by Sarah Walkley | Jul 23, 2024 | Blog
Radical transparency has been as the antidote to greenwashing. It requires companies to be accountable and responsible for the impact of their products, services and operations and to make full and frank disclosure about how the issues are being addressed.
Radical transparency provides all stakeholders with greater information, enabling collaboration and empowering action on systemic issues that could not be tackled by any one player in isolation.
Brands can build trust in their operations, enhance their reputation and potentially gain competitive advantage by being totally — and often brutally — honest about their sustainability efforts. That means not just going public on how a company has improved its products and operations, but also being open about what they are yet to do, what they got wrong and what they have learnt along the way. It shines a light on the actions that are working — and the ones that are less effective — enabling businesses to focus their sustainability efforts in the areas that count.
While businesses should be encouraged to progressively shift towards radical transparency, it is not without its risks and timing is everything. It can open the business up for increased scrutiny — including in areas not covered by mandatory reporting requirements. Some stakeholders may misinterpret a company’s admission of shortcomings, especially in the absence of any comparisons — if competitors aren’t equally honest, any challenge the business encounters may appear to be a company-specific issue, rather than a systemic risk affecting the whole industry. It is also essential to back up statements with data demonstrating clear progress, not just awareness of the issues.
Growing reporting requirements, including the EU Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), mean that companies will have to report on their activities in ever greater detail. How does a business determine if it is ready to go beyond the statutory minimum and embrace radical transparency?
Sarah Walkley, Senior Sustainability Writer at Context Group explores the key questions that you should ask yourself before your company takes the plunge.
- Are you doing it on your own terms?
First, it’s crucial to be clear about why you are considering boosting transparency. Is it because other companies, particularly your competitors, have gone down that road? Are their actions forcing your hand, or raising customer expectations for you to be ever more explicit about your activities?
Companies such as Ace & Tate and Noah, that are highly transparent about their activities, have done their preparation and evolved their approach over time. They have been collecting data on all aspects of their business, developed and tested the messaging and ensured they can tell a coherent story.
They have embraced a more transparent approach on their own terms — not been cajoled into it by those around them.
- Are you prepared for employees to ask anything?
Does your company provide every opportunity for employees to ask questions about corporate and sustainability strategy as part of regular townhalls and updates? And are they provided with full and frank answers?
The most transparent companies have ‘Ask me anything’ sessions in place. They provided a testbed for what companies are ready to talk about publicly. If a company is not yet ready to put its cards on the table and talk about its sustainability progress internally — both the positives and the negatives — then it is not ready to share that information externally.
- How do you think other stakeholders will react?
If your company is already fully open about its activities internally, the next step is to think about how other stakeholders would react to you telling all — and potentially doing so in a way that may be quite different from how you communicate now.
Ace & Tate made no secret of the fact it had made some bad decisions on its journey to becoming a B Corp and had ‘f*cked up’ at times. It made a break from the typically staid tones of corporate communications to indicate that it was not just saying something different — it was also doing things differently, for example reversing a decision to use polyurethane in its glasses cases, which helped to reduce emissions but increased water consumption.
For other organisations, including Noah, Ganni and Patagonia, it starts by acknowledging that they are not sustainable companies. Their focus is on being the most responsible businesses they can be.
If suggestions that your company follows a similar approach are greeted with consternation and worry about what shareholders, suppliers or customers would say, then maybe now is not the time for radical transparency. However, just having the conversation should help to flush out the biggest areas of concern which need to be addressed to unlock a willingness to be more open.
- Could you go above and beyond?
The European Sustainability Reporting Standards (ESRS) list the data points that companies subject to CSRD will have to report on. There are over 1,000 data points in total — most companies will be required to publish data on a few hundred points covering the material sustainability matters that are most relevant to their business.
Companies can choose to be even more transparent and report against additional data points.
But the mandatory reporting requirements under ESRS and CSRD are already a big ask, especially for many private companies that fall within the scope of mandatory reporting for the first time.
Does your company have capacity to go above and beyond the base requirements at this stage?
- Are you prepared to reveal the full picture?
Are you ready to share the truth, the whole truth and nothing but the truth?
Specificity is the key to avoiding greenwashing. The Directive on Empowering Consumers for the Green Transition (also known as ‘the Greenwashing Directive’) has made that abundantly clear in restricting the use of generic terms such as ‘green’ and ‘eco friendly’ and regulating the format of acceptable claims, e.g. ‘this bottle is made of 30% recycled plastic’.
But focusing so specifically on one aspect of a product raises questions about other, less favourable attributes, or even other products. Why is the product not made entirely of recycled plastic or even a different material, for example? Or why are other products still sold in non-recyclable sachets rather than recycled and recyclable bottles?
It is as important to reveal what you are not doing and why as it is to communicate where you are making progress. Like Noah, Ganni and Patagonia, that may mean setting the record straight that there is no such thing as a truly sustainable company — only ones that are trying to make a difference where they can and minimise any inevitable impact.
- Are you willing to share what went wrong?
No initiative ever goes entirely to plan. Things take longer than you think. Projects cost more. And unexpected challenges always emerge along the way. But these setbacks all bring valuable learning, enhancing future initiatives. They enable companies to identify where greater collaboration would help to tackle systemic issues.
Radical transparency requires humility and openness about what went wrong, what you have learnt from the experience and how that is shaping future activities. Bragging only about what went right will sound hollow.
- Are your stakeholders already using AI to judge your efforts?
Are your stakeholders using artificial intelligence to assess your actions? Tools such as ChatIPCC, ClarityAI, GreenwatchAI and ClimateBert enable users to compile information from a disparate range of sources and draw their own conclusions about whether your organisation is living up to its sustainability ambitions.
The most robust response is to be more open about your approach and consistent in the way that you talk about activities. The technology can flush out a poorly considered press release issued in a minor market or an unguarded comment uttered in an interview, making it easier than ever before for stakeholders to question your strategy. Consistent messaging is essential to prevent this and is the foundation to radical transparency.
Context supports companies to hit the right tone with their sustainability strategy, reporting and communications — encouraging transparency and building credibility and enabling delivery of impact-led sustainability strategies. If you would like to talk about your organisation’s needs, please get in touch via www.contextsustainability.com or helen.fisher@contexteurope.com.
by Meera Robins | Jun 24, 2024 | Blog
The Truth About COPs29s Controversial Host
There are plenty of climate issues to tackle at the upcoming COP29 this month, but the overwhelming spotlight has been on the controversial host country: Azerbaijan. This will be the second year running that the annual UN climate change conference is held in a petrostate and the third consecutive year in an authoritarian state with a questionable human rights record. Azerbaijan’s love affair with oil and gas and history of suppressing those who speak out against it has left people wondering: Should a country like this host a COP?
A Petrostate Host
No country – petrostate or renewables haven – should be excluded from contributing to climate action. Having a petrostate host a climate COP can increase international pressure on the country to live up to its climate commitments. But Azerbaijan’s lack of decarbonisation progress is concerning. Considered to be a “gift from god” by its president, Ilham Aliyev, fossil fuels make up 90% of Azerbaijan’s exports. Despite claiming to be in an active green transition and setting targets to reduce emissions by 40% by 2050, the government is yet to provide a detailed fossil fuel phase-out plan, as agreed in a landmark pact at COP28. Gas has now replaced oil as the country’s leading export, and production is set to increase by a third in the next decade. Critics have argued that having Azerbaijan – a country where decarbonisation is not a priority – host a global climate summit is troubling.
An autocratic state host
Azerbaijan ranks as one of the least democratic countries globally, with severe limitations on freedoms of expression and assembly of civil society groups, journalists and dissidents. Civil society groups have accused Azerbaijan of hypocrisy after it labelled itself a peacemaker and called for a global truce during this year’s two-week climate conference. The accusation follows a year of campaigning for the release of Gubad Ibadoghlu, Azerbaijani energy markets expert at the London School of Economics and vocal critic of the country’s oil and gas policies. Before his 2023 arrest, Ibadoghlu was outspoken in his belief that Azerbaijan couldn’t replace Russia as an alternative oil and gas supplier to the EU due to limited capacity and geopolitical tensions. Azerbaijan’s government arrested him for religious extremism and counterfeiting money – claims that have been refuted by global advocacy groups and lawyers. There’s concern that Azerbaijan’s harsh crackdown on dissidents, particularly those that oppose current climate policies, will intensify after the conference.
Azerbaijan’s foreign policy chief dismissed the human rights abuse claims, stating that “overburdening the COP agenda with issues not having direct and immediate linkage to climate change is not helpful but detrimental.” But history shows us that, in many cases, effective climate action relies on respect for human rights. Decades of speaking out against governments and large corporates paved the way for the climate policies and regulations we have today. On the one hand, Azerbaijan is hosting a conference centred on climate justice and empowering developing nations, yet on the other, the country is suppressing core pillars of climate activism – freedom of expression and association, and peaceful assembly.
Paul Polman – former Unilever CEO and major sustainability advocate – sums up the controversy: “Rewarding such behaviour by allowing the country [Azerbaijan] to host COP29 sends the wrong message to the international community…how can you push others to higher ambition, while continuing to build your economy on fossil fuels? How can you convene the different players in a spirit of inclusion and compromise, while violently suppressing dissent?”
Global advocacy and civil society groups are pushing national governments, such as the US and the UK, to pressure Azerbaijan to release its political prisoners. After months of campaigning, the message seems to be getting through. In early October, US lawmakers urged Secretary of State Antony Blinken to press President Aliyev on upholding human rights protections ahead of COP29. The EU Parliament took this one step further, condemning Azerbaijan’s human rights record and encouraging EU leaders to use the conference as an opportunity to address the issue. EU Parliament members even stated that Azerbaijan’s abuses were incompatible with hosting COP29.
How can a host country’s human rights transgressions be addressed at future COPs?
Civil society groups, including Amnesty International and Human Rights Watch, have been advocating for increased human rights protections for COP participants in the host country agreements (HCAs). They’ve also called for HCAs to be publicly available immediately after the climate COP host country is announced. This stems from the fact the COP29 HCA is still not public nearly a year on from the announcement of Azerbaijan as the host. Human Rights Watch did obtain a copy of Azerbaijan’s HCA and uncovered significant shortcomings and ambiguities on the protection of human rights for conference participants. It’s no surprise that the involvement of Azerbaijani civil society in this year’s COP is expected to be extremely limited, with state-supported groups filling their space instead. Undertaking the actions proposed by civil society groups would mean future COP participants – especially those from the host country – are able to speak freely during the conference without fear of persecution afterwards.
What happens at COP29 in terms of climate negotiations and how Azerbaijan will respond to human rights criticism remains to be seen. Despite the international scrutiny, the petrostate is not shying away from the global climate stage. In September 2024, Azerbaijan announced its bid to host another global environmental summit – the COP17 UN Biodiversity Conference in 2026. It seems the discourse around Azerbaijan’s role in global sustainability conversations isn’t over yet.
by Pippa Greenwood | Jun 4, 2024 | Blog
Global wildlife populations have plunged by nearly 70% since 1970. More than 44,000 species are currently threatened with extinction, with 41% of amphibians and 37% of sharks and rays on the brink of collapse. Overdeveloped land and overfishing, exploitation of natural resources, climate change, pollution and the spread of invasive species are the five main drivers of this loss.
Biodiversity isn’t just necessary for healthy ecosystems; it’s essential for economic growth. Nature degradation could cause a 12% loss to UK GDP in coming years, according to the Green Finance Institute — a larger hit to UK GDP than the 2008 financial crisis or Covid-19. Companies are dependent on nature and the services it provides, from crop pollination and raw materials to flood protection and carbon sequestration. These services are crucial to an organisation’s productivity and resilience. Yet companies (and economies) still freeride on nature’s benefits and are failing to integrate nature’s value into our current economic system.
That is until recently. New regulations and frameworks are increasingly encouraging, if not requiring, companies to halt and reverse nature loss and restore biodiversity, supporting a nature positive future. The new EU Corporate Sustainability Reporting Directive will require disclosure of the impact of larger listed EU businesses on biodiversity and ecosystems from 2024. In the UK, the Biodiversity Net Gain Policy requires developers to deliver a 10% biodiversity net gain (creating or improving natural habitats) with all new developments. Voluntary frameworks are being developed to hold companies accountable for their use of natural assets. The Taskforce on Nature-related Financial Disclosures (TNFD), helps companies assess and account for their nature-based risks and opportunities such as soil erosion and flooding to buildings and restoring natural habitats. The Science Based Targets Network (SBTN), a group of 80+ NGOs and wider partners, has published the first voluntary science-based targets for nature. The SBTN guidance supports businesses to set targets on biodiversity and nature. Examples include targets on water consumption, pollution and deforestation.
Whilst some of the nature-based frameworks and legislation are still voluntary, as with GHG emission reporting and climate target setting, measuring and reporting impacts on nature will no doubt soon be required. So, what practical steps can companies take to restore nature and rebalance biodiversity?
We’ve provided 10 tips to support companies on their nature positive journey.
- Conduct a biodiversity materiality assessment. This helps companies assess the impacts of their operations and supply chains on nature and biodiversity. Once impacts are understood, organisations can take steps to mitigate them. The SBTN provides tools to conduct a materiality assessment and the TNFD has a framework to assess companies’ nature-based risks, opportunities and financial impacts.
- Set targets to restore and prevent biodiversity loss. Examples include water pollution prevention targets, goals to avoid conversion of natural ecosystems, and zero-deforestation commitments. Unilever has committed to achieving a deforestation and conversion-free supply chain, meaning its raw materials such as palm oil, paper, soy and cocoa should no longer be associated with deforested and converted land. The targets relevant to a company will depend on its material nature and biodiversity impacts. Targets must be measurable so progress can be tracked. The SBTN has provided initial guidance to set freshwater and land targets (including partial biodiversity coverage). Ocean targets will be available in 2025.
- Develop a holistic, integrated strategy. Taking a holistic approach to nature strategy embeds it into the wider sustainability strategy and business model. With climate and nature so intrinsically linked, action in one area can support and impact the other’s progress. By integrating nature into a net zero roadmap, organisations can reduce adverse impacts on nature and biodiversity while working towards their climate goals. The SBTN’s ‘Avoid, Reduce, Restore, Regenerate, Transform’ (ARRRT) Action Framework, provides companies with a hierarchical approach to effectively implement a nature strategy.
- Source responsibly. Companies depend on natural resources such as water, timber, copper, coffee, cocoa and energy. But many of these are limited and extracting and using them often carries negative environmental and social impacts. Some businesses are already working to source responsibly, and a biodiversity assessment could highlight other hotspots. Certifications and standards such as the Forest Stewardship Council (FSC) for timber and paper, and Fairtrade for foods, can help with assurance. In 2023, 98% of IKEA’s wood was either FSC-certified or recycled.
- Restore habitats. Once a company has reduced its impact on biodiversity, it should look to restore depleted habitats. Reforestation, wetland restoration, regenerative agriculture, marine ecosystems protection and restoration projects are all good examples of habitat restoration. Choosing restoration projects that align with the company’s nature-based risks helps reduce these risks and supports the business case for more projects like it.
- Integrate nature into infrastructure. Invest in green infrastructure, such as green roofs, permeable pavements, wildflower boxes, rooftop beehives and living walls to support biodiversity in urban landscapes. The new Google London headquarters will have a roof garden with a rainwater irrigation system — providing a habitat for protected local species of bats, birds and insects.
- Improve biodiversity data. Nature and biodiversity has approximately 3,000 metrics, unlike its counterpart climate, which has predominately one — tonnes of carbon dioxide equivalent (tCO2e). Collecting all these nature-based metrics can be challenging. Working with and incentivising suppliers to gather this data down to the farm level will support accurate monitoring of future biodiversity levels and impact measurement.
- Invest in technology that promotes biodiversity. Investing in technology can plug the biodiversity data gap that makes measuring progress against targets challenging. Technologies like agri-tech and nature-tech monitoring systems can help. Chirrup, a biodiversity monitoring solution, uses AI to listen and monitor birds to track and protect the levels of biodiversity in a specific area. Tesco has teamed up with start-up tech innovator AgriSound to monitor insects and bees on its apple orchards, as part of its plan to promote biodiversity in the supply chain.
- Stand up for biodiversity: Engage with stakeholders, including local communities, NGOs and governments, to ensure that biodiversity concerns are acted upon and local knowledge is incorporated into decision-making processes. Sainsbury’s, Nestlé and H&M Group are pushing for mandatory disclosures on nature impacts to be brought in by 2030.
- Give nature a seat at the table. Appoint a member of the board to be nature’s advocate to ensure nature’s voice is heard. Patagonia has gone a step further and made nature its sole shareholder. The founder and former owner, Yvon Chouinard, transferred 98% of the company’s shares to environmental organisation Holdfast Collective. Each year, Holdfast will receive all profits that Patagonia doesn’t need to reinvest — an expected $100 million annually — to protect nature and biodiversity and fight the environmental crisis.
Context supports efforts to develop and implement effective corporate nature positive strategies. If you would like to talk about your organisation’s needs, please get in touch via www.contextsustainability.com or pippa.greenwood@contexteurope.com.
by Sarah Walkley | May 2, 2024 | Blog
Environmental and social issues have never been far from the headlines over the past 12 months. While they often take a back seat in times of economic or political uncertainty, these issues are returning to the top of the agenda ever more quickly after a crisis, according to Ipsos. As Context embarks on a new financial year, we’ve compiled our take on the 12 months gone by and what it means for business.
Growing compliance requirements
The regulatory burden has grown significantly over the past 12 months, with several new rules coming into force and many others receiving final approval.
In the US, the Securities and Exchange commission published the first nationwide reporting requirements, obliging large companies to include mandatory disclosures on scope 1 and 2 greenhouse gas emissions in their annual report and registration statement from the 2025 financial year. However, within a month, the rules were put on hold pending a judicial review, delaying final implementation. Nonetheless, publication of the new rules sent a clear signal that more detailed climate reporting will soon be a requirement in the US.
In parallel, sustainability professionals will need to get to grips with requirements under Europe’s Corporate Sustainability Reporting Directive (CSRD), which applies to listed companies from 2024 and up to 50,000 medium and large businesses before the end of the decade. The Directive covers a broad set of environmental and social issues and sets out requirements to conduct and report on a detailed double materiality assessment.
The EU also approved the Corporate Sustainability Due Diligence Directive, obliging companies to assess, reduce and address negative impacts in their supply chain, including on issues such as child labour, slavery, exploitation, water and deforestation. The directive applies to all large companies operating in the EU. In addition, the EU deforestation-free products regulation enters into application later in 2024.
Following a review which found that 53% of sustainability claims were vague, misleading or unfounded, the EU updated consumer protection law to rule out greenwashing. The new rules, which came into effect in March 2024, set out what companies can and cannot say about their products, requiring claims to be clear, specific and substantiated. They will be swiftly reinforced by a new green claims directive, currently making its way through the EU Parliament.
More regulation on the horizon
Additional regulation will continue to come thick and fast over the next few years, with a range of proposals under review.
Europe turned its attention to how things are made in 2023. The EU agreed a draft right to repair directive, making it easier and cheaper for consumers to ask for broken and defective goods, including mobile phones, vacuum cleaners and washing machines, to be repaired rather than replaced. If an item is still under guarantee, the repair will be accompanied by a one-year extension to the warranty. The new regulations are expected to come into force in 2026. While there have been complaints that the directive covers only a limited set of goods, it adds to the pressure on companies to design products to be repaired.
France went further, approving a ban on advertisements for fast fashion brands and a bonus scheme offering up to €21 off the cost of repairs for clothing and shoes. The French Government aims to ban manufacturers that produce vast amounts of cheap clothing every day such as Shein from the country’s screens, claiming their approach compels other manufacturers to expand their range to keep up with competition, leading to excessive production and consumption. The restrictions on fast fashion have yet to be approved by France’s upper house, but the new rules look set to come into effect in 2025.
Elsewhere government action came down in favour of local communities. The US Administration released an additional $328 million in funding to help communities address the impacts of climate change through water storage and recycling. Ecuador halted drilling for oil in the Amazonian national park, while Brazil issued landmark protections for Indigenous communities.
Under the spotlight
Almost 200 new climate legal cases were filed in the year to the end of May 2023, with an increase in cases filed against companies. While the total is down slightly on the previous year, litigation covered more countries and more issues. Around half led to a ruling that promoted climate action.
Governments were increasingly compelled to protect the rights of the next generation; companies may soon be expected to follow suit. The state of Montana was found to have acted against young people’s right to a ‘clean and healthful environment’ by promoting fossil fuels, while in Europe six young people are taking action against 32 countries, including all EU members, claiming that a failure to act on climate change discriminates against the next generation.
Companies faced scrutiny on multiple fronts. Singapore issued its first decision on greenwashing, demonstrating that regulators globally are increasingly prepared to take action. The Advertising Standards Authority banned a campaign for Prism+ air conditioning units. Prism+ had claimed that using its energy efficient units could ‘save the Earth’. In New York, activists questioned why materials manufacturer Saint Gobain should be recognised as the headline sponsor of Climate Week given its record on pollution, while state authorities took aim at PepsiCo for failing to act on plastic waste.
2024 is set to be the biggest election year ever, with over 40 countries and regions going to the polls, including in the US and EU. That has led to an uptick in scrutiny of company donations and lobbying activity to ensure democracy is protected.
An additional steer
September saw the launch of the UN Global Compact’s Faster Forward Initiative. Current estimates put us collectively on course to achieve just 15% of the Sustainable Development Goals by the end of the decade. The Faster Forward Initiative identifies five areas where companies can not only directly affect the pace of progress, but also unlock additional co-benefits, helping to deliver the wider sustainable development agenda. These are gender equality, climate action, living wages, water resilience, and finance and investment.
An expert group of the International Labour Organization (ILO) met in February to review living wages, publishing a clearer definition of a living wage and how to make it a reality globally. The ILO also committed to providing guidance for employers and workers on setting wages.
Beyond climate
Reducing emissions is no longer enough. Growing political instability brought supply chain risks into sharp focus, with attacks on shipping in the Red Sea disrupting supply chains. Ongoing geopolitical tensions also undermine businesses’ willingness to invest, increasing existing social inequalities. Meanwhile, international pressure has been growing for businesses have to consider a wider spectrum of environmental and social issues and their interconnections.
Following the global stocktake of national climate commitments, COP 28 recognised the triple planetary crises — climate change, biodiversity loss and pollution — and the need to tackle all three issues together to accelerate momentum. The decision urged governments to accelerate efforts to protect and restore nature to meet the Paris Agreement.
To date, there has been no formal mechanism for protecting the high seas — the vast expanse of ocean that extends beyond national waters. A new UN Treaty for High Seas Conservation aims to change that, introducing a framework for international cooperation to protect and restore the high seas. It could also lead to a ban on damaging practices such as bottom trawling and the use of harmful chemicals.
Meanwhile, negotiations got underway for a UN treaty on plastic pollution, leading to the publication of an initial draft. The ‘zero draft’ has been broadly welcomed as a comprehensive document, which would support reduction of plastic use, help prevent pollution and stimulate a shift to a circular economy. However, there is a need to sharpen the text to make it legally binding.
Business will have to understand its risks and impacts in relation to all these issues and report on its activities under both CSRD and new science-based targets for nature. In May, 17 companies embarked on a pilot to set verifiable goals for the protection and restoration of nature. The pilot is due to conclude in May 2024, providing a framework for companies to set and track nature progress.
Artificial intelligence (AI) has the potential to support progress on all of these fronts, providing a more comprehensive assessment of risks and responses to environmental issues. However, 2023 was the year when businesses had to grapple with the potential impact of AI on jobs, privacy, social inclusion and democracy.
More ambitious responses
While the sustainability agenda may be expanding constantly and the demands for action accelerating, we have also seen companies be more ambitious in their response.
Cross-company collaboration has increased in a bid to tackle systemic problems within the supply chain and spread the cost of innovation. The Footwear Collective brings together footwear manufacturers including New Balance and Crocs to tackle sustainability in the shoe industry. H&M Group joined forces with Vargas Holdings to form Syre to decarbonise and reduce waste in the textiles industry.
Apple, Coca-Cola and Microsoft, among others, have all been investing heavily in sustainability, either to identify innovative approaches to sustainability challenges, accelerate the development of start-ups and technology (for example, to capture and store carbon dioxide), or mitigate their negative impacts. One-third of the corporate venture capital funds launched in 2023 were sustainability focused. Another one-quarter related to AI, with just 40% of funds focused on any other issue.
The number of companies setting science-based targets for emissions reduction doubled in 2023, topping 4,000 before the end of the year. Some 160 stand ready to develop science-based targets for nature, while 230 have signed up to the UN Global Compact swelling its business membership to almost 24,000.
Preparing for the year ahead
We can’t tell you exactly how things will play out, but we do know that there will be ever greater demand for action on multiple fronts.
- Tip 1 – Understand your impacts, risks and opportunities: Double materiality sits at the core of the new European sustainability reporting standards. We’ve isolated the key steps to assessing impacts, risks and opportunities and developed an assessment toolkit to help make the process more straightforward.
- Tip 2 – Refine your climate strategy: As the urgency to combat climate change continues to grow, so does the importance of having a robust and credible climate strategy and net zero roadmap. Here are our 10 top tips for developing, implementing and evolving your climate strategy and driving meaningful change within your business.
- Tip 3 – Define how you contribute to a nature-positive world: Expectations are growing for businesses to have a carefully considered nature strategy that’s integrated with existing environmental and social action. Explore how companies are putting nature on the board.
- Tip 4 – Work towards a fairer society: Social issues are also set to come out from under the environment shadow of climate action, making it essential to define how your business promotes human rights, decent working conditions and diversity across the supply chain.
- Tip 5 – Get ready for implementation: CSRD will be rolled out in waves over the next five years. Starting early is important for smooth and efficient implementation.
- Tip 6 – Reflect on your reporting approach: With so much going on, it’s tempting to roll up your sleeves and dive straight in. Don’t. Changes in reporting requirements provide the perfect opportunity to rethink reporting and how your business communicates with stakeholders.
We’re helping clients to navigate the evolving sustainability landscape through strategy, reporting and communications support. If you’d like to chat about how we can help you prepare for the road ahead — including CSRD reporting and double materiality assessment, net zero and nature roadmaps, climate advisory services, or other strategic priorities — please get in touch via www.contextsustainability.com or helen.fisher@contexteurope.com.
by Sarah Walkley | May 1, 2024 | Blog
Consumers want to hear how brands are transforming both their products and operations. In fact, 90% of consumers indicate it is important for brands to talk about their sustainability programmes. But the EU has found that over half of current communications are vague, misleading or unfounded, leading to a suite of regulatory changes designed to tackle greenwashing and promote clear communication.
The Directive on Empowering Consumers for the Green Transition (nicknamed the greenwashing directive) updates existing directives on consumer rights, tightening the rules on unfair and misleading claims. It also obliges manufacturers trading in the EU to provide clearer information on how long a product is expected to last, including whether the company only plans to support the software used for a defined period. It should also be clear whether the product is repairable. Approved in February 2024, the directive came into force a month later and will be implemented across the EU over the next two years.
The greenwashing directive will be followed by a second directive — the Green Claims Directive — which is currently making its way through the European Parliament. The directive will further tighten the rules on what companies can and cannot say about the green credentials of their products and how to verify those claims. There are also hefty penalties for companies falsely marketing their products — the regulation allows for fines of at least 4% of company turnover in the EU Member State where infringement occurs.
Here are Context’s top tips for avoiding greenwashing in your product communications and updating your strategy.
1. Be specific
Generic and vague statements are out, and highly specific claims are in. The greenwashing directive includes a raft of phrases to avoid, including ‘green’, ‘ecofriendly’, ‘kinder on the environment’ and ‘more environmentally friendly’.
It also prohibits claims relating to the entire product or company. Your company needs to be specific about how you have improved your products and services, e.g. made from organic cotton on an item of clothing.
Terms such as ‘energy efficient’ or ‘biodegradable’ should not be used without clarification, e.g. that a product is certified to be more energy efficient than the previous version or packaging is biodegradable in a home compost bin.
Any claim needs to be clearly evidenced. Specific, but inaccurate or unsubstantiated claims will fall foul of the Green Claims Directive. It focuses on the accuracy of explicit claims, e.g. that a product is made from 30% recycled plastic or cotton.
2. Be clear on lifecycles
Consumers need to know how long a product should last. That means providing clear information on whether the product is repairable and how long your company plans to support the current generation of software, e.g. the operating system used in a mobile phone.
The greenwashing directive has also set its sights on false claims around durability. For example, you cannot claim a washing machine will last for 50,000 washing cycles if it is only achievable in precise laboratory conditions.
3. Move beyond offsetting
The greenwashing directive specifically calls out claims such as ‘carbon neutral’ or ‘reduced climate impact’, which are based on offsetting alone. You must demonstrate that you have reduced the emissions related to the product and the extent of the reduction.
Offsetting can still be used as part of a wider carbon reduction strategy, e.g. to balance unavoidable emissions as part of a net-zero strategy. It cannot be the default solution, compensating for a lack of action.
4. Go above and beyond
Companies should avoid taking credit for actions that are required by law.
For example, manufacturers of coffee or chocolate cannot claim that their products are ‘deforestation free’ — they have to be. Under the Deforestation Regulation, there has been a ban on selling core commodities produced on recently deforested land since June 2023. This applies to cattle, wood, cocoa, soy, palm oil, coffee and rubber and their derivative products.
In this regard, the greenwashing directive reinforces provisions under the Ecodesign for Sustainable Products Regulation. Rolling out in waves from 2024, the regulations establish design principles relating to the durability, reparability and reusability of products, initially electrical goods such as washing machines and mobile phones.
The regulations also pave the way for the EU to introduce mandatory requirements on the amount of recycled material in a product. If it became a requirement to include 30% recycled material in a product, you could no longer advertise a product as containing 30% recycled plastic. You could only make a claim by exceeding this figure.
5. Say ‘goodbye’ to voluntary labels
The EU has identified over 200 sustainability labels and another 100 green energy labels in use across the region — some backed by very stringent standards and others requiring very little verification. The greenwashing directive heralds a clean-up of product labelling, limiting on-pack logos to accredited schemes backed by approved third parties and public bodies. Companies cannot create or maintain their own labelling schemes.
6. Collate evidence
Claims must be based on sound science or the latest technical knowledge and independently reviewed.
In most cases, you will need primary information collected from direct tests on the product. Data cannot be more than five years old. Secondary information is only acceptable in rare instances where direct data are unavailable.
There should also be clear evidence that the product performs significantly better than both what is required by law and what is common practice in the market. Improvements in one area should not lead to greater negative impacts in another, e.g. a shift to recyclable packaging resulting in far higher production or transportation emissions.
7. Be mindful of comparisons
When improving on a previous product or going above and beyond competitors, it is natural to want to make comparisons. Again, the Green Claims Directive sets out what is a fair comparison.
You cannot claim a product has a lower carbon footprint than a competitor or previous version if the two assessments are based on different methodologies or one analysis covers production emissions and the other takes the full supply chain into account.
8. Seek accreditation
Only recognised providers will be able to provide accreditation. When looking for accreditation seek out established, independent and well-respected organisations. They should also have an international reach. The EU Ecolabel is considered the official standard for products. The Eco-Management and Audit Scheme, or EMAS, is the bar for measuring company sustainability initiatives.
The Green Claims Directive seeks to further whittle down the sustainability labels in use in the EU by establishing rules on approved verification and labelling schemes, including how they assess qualification for an award, minimum requirements for transparency and the process for submitting complaints.
It also limits creation of new national or regional schemes, with the view to making EU-wide programmes the standard. To be approved, new schemes will have to offer something extra to the plethora of independent assessments currently available.
The Green Claims Directive focuses specifically on product communications. It does not cover corporate sustainability reporting, but reinforces the need for fair and accurate sustainability communication at all levels, in line with the EU Accounting Directive or the Corporate Sustainability Reporting Directive.
Context supports companies to assess develop, communicate and implement effective sustainability strategies at the company and product level. If you’d like to chat about your organisation’s needs, please get in touch via www.contextsustainability.com or helen.fisher@contexteurope.com (Context Europe) / lisa.nelson@contextamerica.com(Context America).
by Sarah Walkley | Apr 27, 2024 | Blog
Research shows consumers have little understanding of important sustainability terms and are looking to brands to help them get to grips with environmental issues. But consumer trust is quickly destroyed by the use of vague and imprecise words like ‘green’ and ‘eco conscious’.
Most people (90%) want brands to talk about their sustainability initiatives, according to research by Trajectory and Fleet Street. Consumers want to make sustainable choices, with 68% saying they are more likely to buy from a brand with a clear environmental strategy that they talk about in a no-nonsense way.
Just 4% of respondents indicated they completely understood what is meant by the ‘circular economy’. At Context, we define it as ‘a waste-free way to produce and consume’. Though still very much in development, ‘this state of nirvana eliminates waste and pollution and recirculates products and material while regenerating nature’.
Other terms which confuse people are ‘traceability’ (just 10% completely understand), carbon offsetting (11%) and biodiversity (12%). We also have handy definitions for these too in our Little Book.
Meanwhile, consumers feel more confident about terms like ‘recyclable’ (58% completely understand), ‘reducing single-use plastic’ (47%) and ‘locally sourced/grown’ (40%). They also prefer these terms, giving them higher scores when asked how positively they view the word or phrase.
Why?
According to Trajectory, consumers want brands to talk about what they are doing in ways that are ‘practical, specific and instructional’. Labelling something as ‘recyclable’ tells people what they should do with the used packaging. ‘Locally sourced’ or ‘reducing single-use plastic’ are equally descriptive and make it clear what the brand has done to improve its products.
Trajectory suggests brands flip how they talk about things. Instead of describing a product as ‘biodegradable’, say that it is ‘recyclable at home’ if it will break down in a home compost bin. We agree.
Also be wary of vague terms. Just over one-third of respondents (35%) felt they knew what was meant by ‘environmentally friendly’, while 26% were confident about ‘eco friendly’, 24% understood ‘green’ and 10% understood ‘eco conscious’. People tended to view these words less favourably.
It is perhaps unsurprising that consumers are confused by these terms. They are generic and have been heavily misused, which is why they have been specifically singled out by the EU in its greenwashing directive, currently being rolled out across Europe. They also fall foul of the US Federal Trade Commission’s Green Guides and the Green Claims Codein the UK. They are definitely terms to avoid.
Many brands are taking action to address the climate and nature crises, supported by consumers. Almost half of respondents felt brands have a responsibility to act on climate change (47%) and are sincere in their efforts to make a difference (48%). But there is a clear language barrier standing in the way – one that is made worse by the use of words that are vague or poorly understood.
We know it’s tough to know your bioplastics from your blockchain. Context’s Little Book: (Nearly) everything you always wanted to know about corporate sustainability covers off these and over 300 other sustainability terms and definitions. Why not take a look next time you are telling customers about your sustainability strategy, or talk to us how we can support your company’s sustainability strategy, reporting and communications?
