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27 June 2024 Posted by eliteasia ESG No Comments

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 a lot of ESG reports from smaller-size to market leader companies. Understanding these six major types of greenwashing may prevent your company from being deemed as a greenwasher unintentionally.

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 who tend to do this, rely on general purpose and 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 the follower among every other industry.

2. Greenlighting

Greenlighting is a strategy used by companies to enhance or highlight a specific spotlight or achievement, in particular, 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 doing greenlighting. Showcasing an achievement is not prohibited, as long as there is balance in the reporting; a transparency whether it’s from the positive or negative impacts done by 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. The purpose of this solution is to prevent a spotlight on 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). The reason why service companies tend to be more at risk of this practice is due to a more complicated type of proof in complaining in regards to 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 that have been the issue. As a company with a supply chain, they should reinforce the situation positively by owning the role in the situation as well as 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 greenlabelling 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 Singapore Green Labelling Scheme, Indonesian Green Label Certification, and CIC Green Product Certification Hong Kong that provide environmental and social impact assessment of the product, to ensure that the product meets the sustainability expectations. However, if it’s factually not possible, a progressive change and adoption to be more ethically made is the way to go!

5. Greenrinsing

Greenrinsing is a greenwashing act that happens when a company changes its ESG targets before the deadline due to the inability to fulfill them. This is usually due to unrealistic targets and standards set by the company.

How to Avoid Greenrinsing?

Be realistic!

While it is good to become the benchmark and the leader of the movement 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 a professional in the sustainability field, and other relevant information. We need to also openly share both 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. With that being 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 advice and assistance from various experts will surely shorten the learning curve!

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