The concept of Greenwashing has become increasingly popular in recent years, as consumers have become more environmentally conscious and informed about the negative impacts companies can have. The term refers to cases where organisations put considerable efforts into demonstrating their climate commitments, whilst not adhering to them in practice. There are numerous methods that companies use, that may fall under the definition of Greenwashing:
- Use of colour and imagery to present an eco-friendly sentiment. For example, using the colour green, or pictures of trees, plants and other representations of nature in branding.
- Making misleading claims about operational processes in adverts, such as where materials are sourced.
- Sharing information selectively to appear more environmentally friendly than is reality. For example, a company advertising funds that they have allocated to climate-related causes, but obscuring/hiding their other investments in detrimental practices.
- An entity offsetting emissions up and down their value chain, and then claiming to have reduced emissions.
The fight against Greenwashing
The rise of ESG has made a considerable impact in opposing Greenwashing. Reporting requirements have a significant influence in making sure that the true environmental impact that organisations make are disclosed and disseminated. As ESG becomes a bigger part of legal frameworks around the world, climate data will continue to make Greenwashing harder and harder.
From analysis into Greenwashing, the concept of Social Washing is also beginning to gain popularity. It refers to misleading claims organisations may make about their social impacts including working conditions, equal opportunities practices and human rights. A recent study showed that 31% of companies linked to Greenwashing have also been found to be guilty of Social Washing, showing the interlinked nature of the two. The reality is also likely to be worse; the relative newness of the concept may also mean that many examples of Social Washing fly under the radar, whereas Greenwashing is fast becoming a key consideration for firms.
What is Social Washing?
The ‘S’, or social, aspect of ESG includes all things related to people and human rights, covering the impacts of company policies and operational processes on staff, and on society more widely. The metrics are constantly evolving for what makes a ‘socially progressive’ entity, and definitions differ depending on who you ask, but in general, there is a focus on prevalent social issues such as gender equality, racial equality and the position of LGBT issues. It also refers to other worker-related matters such as disciplinary processes, injury rates, working conditions and pay.
Ways in which organisations may engage in Social washing include:
- Brand activism, whereby companies may use digital platforms to support social causes, whilst sometimes having policies that conflict with the same causes.
- Running a campaign for gender equality, whilst having male-only management.
- Using digital platforms to express liberal pro-worker attitudes, but engaging in union-busting practices internally.
- Using pro-LGBT branding, but selectively choosing to not use it in countries with anti-LGBT laws.
- Donating to a cause or charity and publicising it heavily
- Advertising the use of fairtrade or other ethically sourced products whilst engaging in exploitative labour practices.
- Astroturfing: when a company actively supports a cause or movement that it appears has come from grassroots organising, but in reality is orchestrated or sponsored by the company itself
Transparency using ESG data
As consumer awareness grows around the social performance of companies, it will be increasingly important for firms to ensure they are on top of the social aspects of their operations. There are large reputational and financial risks involved with poor social performance, as socially conscious investors and consumers are far less likely to engage with organisations that they do not deem to be progressive. The traction that social media campaigns can gain in a short amount of time can be extremely damaging, and many companies have suffered from negative details of their operational processes being distributed online.
As well as its ability to prevent Greenwashing, data from ESG reporting can help us to better understand whether entities’ operational processes are socially progressive or not. Particularly for larger companies, it may be harder to get an accurate representation of your workplace culture and relations. With a good ESG strategy, you may be able to get a better understanding of your social performance, by measuring how well your company is meeting the required criteria internally in terms of workers’ rights, pay and conditions, and how you are performing more widely. This wider scope may include your adherence to human rights up and down your supply chain, material or financial support of causes or communities related to your operational processes, and your relationship with consumers and clients.
To get a better understanding of your own company’s performance on social metrics, trusted data is key. Speaking to one of our team will help you identify weak spots in your social strategy, and how you can rectify them.