Globally, the trend towards anti-greenwashing is hastening. For UK business as a whole, this has to be a good thing.
After all, greenwashing by its very nature disadvantages firms being most progressive on climate, as it seeks to manipulate environmentally-minded buyers. UK companies often lead truthfully on environment, so greenwashing does them no favours.
That said, the playing field is complex. There’s no one definition of greenwashing and there is no one metric that works with absolute clarity to prove who is guilty of the offence, or indeed otherwise.
The best approach for UK firms doing EU business is to keep well informed of the changes, and use early adoption to ensure internal practices and reporting are up to scratch. For many, a lot of this work may well be in place already.
The changes on the way…
Energy Monitor reports that the EU Commission is putting the finishing touches to an EU ‘anti-greenwashing law’ that has been a long time coming. Other commentators say the draft law is done and companies should be ready to react soon.
The concept as a whole, says Energy Monitor, was first previewed at the end of 2019 in the EU Green Deal put out by Commission President Ursula von der Leyen shortly after she took office.
The goal was to make companies, “Substantiate green claims against a standard methodology to assess their impact on the environment.” However, since then the proposal has been repeatedly delayed because of controversy over which standard methodology should be used.
And herein lies the trouble. Generally, any given methodology will slightly favour certain companies. If you already have a decent renewable energy supply, then a methodology based on energy emissions could favour you, compared with a firm who uses a lot of carbon in energy, but whose equally relevant savings on the front end carbon supply chain, perhaps through better materials sourcing, might get ignored.
That can make for arguments and accusations from all sides.
Getting through the metrics
To try and avoid these problems, Energy Monitor says the plan is to use an EU methodology called Product Environmental Footprint (PEF), which has been in use since 2010 but continually revised over time.
This uses life cycle analysis to measure the environmental performance of a product throughout the value chain, from the extraction of raw materials to end-of-life, across 16 environmental impact categories.
It can, hope its supporters, also measure the footprint of an organisation that claims to be green or to be reducing its emissions. PEF was designed to replace the myriad methodologies on the market that are confusing at best and misleading at worst.
The PEF approach has been welcomed by the EU consumers organisation BEUC and also ECOS, an environmental NGO focused on standards, which has long complained of a ‘Wild West’ of green claims.
To place this all in context; there are more than 200 environmental labels in use in the EU and a 2021 study by the Commission found that 40 per cent of these green claims are exaggerated, false or deceptive, writes Energy Monitor.
What next: BEUC voice
BEUC’s latest paper on greenwashing looks at financial services. Intriguingly, it finds three core improvements that would benefit most businesses, not just across the EU or UK, but the world.
These are regulated benchmark labels, standardised regulatory frameworks and products that work for customers, not the businesses pushing for profit.
BEUC writes: ‘A general driver/enabler of greenwashing is the vagueness of the legal and informational foundations of the market for sustainable financial products. This extends to the vagueness, insufficient standardisation, unreliability and sometimes sheer absence of sustainability-related information and ratings.’
And, candidly, BEUC says The EU legislator bears responsibility for tackling the regulatory enablers of greenwashing. ‘The Regulation on Sustainability-Related Financial Disclosures (SFDR) needs fixing urgently, through requiring that all investment products that claim sustainability exclude certain business activities and through other measures.’
BEUC, analysts suggest, has the ears of law makers in Brussels. So it is a reasonable punt to figure the issues and suggestions above could well creep into final legislation to stop the rot on greenwash.
Action for UK business
Of course, without a final draft of the law to get our eyes on, we can’t comprehensively advise UK business on what to do next. But The Drum analyses UK and French greenwashing law. It notes that French law now prohibits companies from claiming in an ad that their products or services are carbon neutral without greenhouse gas emissions, process and offsetting details.
UK law only requires under the Green Claims Code that businesses comply with any sector or product-specific laws, not that they make information public.
This kind of variation in EU/UK law is precisely what firms seeking to sell into the EU will need to be aware of.
As ever, early adoption and understanding on international and EU environmental regs will serve UK firms well, both in terms of profit making and in terms of compliance and driving a better green agenda for people and planet.
