How to spot greenwashing – and how to avoid doing it yourself

Having good environmental, social and governance (ESG) credentials has become the expectation rather than the exception.

Consumers are growing wise to greenwashing tactics

Recent studies suggest new investors prefer to get behind companies that support positive change for the planet and its people. As such, this has become an essential aspect of creating and marketing any business.

While this allows us to spend and invest in a way that positively impacts our planet, it also has a dark side, with organisations doing all the ‘people and planet’ marketing without actually doing any of the ‘people and planet’ stuff. But consumers are growing wise to it.

Greenwashing is defined by the FCA as “marketing that portrays an organisation’s products, activities or policies as producing positive environmental outcomes when this is not the case”.

As well-meaning as some of these organisations might be, we as consumers must learn some simple tricks to spot greenwashing, and as businesses, we must make sure we don’t fall into any greenwashing traps.

Firstly, as a consumer, here are some things to look out for:

• Are the ESG claims backed up with easily accessible data?
• Is the language specific and easy to understand? (Words like eco, bio and eco-friendly don’t mean anything without certifications and facts backing them up)
• Are the comparisons made in the marketing comparable – i.e., are they comparing apples to apples or oranges?
• If the product claims to be organic or vegan, do they have legitimate certification to back that up?

Keeping these points in mind while we source, shop and decide where to invest or bank will make it so much simpler to make good choices while figuring out who we can trust.

Fintech organisations, being in a burgeoning and high-growth industry, have an opportunity to build brands focused on people and planet, rather than retrofitting policies and marketing. This allows organisations to show potential customers how business can be done, without getting too overenthusiastic and while staying true and honest to core values.

As an organisation, here are five steps to marketing your ESG credentials without the green sheen:

1. Put your people and planet policy in place and act on it. This is the most vital step. You can’t market your ESG credentials until you’ve earned them with action!
2. Consider certifications if appropriate – it’s up to you whether you want to certify yourself as carbon neutral, and it’s worth doing some research into which certifications are the most legitimate, well known and mean the most to customers.
3. Communicate clearly and have all data readily available – if you’ve followed step one this should be easy. At this point you’re just showing off all the great stuff you’ve done.
4. Be consistent. This is a ‘do as I do’ scenario. If you’re marketing yourself as a responsible company, it needs to run through the veins of your business rather than being an arm of the organisation.
5. And finally: be honest. None of us are perfect. Customers are going to be much more drawn towards an organisation that is doing its best and being honest about not getting everything exactly right.

Greenwashing can be a huge risk to your organisation’s reputation, but learning to market ethically is a journey you need to own. Customers and stakeholders will forgive you for not being environmentally perfect, but only if you are transparent and honest about your progress by clearly and accessibly reporting your ESG data.

What is really important is that you own what you don’t get right, celebrate your successes and communicate then act on your challenges: that is how change is created.

About the author

Gihan Hyde is the award-winning communication specialist and founder of CommUnique, an ESG communication start-up.

She has been implementing ESG campaigns in eight sectors, across six countries over the past 20 years.

Her campaigns have positively impacted over 150,000 employees and 200,000 customers and have closed over £300m in investment deals. Some of the clients she has advised include The World Health Organisation (WHO), HSBC, Barclays, M&S, SUEZ, Grundfos, Philip Morris, USAID, and the Saudi Government. 

Get in touch with Gihan through LinkedIn or Twitter @gehanam.