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From confusion to confidence: Avoiding greenwashing is a challenge that requires ongoing strategic attention and action, writes Stuart Wragg.
Greenwashing, the making of misleading or deceptive environmental claims, has fast become a concern for business leaders. Greater scrutiny from the Australian Securities and Investments Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC), a looming Senate inquiry report, and increased media reporting on the issue are just some of the reasons leaders have heightened concern about greenwashing consequences. Consequences include legal action, reputational damage, declines in consumer trust, and reduced investor confidence.
Given such consequences, it can be tempting for corporate leaders to go quiet on sustainability engagement and communication – but that’s a risky strategy in the long term. Despite current economic conditions, study after study shows consumers, investors, and employees expect businesses to demonstrate environmental responsibility. Moreover, mandatory disclosures and ongoing directors’ duties make not saying anything untenable.
HR leaders have an important role to play in empowering employees to actively combat greenwashing, especially when it comes to training and capability building. Robust education that not only helps employees navigate pitfalls but also builds understanding and relevance of key sustainability concepts can help your business mitigate greenwashing risks and maximise opportunities for effective stakeholder engagement.
If your business is looking to make sustainability training a priority in the coming months, here are four important considerations to keep in mind.
- Make your sustainability strategy accessible and actionable
To avoid greenwashing, it’s important that your people understand your organisation’s sustainability strategy. This includes ensuring your people are aware of the action being taken to reduce harm and create positive impact. Your organisation’s sustainability vision, goals and commitments, and progress being made against those goals and commitments must be accessible to everyone contributing to its success. Corporate sustainable transformations are undeniably complex and multifaceted. However, too many businesses create sustainability strategies that leave employees confused. Avoid this trap by investing in the development of credible and creative sustainability frameworks that bring to life how your sustainable transformation is playing out and how it connects to commercial priorities. Understanding reasons for the action being taken and expected outcomes will help your people accurately communicate the work your business is undertaking.
- Embrace a cross-functional approach
Although often thought about in the context of marketing and communication, greenwashing is a whole-of-business issue that requires a whole-of-business response. Being able to substantiate claims is key to avoiding greenwash. That means individuals from legal, corporate affairs, communications, supply chain, and finance functions working together to minimise the risk of misleading consumers. In our experience of running greenwashing-focused training, having participants from a diverse range of professional roles significantly enhances the impact of the training. Through fostering open conversations and hearing about greenwashing issues from different perspectives, training participants gain valuable insight into all sides of greenwashing challenges and how they can be overcome.
- Make training bespoke and practical
The challenges and risks of greenwashing are well known, but less known are the specific steps a business should take to manage it. Although regulators, such as the ACCC, offer high-level guidance, every business is different, so how that guidance applies to an individual business will be distinct. It’s important any greenwashing or sustainability training rolled out is bespoke to the needs and requirements of your specific organisation and industry. Training that’s too broad or general in nature may leave employees uncertain about their roles in advancing your company’s sustainability goals and result in conduct that’s too broad and general – a greenwashing red flag. For greenwashing-specific training it’s also valuable to share practical, real-life examples of how other organisations have successfully tackled greenwashing. These examples arm employees with practical insight and learnings to apply to their roles and responsibilities.
- Focus on mindsets, too
Although avoiding greenwashing requires practical action, it’s important that capability building addresses employee mindsets, too. This includes shifting the focus from “How do we avoid getting caught out?” to “How do we effectively inform stakeholders about the positive steps we are taking?” This mindset shift can be transformative for a business as it encourages employees to integrate sustainability considerations in day-to-day decision making. It also encourages a culture of healthy scepticism, whereby people critically evaluate environmental claims and organisational practices. Building this culture can help safeguard the company’s reputation and build trust with stakeholders.
Avoiding greenwashing is a challenge that requires ongoing strategic attention and action. Investing in robust employee training and development is an important part of this attention and action. Help your employees build the knowledge and confidence to question, challenge, and make more informed decisions, and you’ll find your business in a better position to navigate greenwashing risks.
Stuart Wragg is the managing director of Salterbaxter Australia.
