Environmental Management and Greenwashing

With ecological awareness in the society rising every day, huge corporations report improved sustainability performance. Speaking numbers, 250 biggest corporations globally say their activity is becoming more and more eco-friendly. Is it really so? Tim Mohin, CEO of Global Reporting Initiatives is concerned about a new phenomenon is currently known as greenwashing. The executive is convinced that this issue is "very serious."

So, what is greenwashing and why is it dangerous? It is a type of a dishonest PR campaign, to which companies resort in order to live up to high corporate social responsibility standards. Of course, It can result in the impaired brand image and loss of clients. However, this is not the worst-case scenario. Stakeholders have no other choice, but to rely on the information, which companies release. With wrong information, wrong decisions are made, and the consequences can be disastrous.

Fake Sustainability Performance Leads to Trouble

Although the current political climate is very uncertain (think about Trump's latest decision to ignore Paris Accord), corporate social responsibility becomes a burning issue. Therefore, companies should give up the practice of overstating their performance in the sphere of environmental protection.

Mohin says that the results, which experts obtain from the reports, form the basis for further policy. Reporting is in fact only a transaction. The information, which corporations share, is later used to create change. What change can we expect to have if it is based on fabricated data? Take, for example, the results of the latest study by Burson-Marsteller, which says that almost 80% of investors acknowledge the importance of ESG performance. In other words, institutional investors are convinced that integrating a well-thought environmental policy into a company strategy can improve company's performance. Nevertheless, experts reassure that these claims mean nothing until they are supported by transparent performance data.

The issue of greenwashing seems is not unnoticed by the publicity. The tendency to file lawsuits against the companies that put the consumer safety at risk have become more frequent in the recent years. However, this does not guarantee that companies realize the threat.

What Sustainability Data Do Investors Expect to See?

Based on Burson-Marsteller report, we can conclude that:

  • Up to 60% of investors expect to see detailed, transparent, and comprehensive reports, while nearly 40% prefer concise reports;
  • Almost two-thirds of the respondents wait for the reports to be easily shareable, printable, and downloadable. In addition, most of them would also appreciate it if the reports could be read on smartphones.
  • Most investors look for a clear indication of how sustainability influences the company performance.

GRI Raise the Standards

Mohin says that up to 80% of the companies claim to be adhering to the standards set by GRI. Experts also witness a sudden increase in the frequency of reporting. Only in Asia, GRI reporting has doubled over the course of the last five years. This tendency can be attributed to the fact that GRI raises its standards instead of simply providing guidance.