Shall we see the end of greenwashing by 2025?
We may, but is there a downside?
I have long railed against greenwashing, advertising and messaging suggesting that a product or service is more sustainable than it really is. Jay Westerveld is widely credited with coining the phrase to describe the practices of a hotel encouraging guests to reuse their towels as part of a water conservation strategy when it was the only thing the hotel was doing to conserve water. Jay concluded that it was a cost-saving strategy, not part of a water conservation strategy. All too often, it seems that more effort and resources are being expended in promoting false green credentials than in making the product or service more sustainable.
There are effectively two ways in which greenwashing by businesses can be constrained: by government regulation and fines and by compensation claims by consumers for misselling. Booking.com’s encouragement of businesses on their platform to declare their sustainability actions is welcome because consumers are enabled to seek compensation for misselling caused by greenwashing. Back in July I wrote for Travel Tomorrow about the problems of certification, specifically the GSTC, because no remedy is available to consumers. The certificate guarantees nothing. Too many of us choosing a green accommodation have entered our room to find the thermostat set too low, the lights blazing, and the TV on, reminding us of our name. These experiences undermine confidence in the third-party independently verified labels against which there is no redress for misselling. For businesses, certification is the safest form of greenwashing.
1. How can consumers be provided with an effective means of holding certification companies to account for intentional or unintentional greenwashing?
In the last few years, the Advertising Standards Authority (ASA) and the Competition and Markets Authority in the UK have begun to take action against greenwashing, which is long overdue in my view. Action has been taken recently against Shell, Petronas and Repsol, Anglian Water, Deutsche Lufthansa and Etihad.
The ASA recognises there is a danger that their action on greenwashing may lead to greenhushing, where businesses do not risk speaking about what they are doing for fear of scrutiny, criticism and prosecution. A study by Font, Elgammal and Lamond of small rural tourism businesses in the Peak District National Park published in 2016 found that they only communicated 30% of all the sustainability actions practised. Booking.com research consistently reports that travellers want travel companies to offer more sustainable travel choices (74% in 2023,66% in 2022), and 51% believe that there are not enough sustainable travel options.
In June, the ASA recognised in an opinion piece on “Greenspeaking with confidence”, the danger that action against greenwashing may encourage greenhushing. Where it does, it may discourage businesses from investing in sustainability and deny consumers the knowledge about water consumption, local sourcing and employment conditions they need to make informed purchasing decisions.
The ASA argues that there is no binary choice to be made between greenwashing or greenhushing, arguing that “accuracy and transparency of communications” are the key: “Impactful and informative green claims benefit consumers because they enable them to make more responsible choices. Businesses have a right to speak about the environmental credentials of their products, services, actions and ambitions. But … businesses must be realistic and honest with themselves and their customers about where they are on their own sustainability journey. They need to ensure that they are communicating in a way that does not get ahead of that journey and in doing so paint a misleading or irresponsible picture.”
The ASA cites the example of Intrepid ruling that “People & planet-friendly” fell foul of the principle that “environmental claims must be clear, and that unqualified claims could mislead if they omitted significant information.” The ASA expects businesses to make their alims in the context of “the full life cycle of the advertised product” and argued that there is nothing planet-friendly about the air travel component of a trip to visit the pyramids in Egypt. The ASA asserts that “If you’re in a high carbon emitting sector, adding balance when making broad aspirational claims really matters.”
The ASA clearly states that “we are not going to ban your claims about those ambitions in ads so long as they tell a balanced story.” They remind businesses they should “assume a low level of knowledge when marketing green claims and …. work hard to ensure your message is not misunderstood.” The ASA has useful guidance and e-learning material.
2. EU Directives on Corporate Sustainability Reporting and Green Claims.
In the EU, the tourism industry, narrowly defined, in 2018 comprised “2.3 million businesses, primarily small and medium-sized enterprises (SMEs), employing an estimated 12.3 million people.”
The new EU Corporate Sustainability Reporting Directive (CSRD) came into force in January, applying to all large companies (>250 employees and/or >€40 million) and to listed small and medium-sized businesses, except listed micro-enterprises. The Directive require that companies report on their impacts on the “environment, human rights, social standards and work ethics”, with reports certified by an accredited independent auditor or certifier.
This will result in hotels, resorts, and tour operators requiring reports from their suppliers, only some of which will be themselves required by law to report. This will have onerous consequences for SMMEs, more so if SMMEs are sent different reporting resources, topics and methodologies by each of their clients.
3. Can a standard list of reporting requirements and methodologies be developed to ease the
burden of the CSRD reporting on SMMEs?
A Green Claims Directive is before the European Parliament and will require companies to substantiate their voluntary green claims and to take a life-cycle perspective. The objective is to extend consumer protection against greenwashing and to provide more specific rules on substantiation, communication and verification. This legislation will currently not apply to microenterprises employing fewer than 10 people and a balance sheet <€2 million. There is some concern that the proposed directive should not lead to a situation where only financially strong businesses are able to make green claims safely.
4. What can be done to ensure that the new directives do not deter SMMEs from making green claims and benefiting from their sustainability endeavours?
Scope 3 and Supply Chain Challenges
There are particular problems for companies in their supply chain. In 2020 IKEA was linked through it supply chain with illegal logging in the Ukraine. IKEA was using the Forest Stewardship Council (FSC) to certify its supply chain. The FSC was described in an investigative report by NGO Earthsight as an organisation that greenwashes the timber industry.
Scope 3 emissions are a particular challenge in the tourism sector. Businesses are increasingly required to report emissions which result from flights, conferences, hotel stays and similar that the business purchases to facilitate its activities. They are in the supply chain, but they do not have control over them. Hotels, resorts and tour operators are going to need to collect information for businesses from which they purchase goods or services. Corporations already require data from hotels and airlines on their emission to enable them to report on their corporate footprints.
Where SMME suppliers, guides, and food and craft producers, for example, sell to tourism businesses, they will increasingly be required to report to their corporate clients on the wide range of issues upon which corporates may be reporting to comply with the new Corporate Social Responsibility Directive.
5. Can accommodation providers and tour operators agree a common set of issues which need to be reported on and a common methodology?
If not, reporting will be, at best, onerous and, at worst, lead to bankruptcy.
