At the same time – and not coincidentally – regulatory action on ESG and climate disclosures is increasing. Recent initiatives include the UK’s Green Claims Code, the Hong Kong Stock Exchange’s Guidance on Climate Disclosures, and the US Securities and Exchange Commission's proposed rule.
Unfortunately, the greenwashing label gets tossed around too easily these days, when it should really, and only, be applied to fraudulent activities designed to deceive.
Yet, many of our clients have expressed their concerns about how these regulatory actions will impact them, and how they may be exposed to greenwashing claims that could result in fiduciary or reputational impact. It’s driven many of them to want to contract their sustainability progress for fear of doing or saying anything wrong.
And that’s exactly the opposite direction that we need to go, and contrary to what these new disclosure mandates are seeking to achieve.
For many companies, talking publicly about how you’re managing your operations is relatively new. Many organizations don’t have the internal expertise to feel confident that they are making ESG claims in credible ways. It’s one of the reasons that demand for our ESG reporting services is skyrocketing, and why the need for communications professionals fluent in sustainability is also on the rise.
Ready or not, these new regulations mean that companies must get comfortable with more transparency in disclosure – while taking appropriate steps to limit liability.
What we recommend:
- Be transparent about your activities and have a balanced view. ESG efforts that look too good to be true are subject to scrutiny. Sharing what you’re doing, how you’re doing it, and where your company is still challenged to make progress is a fairer representation of reality.
- Always rely on standard frameworks and methodologies when building your programs and disclosing. Best practices like TCFD, the GHG Protocol, and GRI are tried and true.
- Invest only in valid and reputable environmental products. This includes products like carbon offsets, which have an important role to play in decarbonization, but must be highly valid and verified to be credible. And, ensure that you’re only making the claims that these products earn you the right to make.
- Consistently work to make tangible, meaningful reductions in operational resource consumption in your business and be prepared to detail your plans and progress.
Whatever your level of disclosures today, it is certain that – soon – you’ll be expected to share more. It’s the opportune time to start building your comfort with, and ability to, communicate credibly on ESG without fear. As always, we’re here to support your team in aligning your climate action vision with a realistic and credible roadmap.