   Most importantly, a business must prioritise and take action towards its stated commitments.
   
5. Be accountable
   Substantiate your progress through benchmarked ESG reporting and consider having the report audited for assurance.

It’s important to note that greenwashing is not always done intentionally. Many businesses genuinely care about the sustainability of their business but still may communicate their commitments and outcomes in a way that may be considered greenwashing.

If you’re seeking assistance on your professional pathway to sustainability, please contact one of our ESG specialists today.