INTRODUCTION
Climate change litigation has surged, doubling since 2015, exposing companies to substantial financial and reputational risks. Preventative measures are crucial, but the term "Greenwashing" adds complexity to the situation. Some companies, to avoid risk, choose not to discuss climate and ESG topics altogether. However, this approach is counterproductive as stakeholders demand transparency. Let's explore Greenwashing and the importance of effective and honest communication strategies.
DEFINING GREENWASHING
Greenwashing involves making misleading, vague, factually incorrect, or unsupported statements about environmental impacts. Statements can mislead the reader by cherry-picking data, and creating a false impression.
PREVENTING GREENWASHING: RECOMMENDED STEPS
Educate Employees on Key Terminology: Ensure all staff understand terms like net-zero, carbon neutral, offsets, ESG, and Scope 1, 2, and 3 emissions.
Avoid Ambiguous Claims: Refrain from labeling products or services as green, eco-friendly, sustainable, or natural, as these terms lack universally agreed-upon definitions, posing a greenwashing risk.
Establish a Review Process: Develop a thorough review process for statements, reports, and marketing materials to ensure accuracy and transparency.
Legal Counsel Involvement: Consult legal counsel to review all public statements on ESG topics before public release to mitigate legal risks.
Life Cycle Assessment: Obtain a Life Cycle Assessment for products to confirm their environmental impact.
REGULATORY & CIVIL LIABILITY UNDER THE COMPETITION ACT
Misleading advertising is an offence under the Canadian Competition Act. In practice, the courts have determined that Greenwashing amounts to misleading advertising. The Canadian federal Competition Bureau has the power to investigate companies accused of misleading advertising, among other offences, in relation to competition. Below are some major Greenwashing cases from 2023, under investigation by the Competition Bureau.
Pathways Alliance is a group of oilsands companies. Their advertising on adoption of carbon capture technologies was flagged by Greenpeace as greenwashing. Greenpeace has stated that the rate of adoption is not fast enough to reduce emissions and the group’s plan does not account for 80% of its emissions.
RBC is facing a complaint that it misled its customers on its commitments regarding climate action. The complaint was filed by six individuals over the bank’s deceptive marketing practices. The bank, along with other financial institutions, has publicly committed to a net-zero financed emissions by 2050, yet continues to invest in oil and gas companies.
Canadian Gas Association - A complaint has been filed in relation to advertising which is presenting natural gas as a clean energy source even though methane, the primary component of natural gas, is a potent form of carbon pollution. Greenpeace issued a report stating that “Fossil gas pollutes the water and air at every stage of its life-cycle, from extraction to processing to combustion, and gas stoves cause indoor air pollution posing a serious health risk for children’s respiratory health. This means gas can never be truthfully described as ‘clean,’ meaning free from pollution,”.
IMPORTANCE OF IMPACTFUL COMMUNICATIONS
Effective communication is key to building trust and addressing stakeholder concerns. Research shows that transparency about both successes and challenges fosters consumer trust. Companies benefit from sharing struggles to improve their carbon footprint, opening doors to solutions and strengthening relationships with customers and investors.
ENHANCE YOUR COMMUNICATION PLAN
Considering the evolving landscape and increasing scrutiny, a robust communication plan is crucial. Talk to us today about developing a comprehensive strategy that aligns with your sustainability goals and builds trust with your stakeholders.
By implementing these steps and prioritizing transparent communication, companies can navigate the complexities of greenwashing, reduce legal risks, and build stronger connections with stakeholders.
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