Could Corporate Transparency Be the Cure for Greenwashing?

Whether it’s the use of green in marketing materials, images of nature in advertisements, surface-level commitments to sustainability, lack of reporting on environmental impact, or products claiming to be “organic” and “natural” – the sins of greenwashing are all around us. Coined in the 1980s, greenwashing is nothing new, however, increasing criticism from consumers, investors, regulators and sustainable companies has set the stage for a long-running conversation on corporate transparency, and it is now more important than ever. Why is there a need for more?

Through the identification of common greenwashing practices, entrepreneurs can begin to spot discrepancies within their companies and use that information to create corporate transparency and reduce the potential for greenwashing.

Greenwashing – the practice of making misleading, unverified, irrelevant or false claims – violates the core principles of corporate transparency and discredits the hard work of authentic sustainability practitioners who use business as a force for good.

As greenwashing practices increase and the ability to spot “green” messaging becomes more difficult, it creates significant economic barriers to sustainability along the supply chain, distracting consumers and investors from important environmental and social issues. and encompasses the integrity of the entire sustainable movement. Question.

This tainted version of sustainability allows companies to prey on the desire of consumers and investors to support eco-friendly brands. As profits continue to rise for companies that engage in deceptive marketing and advertising to promote their “greener” image, the real cost is paid by consumers, the economy, and ultimately the planet.

While some companies intentionally engage in greenwashing, many do so by accident. One of the main traps of greenwashing is taking advantage of a company’s inexperience in a permanent location. Environmental claims that are unverified, poorly defined, irrelevant, or offer a hidden trade-off are common missteps. Even companies with the best of intentions can fall victim to greenwashing if they are not careful.

In 2008, when I served as the CEO of Seventh Generation, I came into the limelight that no business leader wants to see. Our company was exposed as a greenwasher for falsely claiming that our products were free of toxic ingredients. This revelation challenges our integrity and transparency, and thus threatens our reputation – one of our most valuable assets. As someone who spent her career promoting sustainability and radical transparency, this was a moment of reckoning for me.

Simply put, the presence of contaminants in our products was the opposite of who we were and what we stood for. Seventh Generation has spent the last six years working diligently to remove the contaminant, but the truth is that our effort was not good enough. Not just because we had not yet succeeded in removing it, but because our stakeholders were completely unaware. This was not highlighted on our website or detailed in our previous Corporate Responsibility Report – we failed to do so.

Still, as I look back, I am surprisingly grateful for the experience. This provided us with a very extreme opportunity to learn and implement new rules for transparency in order to avoid greenwashing in the future. I found that greater transparency is the first step toward taking greater responsibility for the world we are collectively building – and there is a huge lesson in how to be a transparent company. It is not only about disclosing the aspects that you are proud of but also disclosing the areas where you missed the mark. As consumer confidence continues to dwindle, that kind of radical transparency of Kryptonite is essential to combating unethical greenwashing practices.

Through the lens of corporate transparency, companies can avoid greenwashing by ensuring that their environmental claims are factual, clearly defined, verifiable through third-party sources, and based on federal guidelines designed to protect the US economy. do follow.

From a policy perspective, I commend the Federal Trade Commission and the US Securities and Exchange Commission for developing solutions to address these shortcomings. In 1992, the FTC green guide They were first released in response to the growing threat of greenwashing and remain a trusted resource for avoiding environmental claims that mislead consumers. new rules Proposed by the SEC plan to crack down on unqualified claims, strengthen disclosure requirements, and ensure investor protection. A strong national economy requires laying down guidelines that incorporate transparency and accountability in the decision-making process.

As CEO of the American Sustainable Business Network, we support public policy and market solutions to address greenwashing from an overall vantage point. The principles underlying our solutions advocate for increased verification capability through third-party validators. They also ensure that the regulatory landscape remains stable through industry, sector and size specific policy, that any solution must involve all stakeholders in the value chain, and that governance structures and leadership are integrated into inclusive and sustainable reporting methods. should be educated or trained in ,

As we experience extreme greenwashing, the role of the business community will be critical in reducing the spread of misinformation. Sustainable business leaders and those looking to reduce their environmental impact can start by looking at your business operations. Ask yourself, ‘Are our public commitments in line with our business practices? What else do we need to know about this issue before claiming to be part of the solution? Can we create shared principles, definitions, criteria and methods for verification? What is the role of private-public partnership in shaping the way forward?’

Through radical transparency we can begin to separate the green from greenwashing and ensure the real issues – climate change, clean water, plastic pollution – by companies with knowledge, products, accountability and commitment to a more sustainable planet It is being addressed to create that which benefits all.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.