Greenwashing is Around the Corner! – In the ESG world, GREEN is not always a positive term, as the risk of GREENWASHING has been ‘lurking’ in many ESG reports from smaller companies to market leader companies. Understanding these six major types of greenwashing may prevent your company from being unintentionally deemed a greenwasher.
Six Types of Greenwashing and How to Avoid Them!
According to Bart Lacroix (Founder of GoodUp), there are six types of greenwashing. Those being said are
1. Greencrowding
This type of greenwashing relies on building a belief that you can push down negative discoveries by hiding in the crowd or settling with common prospects. Companies that tend to do this rely on a general purpose and a minimum level to avoid failure during ESG implementation development. An example of greencrowding is blindly adopting the entire national SDGs support instead of creating a corporate target to hedge the bets in case the company is unable to achieve it.
How to Avoid Greencrowding?
Be unique!
Set your own sustainability goals that exceed the local standard or industry norms. Be the benchmark and lead the movement instead of becoming a follower among every other industry.
2. Greenlighting
Greenlighting is a strategy companies use to enhance or highlight a specific spotlight or achievement, particularly relevant to green features, to draw attention away from other activities that are under negative impression due to damaging impacts.
However, there is a difference between showcasing an achievement and greenlighting. Showcasing an achievement is not prohibited as long as there is balance in the reporting and transparency, whether from the positive or negative impacts of the entire activities.
How to Avoid Greenlighting?
Be integrated!
A progressive transition to align the entire business practice with all the sustainable claims would be the only way to avoid this greenwashing act. This solution highlights one aspect, thus committing to a sustainable supply chain and operation.
3. Greenshifting
This risk occurs mostly with service companies, where companies counterattack the complaints and concerns raised by stakeholders by shifting the fault and blame to them (stakeholders). Service companies tend to be more at risk of this practice because they have a more complicated type of proof when complaining about services provided.
How to Avoid Greenshifting?
Be open and engage!
One way to do this is by conducting routine stakeholder engagement, where a company and its stakeholders sit together to discuss the damaging impacts of the issue. As a company with a supply chain, it should reinforce the situation positively by owning its role and offering solutions. In this matter, both parties need to foster a shared responsibility and proactive adoption of change.
4. Greenlabelling
Green products are getting more and more traction nowadays. However, these companies may have the risk of greenwashing when they market their product as environmentally friendly or ethically made without proper evidence that supports the claim.
How to Avoid Greenlabelling?
Enhance credibility!
Engage with credible and independent certifications, such as the Singapore Green Labelling Scheme, Indonesian Green Label Certification, and CIC Green Product Certification Hong Kong, that provide the product’s environmental and social impact assessment to ensure that the product meets sustainability expectations. However, if it’s impossible, a progressive change and adoption to be more ethically made is the way to go!
5. Greenrinsing
Greenwashing occurs when a company changes its ESG targets before the deadline because it cannot fulfil them. This is usually due to unrealistic targets and standards set by the company.
How to Avoid Greenwashing?
Be realistic!
While it is good to become the benchmark and the movement leader or push to exceed the national standard, always be prudent to set realistic sustainability goals, quantifiable action plans, and progress updates. Setting a comprehensive target roadmap will help you to map the target and its strategy cohesively. This type of roadmap can contain, but is not limited to, annual targets, peak performance targets, strategies, and the enablers and responsible departments. One way to design the roadmap is to balance and align the practical achievements with the business goals, financial capabilities, human resources, and last but not least, the possible risks and opportunities due to climate change and evolving social issues.
6. Greenhushing
When a management team tries to hide its sustainability credentials inside its reporting to evade the scrutiny of its investors, that’s called greenhushing. Companies tend to do this for some reason, one being neglectful of their ESG rating or controversies, while they have the resources to address and mitigate the failure. That’s why the GRI Standards require the ESG report issuers to disclose whether the management has undergone certain sustainability-related training, for the stakeholders to understand the company’s resources and capacity in managing the environmental & social impacts. While overclaiming performance is a part of greenwashing, underclaiming it has also become a concern of transparency.
How to Avoid Greenhushing?
Be genuine!
While it’s good to be humble, always be genuine in showing where our credentials stand; whether we have undergone ESG or sustainability training, how long we have been professionals in the sustainability field, and other relevant information. We also need to openly share successes and areas for improvement in the ESG aspect. In ESG implementation and interest, it’s better to be trusted for honesty, rather than leaving the investors with the benefit of the doubt!
Those are the six types of greenwashing. That said, there is no need to be intimidated and overly self-conscious in every step you take in the ESG journey. Always be ready to move forward beyond compliance, yet humbly reevaluate the progress and disclosure you have created. Furnish the ESG team with supportive training to enhance their qualification and experience, and emphasise honesty and genuine commitment as the company values. Of course, seeking sufficient expert advice and assistance will shorten the learning curve!
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