Greenwash is becoming a major flood risk

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ast week, the FT shared a warning from Mark Versey, chief executive of Aviva Investors, that green stocks (environmentally-friendly companies) are, in general, overvalued. Versey says that some do match investor expectations, but most will fail to deliver further down the line. In summary, Mark is trying to say that, eventually, greenwashing won’t wash.

No planet B. Credit: @li_anlim via Unsplash
Read the FT article here

A company doesn’t need to be listed to suffer the same foibles. Accentuating green credentials and riding the buzz deep into the profit margin is an appealing short term strategy no matter how large your revenue. But time, the great leveller, will eventually be the judge and critic—how many hollow promises will we see exposed as unfulfilled in due course?


In February, a television advert for drink’s brand Innocent was banned by UK Advertising Standards. It suggested that drinking Innocent smoothies helped to “fix up the planet”, but the reality is very different. Since 2013 the company has been owned by Coca-Cola. In 2021, a report conducted by the NGO Tearfund concluded that across Asia, South America and Africa, Coca-Cola creates 200,000 tonnes of plastic waste–approximately 8bn bottles–that are subsequently burned or dumped, making Innocent’s claim of “fixing up the planet” not look so smooth, in fact it looks just like what it is–greenwashing.

Innocent drinks advertising. Not so innocent after all.

As Mr. Versey suggests, ESG has developed into something akin to a Gold Rush. With the promise of success and stories of literally fantastical growth just over them-there hills if only you tell people your green, just like Innocent did. But things are changing, fast. Think Tesla’s vocal anti fossil fuels position but its lack of full carbon emission disclosure. How long until Tesla’s strategy will age like Volkswagen’s rigged engines emission data from back in 2015. In reality, companies are more keen than ever to tell us that they are green, yet few are actually able to match growing expectations and demands for evidence. Can your company afford to bear that risk?

 

In this sense, we continue to see more and more talking at the subject rather than about the action that should define it. After all, it is action that is needed if we are to really live in a sustainable world one day. There remains a lot of talk about ‘best practices’, moonshot projects and big promises rather than evidence of action that demonstrate desperately needed change required to redefine how we live and do business. What’s stopping us from surveying what is possible before we move off on a journey? Why didn’t VW or Innocent think to ask what is possible? Why did they set themselves up to fail by using unattainable goals and lies?

'For those yet to get going, the question remains where to begin? After all, the first steps are the most important of any journey, they are also the most daunting'
Read our previous journal: Full steam ahead for global catastrophe?

It's not all doom and gloom: there are, of course, reasons to get excited about the potential for business to help shape our sustainable future. The problem is that more and more companies are keen to be seen as moving with the majority rather than actually setting out on their own journey in earnest. For many, it might just be a case of not knowing what to do and where to start. This means few are developing a critical understanding of what they as a company can do, act on it, and then communicate their action directly to their customers via their brands.

 

Brand? I hear you ask–what’s that got to do with this? Well, as a statement of purpose and your company's magnetic north, your brand should encourage and accelerate the change undertaken. This is because authentic brands offer cues for strategic and tactical decision making for customers, staff and all in between. Authentic brands are driven by the ideas that they stand for in people's minds. Because your brand is a bridge that takes your values to your customers’ hearts your brand needs to truthfully and authentically reflect action and your values.

 

The point here is that talk is cheap. Ultimately, without action and effective communication on your ESG activities, they can feel peripheral to what your company and products mean, not to mention costly and very likely risky too. Such risks are set to increase as brand transparency and brand authenticity becomes the norm in the years to come. Can you feel the anxiety yet (sorry not sorry)!?

 

Thankfully, there are a variety of positive motivations driving the ESG movement beyond the impulse to keep-up-with-the-Joneses. So instead of listing all the risks, it's worth thinking of the positive reasons to expand your focus on sustainability. Increasing numbers of consumers want to give their money to brands that are changing the world; others simply want to minimise the harm their consumption has on communities and ecosystems from where their products are sourced. Neither of these drivers should be incomprehensible to anyone in business, but they are no doubt a daunting task to get started with.

 

Versey, via the FT,  encourages investors to “buy brown and help it turn green”. Again, there is a lesson here for all companies, not just those that are listed on the exchange. The lesson is to work with what you already have. To look down at where you stand and–with a critical approach and assess what can be improved before setting about changing your company and brand into driving forces for sustainable change. 


At Penny Black, we know exactly how valuable and revolutionary this type of thinking can be. So if brand, as your magnetic north, is to become your statement of purpose on a journey towards sustainability, and you are ready to critically understand, unpack and engage the risks that abound, we at Penny Black are very interested in accompanying you on the journey. As with all journeys, the first steps are the most important and the most difficult to make, because choosing to set out on the right path dramatically increases the chance of reaching our objectives.


If you would like to hear more about our tailored critical approach to brand led transformation for the sustainable future of your company, please contact us through the form below.


PLAY IS THE ENGINE THAT POWERS TRANSFORMATION

PLAY IS THE ENGINE THAT POWERS TRANSFORMATION