Watchdogs are cracking down on greenwashing, so how can your business back up its sustainability claims?

International and domestic pressure is building on corporate Australia to reduce its environmental impact. However, local businesses that gild the lily on their green credentials are being targeted by authorities — and it’s not just the top end of town that’s under intense scrutiny. 

Heading into the federal election, both major parties have pledged 2050 net zero carbon targets. 

At the same time, domestic and international investors and customers are increasingly demanding more action from businesses on climate change. 

While this has sparked a wave of environmental promises and positive action, it’s also given rise to an increase in claims of ‘greenwashing’, where a business markets environmental credentials that are misleading or overstated. 

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Watchdogs the Australian Competition and Consumer Commission and the Australian Securities and Investments Commission (ASIC) have announced crackdowns on greenwashing, and businesses are facing mounting pressure to substantiate claims of environmental sustainability and climate change measures. 

For SMEs it can be challenging to back up claims around their carbon footprint targets when they rely heavily on third-party frameworks to make them, and are often far removed from the energy source. Smaller businesses also often don’t have the resources to devote to collating quantifiable data to justify their green credentials. 

In addition, the playing field isn’t level. For example, a business that doesn’t manufacture the products it sells is going to find it easier to offset carbon than a business that runs a factory.  

Taking action 

The key is to start small. SMEs can avoid greenwashing by ensuring their green claims are transparent and accountable by: 

• Providing evidence that’s publicly available on their website;
• Ensuring they have a reasonable basis for any statements, promises or targets announced in relation to environmental measures; and
• Being specific and narrow in claims made, rather than broad and potentially vague or open to misinterpretation.

Worldwide, big corporations are being penalised for greenwashing and on our shores ASIC has announced it’s looking into greenwashing in the financial services industry.  

Ultimately, this is about substance not spin. Every SME should be considering whether the promotion of sustainability measures or environmentally friendly products and services accurately reflects its practices in this area.