Sustainability: Consumers demand less rhetoric & more climate action from companies
Over recent years consumers have increasingly considered a company’s green credentials before committing to buy their products or services. As a result, many organisations have invested significant sums in promoting their green initiatives and in attracting and retaining employees skilled in sustainability.
However, what often really matters to consumers isn’t just companies’ CSR policies or their climate-related facts and figures - what’s more important is tangible examples of their sustainability in action and the integrity of their climate data. It’s common knowledge that measurement and reporting alone will not help solve the climate crisis. Companies must complement their data and reports with meaningful and timely examples of substantiated climate action in order to avoid the risk of being tarred with the “greenwashing” brush.
A 2023 survey by KPMG found that more than half of shoppers were prepared to boycott greenwashing companies. Not only can companies swiftly lose consumer trust if the consumer feels deceived or misled, but in some instances they can also face costly legal action and often irreversible damage to their reputation.
The global climate summit COP 28 (held in Dubai) faced further controversy just days before the conference began after briefing documents were leaked to the BBC revealing the host’s plans to discuss fossil fuel deals with certain nations. According to the BBC, several of the proposed projects mentioned in the documents appeared to represent new fossil fuel developments. The International Energy Agency (IEA) has previously said that to ensure temperature rises are kept to the 1.5C target, no new oil and gas fields should be developed.
Climate misinformation is fast becoming a growing issue. Climate denial is nothing new, it just means companies must place a heightened focus on enacting meaningful sustainability. Organisations must refrain from promoting exaggerated (or even in some instances fabricated) green credentials or face losing their customers and the force of the law. ClientEarth is an environmental charity that uses the law to create powerful change to protect life on earth. In 2023 the charity took legal action against Shell’s Board of Directors and filed a legal complaint against the US-based agri-business Cargill.
Many environmental campaigners continue to point the finger at politicians and corporate boards for their seemingly indifferent approach to the health of our planet. Many campaigners claim that the rollbacks on timely climate action by those in power have irreversibly impacted our planet.
In November 2023, the UK’s Channel 4 promoted its "Change Climate" season of programming with an advert questioning whether those in power are actually doing enough. It also addressed whether corporate inaction is in fact being surpassed by individuals making their own concerted effort to repair our environment.
As our blog series denotes, the world’s focus on sustainability has grown exponentially in recent years. Sustainability is now embedded at the core of many organisations - ranging from FTSE-listed companies through to Series A start-ups.
Sustainability: Ratings and regulation
As no universally adopted sustainability rating scheme currently exists, this void has led to a lack of consistent metrics, loose definitions and complex jargon. This, in turn, has led to the widely documented knowledge gap of what constitutes true sustainability. Consequently, many companies have been accused of (and, even boycotted over) their environmental claims that many consider amount to little more than “greenwashing.”
Regulatory reporting requirements for carbon emissions disclosures often vary widely by region and jurisdiction. In the UK, central government departments and public listed companies (and those private companies and LLPs employing over 500 people with annual turnovers of over £500 million) must measure and report on their environmental impact.
A report published in November 2023 by London-based The Transition Pathway Initiative Centre (TPI Centre) stated that less than 1% of businesses (the report assessed 1,000 corporate transition plans) have adequate transition plans in place to demonstrate how their decarbonisation targets will be met.
According to a new study from InfluenceMap over 50% of the world’s biggest corporations are at risk of greenwashing their net-zero claims due to the industry associations they are part of and, also because of their political lobbying and influencing practices. The study found that over half of corporations have introduced ambitious climate targets, but that these do not align with the organisation’s current policies regarding lobbying and influencing activities. Subsequently, the report warns of a major disconnect between a company’s public-facing pledges and its (largely obscured) lobbying and influencing activities.
In November 2023, it was reported that consumer and environmental groups filed a formal complaint with the European Commission claiming that Coca-Cola, Danone and Nestlé falsely claimed that their plastic water bottles are 100% recycled or recyclable. “Using ‘100% recycled-recyclable’ claims or displaying nature images and green visuals that insinuate that plastic is environmentally friendly is misleading consumers,” stated Ursula Pachl, Deputy Director General of The European Consumer Organization (BEUC). Pachl concluded by stating “this greenwashing must stop.”
Many companies have a detailed CSR policy and a sustainability-related certification, but what stands out to consumers are memorable examples of meaningful action - albeit those that are communicated in an empathetic way and don’t bamboozle people with climate-related data.
Where sustainability claims have fallen flat
Here we cover three examples of organisations exposed for their apparently missold green claims:- In November 2023, an undercover BBC reporter working at Boohoo (the fast fashion retailer) found that the company was still failing to pay its suppliers and workers fairly and subsequently had reneged on a key commitment in its previous pledge to radically overhaul its working practices. The reporter’s findings were evidenced in a Panorama documentary.
The programme’s airing followed on from a growing backlash from Boohoo’s shareholders over damages caused by accusations of modern slavery back in 2020 (shareholders are seeking £100 million in compensation after the allegations knocked more than £1 billion off the company’s market capitalisation). The Sunday Times reported that Boohoo’s Leicester-based factory workers were forced to work when they were COVID-19 positive and that workers were paid less than the minimum wage (allegations since verified through an independent review). Online retailers including Asos and Next decided to drop Boohoo’s products following the allegations. - Shell, the multinational oil and gas giant saw the UK’s Advertising Standards Authority (ASA) ban a series of its ads (run as part of an integrated campaign) promoting its green initiatives. The ASA deemed the ad’s environmental claims (including promoting its work to install EV charging points and increase its proliferation of renewable energy) were misleading due to the fact that they positioned the company in a false light (with the majority of Shell’s business currently being based on environmentally damaging fossil fuels).
The Financial Times reported that Caroline Lucas, a Green party MP, said greenwashing ads had been “allowed to disseminate fake fossil-fuel news for far too long.” - The ASA banned a TV and on-demand advert by Anglian Water. The adverts made positive environmental claims (regarding the company’s role in creating wildlife-friendly wetlands). However, the adverts were banned for not also informing consumers about the company’s history of releasing sewage into the environment and subsequent fines. Despite the ASA acknowledging that Anglian Water was carrying out a number of activities that could have a positive impact on the environment, the ASA decided that key information had been omitted from the ad. Therefore the ASA deemed the adverts to be misleading.
- In early 2022, the ASA banned a high-profile advertising campaign by popular plant milk brand Oatly for its apparently misleading green claims. The controversial ads compared the carbon footprint of Oatly's oat milk with dairy milk, but the ASA felt that the claim could have been interpreted as a blanket comparison of all Oatly products and types of cow's milk. The ASA also stated that Oatly’s ad implied a scientific consensus by referencing "climate experts” for their claim that opting for a vegan diet is the single biggest way to reduce environmental impact.
All advocates of climate action concur that we must remain optimistic that we can collectively mitigate the effects of climate change. On this note, our series concludes with some positive news stories - examples of substantiated green credentials in practice.
- Apple often leads the smartphone industry in terms of green innovations. Since 2018, all of Apple’s corporate offices, data centres and retail stores have been powered by renewable electricity. The tech behemoth has pledged to achieve net zero climate impact for every device sold by 2030. In 2023 (and, as part of its effort to reduce waste and become more sustainable), Apple unveiled several new products made from 100% recycled aluminum (including the iPhone 12 and all iPad devices). It also unveiled its “Mother Nature” campaign highlighting the company’s key sustainability commitments.
- Fairphone, often described as “the world's most repairable smartphone” pledges “we’re out to change the world” and that the company puts “people and the planet first.”
In 2013, Fairphone launched a movement for fairer electronics. According to its website, the company wished to make a positive impact across the value chain in mining, design, manufacturing and life cycle, while expanding the market for products that put ethical values first. The company continues to grow at pace. In autumn 2023, the Guardian awarded the Fairphone 5 device five stars describing it as “the most ethical, sustainable and repairable handset.” - Patagonia is often hailed as one of the world’s most sustainable companies – and for good reason. The outdoor clothing company has positioned itself as an innovative leader in the fashion industry, with a business model that revolves around making quality items that withstand the test of time. Patagonia's clothing reflects the company’s unwavering dedication to sustainability through their use of FairTrade Certified, organic cotton and recycled materials. This commitment often makes Patagonia the top choice for outdoor enthusiasts who prioritise long-lasting and eco-friendly options. Patagonia has a transparent approach to addressing environmental concerns and seemingly demonstrates an authentic concern for the planet’s wellbeing.
On World Ocean Day 2023 (8 June), Patagonia launched a global environmental campaign focusing on ocean protection and restoration. Patagonia used an integrated campaign to mobilise individuals and to call on governments to end bottom trawling (a fishing method that uses towed nets to catch fish and other marine species living on or close to the seabed) starting with an immediate ban in marine protected areas and inshore zones. - Building on their commitment to create a more circular economy, Vestiaire Collective (the leading global second-hand luxury fashion platform) worked with a committee of fashion and sustainability experts to create a clear definition of what constitutes fast fashion and the company leverages this framework to ban industry giants from its platform.
In November 2023, Vestiaire Collective announced it is banning a second wave of fast fashion brands from its marketplace. This marks the second year in a three-year rollout to ban all fast fashion from the company’s website. Following the initial announcement in 2022, Vestiaire Collective saw 70% of members impacted by the ban return to the platform to shop for better quality items and invest in second-hand items.
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